Beware Of New Mortgage Hikes

[leehack]

I had a letter off my mortgage company today, my current 2 year fixed deal is about to end and my new payment will be 22% higher than what I currently pay. The best deal I can find through a mate (who is an advisor) is £135 more a month than what i currently pay and I need to pay £995 to have the luxury of such a product.

IF your current mortgage deal will be finishing soon, get on the case as you only usually get a months notice of it coming to an end. Ideally you want the wheels in motion 6-8 weeks before your current deal ends IMO.

Don't panic though, just be prepared and aware of what's ahead. My decision 2 years ago to select a 2 year fixed rather than a 5 year fixed, looks like it's cost me about £5k lol :D.

[fergusw]

You won't be alone Lee.
This 2/3 year fixed mortgage rates will be finishing and flushing through the economy in the next year or two and will have a dramatic effect on housing market. Safe to say the boom is over.
I wouldn't be surprised if we don't start hearing about repossessions before too long as well when people who have overstretched get hammered. Recall that some banks were giving mortgages based at 4-5 times salaried amounts! Interest rate hikes will heavily impact these poor people.

Sell today - rent for 18 months - then buy again! :p

[leehack]

There will be a big squeeze I expect - £249.42 extra a month in my case.
And that starts in 27 days if i do nothing about it.
Lets hope people are getting prepared.

[fergusw]

For online retailers I hope that any squeeze on the economy encourages people to shop more frugally, i.e. online rather than highstreet!

[leehack]

Yep, you all need more websites, roll up roll up lol.

[TraceyHand]

Our 2 year discounted rate ended in August 2007 and, in the 6 months since then, we've seen the mortgage DOUBLE from what it was when we first took it out (in August '05)
With us both being fully self-employed, we factored this in when we took out our mortgage (ie, we took a 'worst case scenario' mortgage rate, compared it against the maximum we could afford to pay and spent on our new house accordingly) as it was challenging enough finding a lender who would lend to us without an employment income anyway.

I'm damned sure there will be thousands of people out there who have borrowed 5 or even more times their salaries at the time though who will have no chance of paying a 'normal' rate when their offer periods end though.
Never mind it being difficult to get ON the housing ladder. Even if you're already on it, it's pretty bloody difficult not to fall off!

[end rant]

[CymraegKev]

For online retailers I hope that any squeeze on the economy encourages people to shop more frugally, i.e. online rather than highstreet!

This BBC Article (http://news.bbc.co.uk/1/hi/business/7329796.stm) seems to tell a story.

Apart from the physical (and very real) credit crunch, I think all the hype in the papers and media fuels the flames to the point of frenzy though. You can't get away from how terrible our lives are going to be over the next X months/years. My fixed term mortgage expires in 18 months so I'm not worrying about that too much, but I do think a general down-turn in consumer spending will hit online sales too, however, as Fergus says, hopefully not as much as footfall-shopping. Time to build a pingybank selling site I think ! It will be interesting to compare sales over the next 10 months compared to the last three years of seemingly happy-go-lucky sales.

Kevin

[Darren B]

Lucky enough i sorted mine out in spetember, im glad i did. you can blame northern rock for all this

D

[leehack]

I'm damned sure there will be thousands of people out there who have borrowed 5 or even more times their salaries at the time though who will have no chance of paying a 'normal' rate when their offer periods end though.
It's this point that leaves those who will be OK in a quandry also. The government (B of E) is simply going to have to step in and rescue these people with a rate reduction, so it seems prudent to select a tracker mortgage, but it's not a certain science.

[los_design]

I wouldn't be surprised if we don't start hearing about repossessions before too long as well when people who have overstretched get hammered. Recall that some banks were giving mortgages based at 4-5 times salaried amounts! Interest rate hikes will heavily impact these poor people.

Sell today - rent for 18 months - then buy again! :p

We already are. The figures supplied for the first three months of the year were dramatically up on the same period last year.

