Re-mortgage now or wait?

[Caddyshack]

DonkeyApple said:

Caddyshack said:

I think this is very true…I also feel that any positive stimulus or rate rise to cool things overshoots due to the lag in reporting house completions or tax returns etc….I am guessing that we will see a massive nose dive at some point and then stimulus to get things back on track….the boom bust cycle continues but on a much faster turnaround these days.

2023 housing data is going to be weird. There will be stuff people have paid more for and stuff that's had to be hugely discounted and all in a data flow that's thinner than normal.

I suspect that one aspect that will have a huge drag beyond 2023 is the growing realisation that the enormous costs of renovating, updating or extending a property requires far larger discounting than sellers wish and buyers have currently realised. I'm not even sure lenders have yet realised the true disparity at present?

I don't yet see any risk of a general rout in values (but then you never do) but I do see an o going growth and expansion in the market becoming more discerning with parts of it clearly already broken. One example being the previous habit of over paying for a wreck and then just slapping a couple of hundred K extra on a mortgage to get its true value up to the over value that was paid.

There are bits within the market that just have to break and reform under the newer, much higher costs.

One can also smell the return of the DIY extension TV programs buying discussed in the corridors of Amazon and Netflix as they decide which pair of rubber jugs, regional camp accent wearing grandma's false teeth and grandpa's old trousers will be excitedly introducing the segment about building a wall using Bitcoin and humous.

There was certainly a Sarah Beeny boom in the past with diy £3k budget and doubling your money because the housing market handily boomed.

My friend is in early talks as he has just bought a £1m wreck of a pub and has a big budget to turn it in to a fancy food pub, he has already had his hotel on TV.

[CoolHands]

DonkeyApple said:

One can also smell the return of the DIY extension TV programs buying discussed in the corridors of Amazon and Netflix as they decide which pair of rubber jugs, regional camp accent wearing grandma's false teeth and grandpa's old trousers will be excitedly introducing the segment about building a wall using Bitcoin and humous.

God save us

[The spinner of plates]

DonkeyApple said:

The spinner of plates said:

Yup, personal view is things will ease over the next 12mths, but we’re not going back to sub 2% levels any time soon.

I think things will ‘settle’ in the 3-4% range over the next 5 years.

So a 5 year fixed at 4% will do, can’t see myself getting too bent out of shape at that rate… but willing to listen to other opinions between now and aug!!!

That seems to be the general view of the markets.

It's one of those times that people need to weight up the two outcomes of this general view being incorrect. On the one hand there is the annoyance of finding out one could have taken a shorter fix and been paying a little less interest while on the other hand, if rates were to run higher and return to some kind of traditional norm then they'd be screwed. The point being the scales of upside v downside are not well balanced at present.

What's interesting is the mind chasm 2008 has caused. On the post 2008 side are people who have only ever known the zero interest society and on the other those who see it as a momentary anomaly. What has surprised me was meeting people in the latter group who haven't used the last 14 years to pay down risky levels of debt

Agreed.
I'm older enough to have viewed the sub-2% period as a gift, a time to over pay whilst I'm in 'peak career' years. Going to 4% ish is now back to normal <sigh>.
Younger family members however have only every know 2% and built a life around it. Going to 4% ish is viewed as problematic, a short term anomaly whilst they ask 'but when will things go back to normal?' <gulp>

[The_Doc]

I nearly bought a Grade 2 listed house near us, that I could just about afford the mortgage on at 1.4%..... And cheap heating bills back then.

Its still for sale 2.5 years on.

That's the stuff of nightmares.

Edited by The_Doc on Saturday 25th March 12:20

[havoc]

The spinner of plates said:

DonkeyApple said:

What's interesting is the mind chasm 2008 has caused. On the post 2008 side are people who have only ever known the zero interest society and on the other those who see it as a momentary anomaly. What has surprised me was meeting people in the latter group who haven't used the last 14 years to pay down risky levels of debt

Agreed.
I'm older enough to have viewed the sub-2% period as a gift, a time to over pay whilst I'm in 'peak career' years. Going to 4% ish is now back to normal <sigh>.
Younger family members however have only every know 2% and built a life around it. Going to 4% ish is viewed as problematic, a short term anomaly whilst they ask 'but when will things go back to normal?' <gulp>

Agree with both of those points.

