What sort of jumps can we expect in mortgage rates in the coming year?

[spygirl]

2 hours ago, Frank Hovis said:

 

You're however basing that upon a £304bn deficit for 2020/21 which was highly unusual and down to Covid lockdown.

The graph below was forecasting from 2017 on.  It's arguable but I would say that a typical deficit would be £40bn with each percentage point being then £400m extra.

Government debt March 2021 was £2,224.5bn so a 30th (rough average of gilt issuance maturing each year) of that is £74bn meaning £740m extra per percentage point.

This is a combined £1.14bn additional cost per percentage point increase.

I may be hugely debt averse but i don't see that the government has an imminent problem now that furlough, track and trace, business loans and all the other costs of lockdown have been mostly done away with.

 

Government debt link.

https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicspending/bulletins/ukgovernmentdebtanddeficitforeurostatmaast/march2021

I look at that and I'm reminded of all the people who go - The conservative doubled the national debt....

[23rdian]

On 05/05/2022 at 09:02, spygirl said:

BTL is insane leverage and limited investment.

Itll blow up.

Its would have in 2008, if the CBs had not gone down the folly of ZIRP.

 

I would like to know how a landlord I know will be affected. He's got to have maybe a dozen rentals, maybe more. Some are paid off but so can't help but think he been using the equity to buy other more recently. 

I honestly don't know if he lucked out or fucked up. 

[With a crooked smile]

9 hours ago, 23rdian said:

I would like to know how a landlord I know will be affected. He's got to have maybe a dozen rentals, maybe more. Some are paid off but so can't help but think he been using the equity to buy other more recently. 

I honestly don't know if he lucked out or fucked up. 

Buy to Let lending at 80% ltv seems easier now. I'm sure in the past when I've looked there's only been a few companies offering mortgages in this bracket and none of them have been competitive or someone ive heard of before.

People like Metrobank and Virgin offering 80 ltv at ok rates so don't need 75% ltv necessarily now.

In my experience virgin are very easy to deal with and do minimal checks.

If anything decent for my criteria comes up in next 12 to 18 months I'll make use of the higher ltv opportunity. 

[Lightly Toasted]

On 05/05/2022 at 08:18, haroldshand said:

OK, it's not pleasant along with rising inflation that could well be stretching home owners another £300-500 per month come next year and where they will now have to find an extra £1,000 per month(including extra mortgage payments) probably in 2023.

But on the whole I can see with a few cut backs most people getting through this with just a little pain?

Even if households can find fat to trim (huge numbers won't, I suspect) the trimming will be deflationary & that's the real impact, not the immediate (first order) impact of households who can afford it while they still have jobs.

From what I recall, the real killer in the early 90s wasn't just high interest rates + negative equity, it was suffering from those and also losing your job when the recession meant you couldn't find another one.

[spygirl]

2 hours ago, Lightly Toasted said:

Even if households can find fat to trim (huge numbers won't, I suspect) the trimming will be deflationary & that's the real impact, not the immediate (first order) impact of households who can afford it while they still have jobs.

From what I recall, the real killer in the early 90s wasn't just high interest rates + negative equity, it was suffering from those and also losing your job when the recession meant you couldn't find another one.

It's less whether you can afford your mortgage, more that the neighbours can.

Slowdowns see new build estates hammered as theres do many ftbs n new buyers on.

 

[spygirl]

20 hours ago, 23rdian said:

I would like to know how a landlord I know will be affected. He's got to have maybe a dozen rentals, maybe more. Some are paid off but so can't help but think he been using the equity to buy other more recently. 

I honestly don't know if he lucked out or fucked up. 

Fuckup.

The Get rich or go bust trying io btlers watefalled any gains into their next lit if btls.

None seem to have grasped that tgey lose tge ability yo offset rent on withdrawn equity.

Portfolio io btl are small in  number but own a lot if io btls.

Massive fuckup, at levels that will cause a problem for the smaller banks. With io btl books - nationwide, CovBS

[King Penda]

This is a friend of mine he went interest only in 2009 he figured house prices to the moon would inflate his debt ie the principal away .I sense panic he wants to visit me tommorow.fucking tit.

[Democorruptcy]

On 03/05/2022 at 09:41, haroldshand said:

This is how dis-interested I have been with the mortgage rates, I cannot think of one time I have shown any interest in the mortgage  rates since Covid started.

What are the rates like now and what can we expect after a BOE hike to 3%

That was as far as I got.

[spygirl]

3 hours ago, King Penda said:

This is a friend of mine he went interest only in 2009 he figured house prices to the moon would inflate his debt ie the principal away .I sense panic he wants to visit me tommorow.fucking tit.

IO mortgages are going to be fun , as they start reaching the end of term.

A 20y repayment mortgage has 240 repayment events, each one reducing the principle

An IO mortgage has a single repayment, right at the end. At that point, the bank gets feedback in its loan quality from 20y ago.

[King Penda]

37 minutes ago, spygirl said:

IO mortgages are going to be fun , as they start reaching the end of term.

A 20y repayment mortgage has 240 repayment events, each one reducing the principle

An IO mortgage has a single repayment, right at the end. At that point, the bank gets feedback in its loan quality from 20y ago.

I think he was put on it to stop him loosing his house I will see if he spills the beans tommorow.

[snaga]

14 hours ago, King Penda said:

I think he was put on it to stop him loosing his house I will see if he spills the beans tommorow.

he'll be fine, he's had over a decade to save to pay off the principle, he should now be on track to halve his debt

 

or not.

[King Penda]

1 minute ago, snaga said:

he'll be fine, he's had over a decade to save to pay off the principle, he should now be on track to halve his debt

 

or not.

He has not paid a penny off it just pays the interest by the sounds of it

[Boon]

GBP strong today, Standard reporting maybe 3% by end of year:

https://www.standard.co.uk/business/pound-interest-rates-jobs-inflation-bank-b1000483.html

Only 5 meetings left to go, so that would imply 50bps at 3 meetings and 25pcs at the other two.

Not sure that will happen, although if the BoE really fall out with government.... 

[sancho panza]

I'm sure I remember years ago,base rate was RPI +1%,then mortgage rate was base rate +1%.could be worng.

CB's have dropped hte paddle jsut as shit creek is about to get interesting

 

https://uk.finance.yahoo.com/news/uk-inflation-cost-of-living-061355816.html

UK inflation soared to a more than 40-year high in April thanks in part to rising food, energy and fuel prices and the war in Ukraine as the economy deteriorates and people have less to spend.

According to the latest data from the Office for National Statistics (ONS) on Wednesday, the consumer price index (CPI) measure of inflation rose to 9%, the highest since it started being calculated in 1997.

ONS estimates that CPI hasn’t been higher since 1982 when it peaked at nearly 11%.

This is up from a 30-year high of 7% in March, while economists polled by Reuters forecast inflation to hit 9.1%.

Core CPI, which strips out volatile food and energy components, rose 6.2% in a sign that inflation has become embedded across Britain's economy.

 

[Democorruptcy]

Economic forecasts out this week, base rate attached:

[Chewing Grass]

I'm going for the average mortgage being 4.5% by September, I think there are too many Rose Tinted spectacles on at the moment.