[Miranda Stamp]

We gambled the next election would be in 2009 - traditionally the longer term mortgage rates go down in an election year. So our 3 year fixed rate ends January 2009, i think the election is likely to be June 2009. We actually upped our mortgage outgoings and shaved 5 years (and 50K in repayments) off the term. We're hoping that to fix for the remaining few years of our mortgage we'll be looking at a lower rate in January than those being offered now.
You might be better off carrying on with your existing provider at their current rate for a few months rather than fix now at a (large) fee for a higher rate. I'd suggest see if you can find graphs of mortgage rates vs general election dates, I'm sorry I can't find them at present, I think my brother (a financial advisor) printed them off and sent to me.
Our current plan is saving up as much as we can (I think NR offers a good interest rate!) and paying off a lump sum when we remortgage, then paying as much as we can on a fixed rate thereby shortening the term again by as much as we can afford.

It is all a gamble though.

[leehack]

My instinct tells me that the BofE are going to be bailing this country out of the mire over the next 12 months as mortgage deals finish. Also like you say with an election on the horizon always brings rates down, hence i've signed up to a tracker mortgage.

Holding tight is not a sound idea if like me your payments were £250 higher, yet it only costs £995 to get a new deal, depends what's on offer though, i managed to get a very good deal in today's marketplace. All the financial advice i have read, seen or been told, says it's going to get worse before it gets better, that tells me that start of next year is where the weight lifts, therefore make your financial decisions bearing in mind now until Jan next year.

'Term' deals with no tie in are a good proposition ATM IMO. Your decisions will much rely on whether you will be funding the £995 product fee yourself or adding it to your loan. The days of £250 product fees and 100% mortgages are gone.

[jxm28788]

I wouldn't be surprised if we don't start hearing about repossessions before too long as well when people who have overstretched get hammered. Recall that some banks were giving mortgages based at 4-5 times salaried amounts! Interest rate hikes will heavily impact these poor people.The biggest problem will be for those that took 100%+ mortgages on 2 year fixed rates, they are going to see their rates rocket up and will have bugger all chance of remortgaging as the last 100% have now disappeared...

And just think of all those people who took out the N.Rock ‘Together’ mortgage, which enabled them to borrow up to 125% of a property’s value... These customers make up almost a fifth of Northern Rock’s loan book! :eek:

[Stereo Steve]

Especially now that property has fallen 3 or 4% already this year. End of boom and bust? We've had the boom. How will the magician stop the bust?

[pnagames]

rates will drop in the very near future. banks will not drop the rates but will not increase either

rates will drop again and again. new houses applications will not be approved so the government will force customers to go for existing house to help the market.

houses prices will drop more but not collapse

i've been hearing about the market going bust for the last 7 years now.

it wont happen. just everything will slow down and prices will drop to reasonable affordable figures

[leehack]

I agree Pan, we are in danger of creating mass panic, where all we need to be is prepared. A 3 or 4% drop is significant of course, but house prices have increased by about 180% over the past ten years or so, perspective is just as important as caution.

[Legends]

HSBC have anounced that for anyone comming off a fixed rate mortgage in the next six months they will offer an equivalent 2 year fixed rate mortgage (but with a limit of 4.5%)

So for example if you had a fixed rate at 4.9% they will match it for 2 years - if you had a fixed rate at 3.9% they will give you a fixed rate of 4.5% for 2 years. Fees for this have not yet been anounced.

Apparently according to the BBC HSBC will be taking applications from 14th April.

Looks like they are trying to buy market share in a time when everybody else is trying to sell it!

could be good news for some!

[jxm28788]

As long as you don't need to move and can pay your mortgage then there's nothing to worry about at all, negative equity and a lower house price are irrelevant if you just want to live there...

[jxm28788]

Looks like they are trying to buy market share in a time when everybody else is trying to sell it!and in a buyers market no doubt they will pick and choose the best ones, so probably no help to the 'not so best' ones...

[jxm28788]

Well the BoE just cut rates by .25% to 5%... and 2 banks promptly announced they are putting their rates UP across several mortgage ranges...