DA - we used that period to maintain some semblance of our pre-kids lifestyle through 2 lots of mat leave and nursery fees. Long-haul holidays and trackdays disappeared, but I kept the weekend toy and we still managed meals out and a decent Med holiday each year, without taking on any non-mortgage debt. I consider that a small win.

[skeeterm5]

DonkeyApple said:

What has surprised me was meeting people in the latter group who haven't used the last 14 years to pay down risky levels of debt

In my view they have used this cheap/free money to fund lifestyles way beyond what they could normally afford and now it is coming back to roost as more people come to end of their cheap fixes and find a great hike in cost.

With little or no disposable income or savings the landing could be very bumpy for some people.

[Jakey123]

The spinner of plates said:

Agreed.
I'm older enough to have viewed the sub-2% period as a gift, a time to over pay whilst I'm in 'peak career' years. Going to 4% ish is now back to normal <sigh>.
Younger family members however have only every know 2% and built a life around it. Going to 4% ish is viewed as problematic, a short term anomaly whilst they ask 'but when will things go back to normal?' <gulp>

Pre '2% period' houses were also much cheaper.
So you've had a double dose of luck that buyers now will not experience and thus pay more on both fronts .... <gulp> indeed

[MrJuice]

DonkeyApple said:

I suspect that one aspect that will have a huge drag beyond 2023 is the growing realisation that the enormous costs of renovating, updating or extending a property requires far larger discounting than sellers wish and buyers have currently realised. I'm not even sure lenders have yet realised the true disparity at present?

100% agreed

I'm spending far too much on my house and suspect for every £2 I spend, only £1 of value will be added.

Absolutely no way I'll get back what I paid for years and even then, it's not a great financial investment because there's opportunity cost

The only way to look at it is that the extension and renovation has enhanced ones life. Or to take a big hit on selling but then also pay correspondingly less for next house which may or may not be possible

[thepeoplespal]

Pixelpeep Electric said:

WeiB.beer said:

My existing Halifax mortgage fix ends in September 2023, Halifax offered 3 new deals 2,5 and 10 years fixed.

We’re in our ‘forever’ home and the 10 year fix was the most competitive, so thankfully we locked this in last weekend at 3.95% for 10 years with no arrangement fee.

10 Years seems extreme, but at least it will be stable (for better or worse) for a good time to come.

There are too many variables for me to be ok with being locked in for that long - just personal opinion,

I'd agree with you, IMO you need to be very sure you are in your forever house to take on a 10 year fix, especially if it isn't an offset or bank account type mortgage.

We fixed for 10 years, some 9 years ago now, as we could afford the mortgage payments and cover it with just one salary.

Rate was a less competitive 4.09% compared to a circa 3.5% 5yr fix IIRC, but the Offset was worth the peace of mind of not needing to worry about not getting a loan or getting overpayments back (we got caught out with the Northern Rock debacle on this), or hunting around for safe tax free high yield savings rates. Wife even Stoozed a personal loan a good 1% less than our mortgage into the offset for a few years.

A hell of a lot has changed in 9 years which the offset helped smooth things over, house extension with bedroom for an Au Pair, redundancy×2 (emergency funds depleted twice), niece came to live with us, both sets of parents dying in less than 5 years etc.

Can't imagine there are too many very competitive fixed offset products ATM, but they can work for you if you might get an inheritance, have to keep aside money for HMRC bills, get lumpy bonuses or feel you want a very hefty instant access rainy day fund. It's totally tax free savings, effectively worth an extra 40% on top of the mortgage IR and would be a risk free 6% (at best current 4% rates) for a higher rate tax payer already getting £1000pa interest on savings. Better than any cash ISA on the market and who can get 10%+ you'd need to take a risk on a stocks and shares ISA.

[gangzoom]

thepeoplespal said:

I'd agree with you, IMO you need to be very sure you are in your forever house to take on a 10 year fix, especially if it isn't an offset or bank account type mortgage.

We fixed for 7 years on a 10 year additional borrowing and than 10 years on 15 year team on the main mortgage product 18 months or so ago. Works out at roughly 75% of total mortgage debt fixed at 1.8% for the next 8.5 years, which give the current rates/inflation seems like we couldn’t ask for any better a ‘deal’.

But we are 99.99% sure we are in our final family home, pending death/life changing illness - at which point honestly who cares about the mortgage.

Prior to this the longest I had fixed for was 5 years, but sub 2% rates locked in for 10 years was just too good a gift horse to not take a ride on!!

