Current Affairs Mortgages

[Daveysgingerlovechild]

Spot on mate.

We also have the added conundrum of one trying to stimulate an economy(Truss and Kwarteng) and the other (BoE) trying to head off Inflation, unfortunately both measures are now at odds with each respective measure and actually may trigger a deeper recession and Hyper Inflation, (All very doom and gloom) by by allowing the government to borrow more with the buy up of Gilt/Bonds, its effectively QE by another name and QE is largely responsible in my opinion for a lot of the fiscal issues we are now seeing. QE will always at some point cause a spike in inflation, if not actually crash a currency to a degree. constantly robbing Pete to pay Paul is car crash economics and Kwarteng policy of securing debt on future GDP growth is a risky policy, no in fact its suicidal given the level of Government debt worldwide. US announce 31 Trillion last night, first time ever reached that level.

QE and Trickle Down economics are very rarely successful, those at the top cream off the QE and it never really reaches the working man who actually needs it, hence the outcry over the 45 tax rate.

So where does it end?

I wish I could see the end but in all honesty we never really came out fully of Austerity measures following 2008, then along came pandemic and we now seem to be lurching from crisis to crisis.

QE = quantitative easing?

 

[john jako]

If it had of been early last week, I would have said pay your ERC if you can afford to and get on a 10 year deal, they were still hovering around 2.49% to 3.0% then, Now its a mess.

I work in finance sector, nothing major position wise but now over 20 years experience and this is a shocker.

Rates due to Swap Rate Derivatives and uncertainty have skyrocketed on a forecast of what BoE will do.

I have argued until I'm blue in the face with some of our execs and policy makers over some decisions that my company have made as being enough to trigger a huge financial crisis. They simply don't want or aren't able to do much about it due to the markets and the trigger that Kwarteng and Truss pulled.

Pre those measures, the BoE were always gonna raise the rates, borrowing has been too affordable and comfortable for way too long but we had a small element of time on our side, now, it could happen very soon and from the way that banks etc have reacted I expect it to be soon.

It has caused untold uncertainty in Consumer minds already, our contact centres cant cope with the influx and of course rates have already increased on some Mortgages over 3% as the banks position themselves. People who were o low fixed rate deals will see huge impact on their outgoings, its simply a precipice for some, that they may never come back from.

There is a real Fiscal shock coming, personally I think worse than 2008 and coupled with perhaps a housing price downturn and while the banks have no moral compass to speak of that will see them really help out the borrower, do they really want to see a return to wholesale repossessions and negative equity? What benefit does that have to the banks other than knowing that eventually it will go full circle and we will have banks sitting on even more appreciating assets while little old us, pay the heavy price.

Do everything you can to secure a long term fixed rate, its imperative, shop around and if you can pay to do it, do it. Trouble is all the good rates have pretty much disappeared.

Would of been really difficult to get an agreement in principle done within a week last week though pal. They where pulling any offers than weren’t agreed on. Slags

 

[Dixieslaces]

Do you think things might be more settled in 5 years? I looked at 10 years but at the time things weren't where they are now so got 5.

I would say so, looking at it, a 5 year deal gives you some security, i took a 10 year one in July this year, I consider myself luck in that respect but I have a smaller part that i wanted to pay the ERC on to secure another deal under 3% but due to volumes of people couldnt get through. so now the rate I'm being offered is 5.75%, luckily its a small portion so the hit isnt quite as large. And I work in finance so had a clue about getting this sorted. Didnt see what Truss and Kwarteng pulled coming though!

I think you have chosen well with a 5 year deal.

I believe we will see a plateau point late next year, where things start to settle.

There are other factors though such as the Dollar being so strong and China wanting to dump its Dollar holding to prop up the Yuan, all of these factors will have a bearing on how it pans out, China unfortunately could be the crux point, we have all been so used to cheap goods and imports, if they start to really fail then it will domino.

Used to be when America sneezes the World gets a cold but now im afraid its China and we arent always privvy to what really goes on in China.

