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"panicked Homeowners Are Rushing To Remortgage Because They Fear Interest Rates Are About To Rocket"

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http://www.dailymail.co.uk/news/article-1344072/Remortgage-number-switching-loans-rival-jumps-42.html

Panicked homeowners are rushing to remortgage because they fear interest rates are about to rocket, experts said yesterday. Figures from the Bank of England revealed a 42 per cent jump in the number of people remortgaging, compared to the same month in 2009.

In November, 34,262 switched their loan to a rival bank or building society, the highest number for two years. This figure compares to 23,973 in November 2009. The rush to remortgage is fuelled by growing fears that the Bank is finally on the verge of raising rates.

The base rate has been stuck at 0.5 per cent since March 2009, the longest period of ‘frozen’ rates since the aftermath of the Second World War. But there is a growing suspicion among economists, mortgage experts and business lobby groups that the base rate will rise, possibly within months. For example, the CBI expects the base rate will hit 1.25 per cent by the end of this year and 2.75 per cent by the end of 2012.

Howard Archer, chief UK economist at the consultancy IHS Global Insight, said: 'There seems to be an increasing risk that the Bank could raise interest rates earlier than expected in 2011 to counter above target and rising inflation.'

Melanie Bien, director of independent mortgage broker Private Finance, who predicts the base rate could double by the end of the year, said: 'The remortgaging market has been dead in the water.

'But it is coming back to life. People are now taking the plunge because of the fear that rates are going to go up.'

The mounting pressure on family finances from higher VAT bills, the rising cost of living and the National Insurance rise in April means people urgently need to cut their mortgage bill. Since the credit crunch, most homeowners have simply moved on to their lender's standard variable rate when their deal ends.

But the likelihood that rates will rise this year and the availability of cheap mortgage deals means people are deciding to remortgage, rather than risk opting for a standard variable rate which goes up. NatWest, part of Royal Bank of Scotland, is offering a two-year fixed rate deal for just 2.75 per cent, although it is only open to those who borrow 60 per cent or less of the property’s value. By comparison, many of the big lender’s standard variable rates are around four per cent.

David Hollingworth, from the independent mortgage broker London & Country, said:

'People realise that there is an opportunity to save money on their mortgage.'

It comes as experts have warned about 'zombie households' who are sleepwalking towards a financial meltdown when interest rates rise.

They have become used to their rock-bottom monthly repayments, lulled into a false sense of security, and will struggle to afford their super-size mortgage when rates rise. Yesterday the Council of Mortgage Lenders said millions of households will face an interest rate rise shock, but most will do everything within their power to cut back on other spending.

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Interestingly BBC news at 6 had these figures on as some sort of 'good news more mortgages woohoo' story.

The Kate bird even had the typical BBC smiling face and slightly higher pitched voice when announcing more people were getting into debt than last month.

More debt = good news.

They didn't bother to mention the reason behind most of the 'new' mortgages.

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People ain't so dumb as we thought then !

I reckon we are going to see 12 - 15% within 3 years. Property will get transfered to the banks.

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I shore hope they do ries ,but my gut tells me the gov spin over the last month is to fool the sheeple into bailing the banks out quicker by takeing out higher yeilding loans hope I am wrong

Exactly. Rates won't rise too much as it will make the banks insolvent as property plunges.

But if you can find the person with a bit of spare cash and trick them into a higher rate then you have managed the trick of differential pricing - ie charging more for those willing to pay more.

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People ain't so dumb as we thought then !

I reckon we are going to see 12 - 15% within 3 years. Property will get transfered to the banks.

That would be lush. I could retire.

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People ain't so dumb as we thought then !

I reckon we are going to see 12 - 15% within 3 years. Property will get transfered to the banks.

Properties in negative equity will get transferred to the banks who hold the mortgages. This will wipe out their balance sheets so they promptly go bankrupt and the debts and properties will get transferred to the state. Not long after, the state will also go bankrupt, and the properties will be sold off to the next generation of homeowners in the great once-in-a-lifetime closing down sale of housing which lies at the end of this ridiculous bubble.

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A friend of mine is panicking. He is late 40s 15 years left on his mortgage. Currently on a cheap IO tracker which runs out soon. He asked me when interest rates were going to rise. To which I replied if I know that I would be a millionaire! Anyway after explaining that it's all speculation really and know one knows, we then delved into his finances a bit more. He wants to remortgage and keep similar payments to what he has now as he can't afford anymore. But turns out he also has £30k of unsecured debt which he stopped paying several years ago. Now pays £1 a month. So he is effectively blacklisted. I explained that he has very little chance of another mortgage deal and no chance of IO and that he will be paying the lenders SVR which will basically triple his repayments.

He is now planning on selling up. Athough I did tell him to speak to a mortgage advisor first before acting on any financial advice I give him! Which he is next week. It will be interesting to see what, if any, options he has.