[The spinner of plates]

gangzoom said:

thepeoplespal said:

I'd agree with you, IMO you need to be very sure you are in your forever house to take on a 10 year fix, especially if it isn't an offset or bank account type mortgage.

We fixed for 7 years on a 10 year additional borrowing and than 10 years on 15 year team on the main mortgage product 18 months or so ago. Works out at roughly 75% of total mortgage debt fixed at 1.8% for the next 8.5 years, which give the current rates/inflation seems like we couldn’t ask for any better a ‘deal’.

But we are 99.99% sure we are in our final family home, pending death/life changing illness - at which point honestly who cares about the mortgage.

Prior to this the longest I had fixed for was 5 years, but sub 2% rates locked in for 10 years was just too good a gift horse to not take a ride on!!

I'd say 1.8% for the next 8.5 years you can't lose. Good decision

[okgo]

I wish I’d known more about the portability of mortgages myself. I’ve another 4 years at 1.8% also but had I know it was fairly trivial to take it with I’d have done longer.

[The spinner of plates]

I guess all providers differ, but first direct offering free porting if you move.

[okgo]

The spinner of plates said:

I guess all providers differ, but first direct offering free porting if you move.

I think I read from Sarnie on here that there would have to be some good reasons as to why they wouldn’t port.

That said, in 4 years time I may just get lucky in that things may have reversed a touch.

[Sarnie]

okgo said:

I think I read from Sarnie on here that there would have to be some good reasons as to why they wouldn’t port.

That said, in 4 years time I may just get lucky in that things may have reversed a touch.

All UK residential mortgages are portable.

But, you have to comply with the lenders lending criteria at the point of porting. It's not a given, if your circumstances have changed then they could decline to port your mortgage

Edited by Sarnie on Monday 27th March 00:24

[Krhuangbin]

okgo said:

I wish I’d known more about the portability of mortgages myself. I’ve another 4 years at 1.8% also but had I know it was fairly trivial to take it with I’d have done longer.

Exactly the same. Had no idea about porting when I fixed as a FTB for just 2 years at 1.4%, Jan 2022. I was offered a 5 year @ 1.7% but didn’t want to be stuck in this place and beholden to ERCs.....

Renewal window coming up in a few months at over 4%.

Worst financial decision ever made!!

[okgo]

Sarnie said:

All UK residential mortgages are portable.

But, you have to comply with the lenders lending critetia at the point of porting. It's not a given, if your circumstances have changed then they could decline to port your mortgage

Yes the latter certainly makes good sense, and is the least you’d expect but as per the poster above me I went with 5 as the ERC on my large mortgage was lumpy enough that 10 looked like way too big a risk.

Obviously I don’t know where rates will be in 4 years but I’d imagine they won’t be in a place where I can get 1.8%

[Sarnie]

Krhuangbin said:

Exactly the same. Had no idea about porting when I fixed as a FTB for just 2 years at 1.4%, Jan 2022. I was offered a 5 year @ 1.7% but didn’t want to be stuck in this place and beholden to ERCs.....

Renewal window coming up in a few months at over 4%.

Worst financial decision ever made!!

There is a full section on the portability of your mortgage in the illustration you would have received at the start of the processs and also your mortgage offer.

The information is all there for you.

Whats not in there is that mortgage rates would be so much higher in two years, no one could have given you that information.......

[Nemophilist]

Portability is good, but as Sarnie mentioned on post before that you have to be able to fit the same lenders criteria, which can change.

If you know you plan on moving within a few years, especially a move upwards where you’re likely to need to go up to max borrowing to do it, then I can totally understand why someone would pick a 2 year fix to enable as greater flexibility as possible.

[mrpbailey]

My BTL fixed rate is coming to an end at the end of June.

LTV ~ 51%. Currently with NatWest, interest only 2.88%.
For renewal they are offering:

-2 year fix @ 5.51% 0 fee (5.05% with 995 fee but annual cost works out higher)
-5 year fix @ 4.99% 0 fee (4.79 with fee but again works out higher annual cost)

So basically my monthly payments will be not far off doubling (which obviously has a big effect on the profit margin).

Best 2 year fix I am coming across elsewhere is HSBC at 5.19 with no fee. Roughly £19/month cheaper than NatWest.

Best 5 year fix I can find is again with HSBC AT 4.74%, 0 fee.

Am I likely to find anything better via a broker?

I’m hesitant to fix for 5 years as I may opt to sell up before then, but not sure 2 years is enough to see a significant reduction in interest rates.