 

[Dixieslaces]

QE = quantitative easing?

Yeah man.

It has its plusses, dont get me wrong but man when it becomes primary policy its a very dangerous route to stability,

 

[GlosBlue]

I would say so, looking at it, a 5 year deal gives you some security, i took a 10 year one in July this year, I consider myself luck in that respect but I have a smaller part that i wanted to pay the ERC on to secure another deal under 3% but due to volumes of people couldnt get through. so now the rate I'm being offered is 5.75%, luckily its a small portion so the hit isnt quite as large. And I work in finance so had a clue about getting this sorted. Didnt see what Truss and Kwarteng pulled coming though!

I think you have chosen well with a 5 year deal.

I believe we will see a plateau point late next year, where things start to settle.

There are other factors though such as the Dollar being so strong and China wanting to dump its Dollar holding to prop up the Yuan, all of these factors will have a bearing on how it pans out, China unfortunately could be the crux point, we have all been so used to cheap goods and imports, if they start to really fail then it will domino.

Used to be when America sneezes the World gets a cold but now im afraid its China and we arent always privvy to what really goes on in China.

Thanks - it is quite a scary time. If it goes mental in 5 years time I'll just have to sell and move into a flat!

 

[Dixieslaces]

Would of been really difficult to get an agreement in principle done within a week last week though pal. They where pulling any offers than weren’t agreed on. Slags

Again very true mate, it was done in the blink of an eye.

Took many of us by surprise in my world.

The outpouring of angst against them has shown just how impacting whipping those rates away is gonna be.

Some banks have Online Mortgage Manager tools, it doesnt help those just applying(For new Mortgages) but they are useful tools for those who(have existing mortagges) think they need to contact their bank etc, They are very good, or were for securing switches etc but if you have any ERC to pay they are what we call a showstopper as then you often need to speak to an "adviser". Our suggestions was to remove the showstopper element to allow people who wanted to on a "non Advised basis" pay any ERC on line and therefore secure a better deal but alss reduce "traffic" to call centres, we are swamped at the moment as I'm sure you will have found. We are still waiting for this suggestion to be reviewed and now, its probabaly way too late for many, quite ridiculous. Yes SLAGS indeed and its embarrassing.

 

[Dixieslaces]

Thanks - it is quite a scary time. If it goes mental in 5 years time I'll just have to sell and move into a flat!

It is buddy, you have taken a good step getting on a 5 year deal. Definitely.

Some of us who have lived this before, as in financial crises, know there is an end point, its just how long we take to get there, we have never really had to endure Pandemic Costs, QE etc all in one hit though, so its a bit of an uknown.

Sit tight in the knowledge for 5 years you know your outgoings.

At some point it will come full circle.

 

[Dixieslaces]

I cant say too much more but the organisation I work for has provided some reassurances today regarding those who may find themselves in difficulty after any rate hikes etc. They will be Sympathetic and Understanding of each individual circumstances and arent looking to penalise people who do experience hardship. In my experience these are really tough times and they are aware of this and from the tone they will do everything within their powers to assist.

Im not sure how reassuring this is for many who already have a distrust of banks etc but the tone feels different this time from them. Lets hope so. Last thing we want is people losing homes etc .

Its been a bumpy few years for sure.

 

[Dixieslaces]

Another way to reduce outgoings on Mortgage would be to see how much your ERC penalty you pay if you do have a lump of cash sitting around, pay just under your allowance off your mortgage. This would have possible benefits of a. reducing your balance thus allowing either to reduce your monthly mortgage payment or keeping the payment the same but would mean you pay it off a little bit quicker b. depending on how much interest you are getting on your savings it may actually be better to realise the saving on your monthly payment or overall on the term of your mortgage than settle for less interest on a saving?

With any overpayments, most banks etc will allow you to then have this back at a later date but do remember that if you take it back out your mortgage payment or term will have to go back up again to reflect this. When things settle down, you take it back or leave it where it is,

Always check with your provider before doing anything, just to ensure you dont get any hefty penalties that would negate any benefit.