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A friend of mine is panicking. He is late 40s 15 years left on his mortgage. Currently on a cheap IO tracker which runs out soon. He asked me when interest rates were going to rise. To which I replied if I know that I would be a millionaire! Anyway after explaining that it's all speculation really and know one knows, we then delved into his finances a bit more. He wants to remortgage and keep similar payments to what he has now as he can't afford anymore. But turns out he also has £30k of unsecured debt which he stopped paying several years ago. Now pays £1 a month. So he is effectively blacklisted. I explained that he has very little chance of another mortgage deal and no chance of IO and that he will be paying the lenders SVR which will basically triple his repayments.

He is now planning on selling up. Athough I did tell him to speak to a mortgage advisor first before acting on any financial advice I give him! Which he is next week. It will be interesting to see what, if any, options he has.

Maybe he can lie about his name.

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Articles like this are music to my ears as they strengthen my resolve to stick with my tracker.

Just like when uk rate was 5.75% and people were fixing duh

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A friend of mine is panicking. He is late 40s 15 years left on his mortgage. Currently on a cheap IO tracker which runs out soon. He asked me when interest rates were going to rise. To which I replied if I know that I would be a millionaire! Anyway after explaining that it's all speculation really and know one knows, we then delved into his finances a bit more. He wants to remortgage and keep similar payments to what he has now as he can't afford anymore. But turns out he also has £30k of unsecured debt which he stopped paying several years ago. Now pays £1 a month. So he is effectively blacklisted. I explained that he has very little chance of another mortgage deal and no chance of IO and that he will be paying the lenders SVR which will basically triple his repayments.

He is now planning on selling up. Athough I did tell him to speak to a mortgage advisor first before acting on any financial advice I give him! Which he is next week. It will be interesting to see what, if any, options he has.

So, presumably, he started off on a repayment mortgage for, say, 10 years then circumstances changed which meant he could no longer afford the debt (as evidenced by the not insignificant unsecured debt he's also racked-up)? Hopefully, he'll have sufficient equity in the gaff to to take a haircut. God help him if the dreaded MEW was also involved....

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The thing is - most of the new mortgages at fixed rates run for 2 years.

That's typically what people get.

If you listen to what the "experts" are predicting for rates over the next two years - maybe 3% in 2 years time, you'd need to be a very low fixed rate to achieve a profit after fees.

I think that this is just hype to get people to switch. I can understand someone on a BOE+4% deal wanting to remortgage - but not someone on BOE+/-0% wanting to do anything right now.

Personally, I have a First Direct offset mortgage at BOE+2.09% - not fantastic but my mortgage only costs about £100 per month.

I'm not really concerned how rates move but my opinion is that they will not reach 5% before England win the Ashes again... :)

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Any FTBs from the last six years that took out high LTV deals wIll all be in negative equity anyway and will be paying the SVR for a long time to come.

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Any FTBs from the last six years that took out high LTV deals wIll all be in negative equity anyway and will be paying the SVR for a long time to come.

I was going to say that myself.

Imagine the horror of finding out that your 2-bed young executive lifestyle pad is worthless than you paid for it!!!

Well - it's probably the fault of those greedy bankers!

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That number includes me.

I switched to an offset as my savings rates were so pathetic (Isa with £10k in it paid out £100 in interest)

My ISA is paying 1.2% and our mortgage is BoE+0.5%, both with the same institution. They must hate me.

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it's probably the fault of those greedy bankers!

...no ....Brown blew the bubble....and everyone is suffering...borrowers and savers....the failed banks were lead by people (usually friends of Brown) ...who were not fit for purpose ...just like Gordo the Clown himself...... :rolleyes:

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A friend of mine is panicking. He is late 40s 15 years left on his mortgage. Currently on a cheap IO tracker which runs out soon. He asked me when interest rates were going to rise. To which I replied if I know that I would be a millionaire! Anyway after explaining that it's all speculation really and know one knows, we then delved into his finances a bit more. He wants to remortgage and keep similar payments to what he has now as he can't afford anymore. But turns out he also has £30k of unsecured debt which he stopped paying several years ago. Now pays £1 a month. So he is effectively blacklisted. I explained that he has very little chance of another mortgage deal and no chance of IO and that he will be paying the lenders SVR which will basically triple his repayments.

He is now planning on selling up. Athough I did tell him to speak to a mortgage advisor first before acting on any financial advice I give him! Which he is next week. It will be interesting to see what, if any, options he has.

He won't be alone. MSE is rife with anecdotals like this. It will be interesting to know what happens. Thanks for sharing Pent Up and please let us know.

So many factors coming in to play this year and next. The game is well and truly up.

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He won't be alone. MSE is rife with anecdotals like this. It will be interesting to know what happens. Thanks for sharing Pent Up and please let us know.

So many factors coming in to play this year and next. The game is well and truly up.

I'll start a new thread on it when I speak to him again in a week or two after he's been to see the mortgage advisor.

And yes, he did MEW!

Edited by Pent Up

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Excellent news, prolong the agony for a few years, making the HPC longer and deeper.

They should have spent the period of low rates to clear as much mortgage as possible preparing for higher rates, not debt themselves to the eyeballs because of it.

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I'll start a new thread on it when I speak to him again in a week or two after he's been to see the mortgage advisor.

And yes, he did MEW!

Very interesting post, will be interested to see what happens with this guy!

... MEW'd ... OH DEAR! :blink:

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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