Always worth looking at options, especially as they are not passing on the savings rates as quick as the rate Increases on mortgages, its always been like this though so nothing new here.

 

[evilwebby]

It will lead to a sudden drop, however if they keep tanking the economy we could easily see cheap interest rates being brought back after a short period once the sting has been taken out of inflation. If that happens those losses won't last long.

Even if inflation falls back to target, I personally I don't think we'll see a return to the ultra-low mortgage rates of the last few years, which were an aberration. The markets will never allow bond yields to go that low again, because people will now understand that they can still lose their shirt if they chase bonds all the way to zero yields. The natural rate of interest in the economy should be about 1-2% above the nominal inflation rate.

And I think a recession won't necessarily be very disinflationary as it has tended to be in the past. We are not in that world any more where inflations have huge deflationary effect - it's more likely that it will be stagflation as output contracts in comparison to the amount of money sloshing around in the system.

 

[evilwebby]

Personally I'm sticking to my long term plan of NOT paying down my mortgage. I accept that rates are heading higher, but my plan remains unchanged which is to to let inflation erode my debt over a long time period while I continue buying asset that, over the long term, will compound at a higher rate. You have to takes ups and downs of any strategy - if you always jump ship to another strategy then all you are doing is effectively selling at the bottom of the cycle

 

[The binman chronicles]

Even if inflation falls back to target, I personally I don't think we'll see a return to the ultra-low mortgage rates of the last few years, which were an aberration. The markets will never allow bond yields to go that low again, because people will now understand that they can still lose their shirt if they chase bonds all the way to zero yields. The natural rate of interest in the economy should be about 1-2% above the nominal inflation rate.

And I think a recession won't necessarily be very disinflationary as it has tended to be in the past. We are not in that world any more where inflations have huge deflationary effect - it's more likely that it will be stagflation as output contracts in comparison to the amount of money sloshing around in the system.

I agree to a point, ideally interest rates would stay in the 2-5% range, but ultra low rates is a tool in the box should things go pear shaped again. Unfortunately there is a lot of things happening in the world that could sink economies and to kick start a growth cycle their hands might be forced into it.

If they've learnt anything from this period of time though it would be to not wait so long to restore it back to the usual range even if it doesn't look optimal at the time. As I said if they had bumped rates up .5 of a percent a year over 5 year period everyone gets a bit of a warning and allows people to budget for the extra costs far more than a jump from 0.25 to what looks like it could be closer to 4% by the end of the year.

 

[Dixieslaces]

Another way to reduce outgoings on Mortgage would be to see how much your ERC penalty you pay if you do have a lump of cash sitting around, pay just under your allowance off your mortgage. This would have possible benefits of a. reducing your balance thus allowing either to reduce your monthly mortgage payment or keeping the payment the same but would mean you pay it off a little bit quicker b. depending on how much interest you are getting on your savings it may actually be better to realise the saving on your monthly payment or overall on the term of your mortgage than settle for less interest on a saving?

With any overpayments, most banks etc will allow you to then have this back at a later date but do remember that if you take it back out your mortgage payment or term will have to go back up again to reflect this. When things settle down, you take it back or leave it where it is,

Always check with your provider before doing anything, just to ensure you dont get any hefty penalties that would negate any benefit.

Always worth looking at options, especially as they are not passing on the savings rates as quick as the rate Increases on mortgages, its always been like this though so nothing new here.

As there seems to have been a few moves on Savings rates since yesterday, then this post is only relevant if your interest rate on savings is less than your mortgage rate.

The banks seem a bit "rattled" but overall its a time to hunker down, make some economies and ride this out.

AGAIN!

 

[LinekersLegs]

 

[Martin Alvito]

Wait, jumbos are cheaper by a full percentage point?

That is a massive statement about what lenders think is going to happen, and who is going to be affected.