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Simhadri

Cost of fixed rate mprtgages to rise

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5 hours ago, Odin said:

Credit rating downgrade effect ?  "UK credit rating downgraded by Moody's (23 Sep 2017)"   http://www.bbc.co.uk/news/business-41369239

Wait till the big one hits.  "BoE Term Funding Scheme"  http://www.bankofengland.co.uk/markets/Pages/apf/termfunding/default.aspx

If rates rise in line with house prices, thats when I believe this govt. Bit its a good start that some lenders putting an end to IO mortgages with rate rises.

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This is what's needed.

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The reason for the rise is that lenders are having to pay more to access the funds they need to lend out to homeowners.

Even though base rates themselves have not gone up, so-called "swap rates" have risen in recent weeks.

These are financial instruments used by lenders, which reflect the expectation that base rates will go up in the near future.

The Bank of England has already suggested that rates will rise "in the relatively near term". Some experts think that could be as soon as next month.

Too many buyers pushing and falling over each other to pay high prices, looking at the monthly nut (mortgage payment) and far less bothered about whether house is value for money.

"£450,000... yeah but look at low rate deal."  "We can attack the debt with low rate fix, throw excess savings at it, and pay down the debt during the fix years."

Especially when monthly nut on low-rate-fix is way below what they are paying in rent.

The last 6 months has seen a lot of buying houses from people I know/know of.

Tickup in rates, should mean fewer new buyers will be able to borrow as much....

DrHousingBubble had a chart although that was for US with 30 year fix type deals, but it's a bit different for the UK (where we have some really low rate fixes), and all makes my head spin anyway.

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2013

Lower interest rates create added purchasing power.  The lower the rate, the lower the monthly payment and the higher a home price people can afford.  The math is fairly simple here. 

.......Today, the big push in home prices is coming from the drop in interest rates from 6 percent to close to around 3.5 percent.  This large push makes a big difference.  Take a look at a scenario for a $500,000 home:

various interest scenarios

This is an important point here.  A drop from 6 percent to 3.5 percent lowered the principal and interest payment by 25 percent.  This is a big deal considering housing is the biggest monthly expense for most Americans.  What is fascinating above though is look at how much more home a person can buy when rates drop.  At 6 percent, a $500,000 loan will carry the same principal and interest payment as a 3.5 percent mortgage with a balance of $667,500 (a price increase of 33 percent).

(2013) in full.  http://www.doctorhousingbubble.com/another-housing-bubble-forming-with-fed-low-rates/

 

Edited by Venger

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As a HPCer mentioned yesterday on a different thread; higher swap rates.

Interesting article.  Worth a read.

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This time?

I also keep my eyes on US Mortgage Rates, because of its wider importance, and find this the best sources.  Often daily updates.

Index:  http://www.mortgagenewsdaily.com/consumer_rates/

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Mortgage Rates Head Back Toward 4%
Oct 5 2017, 3:02PM

Mortgage rates moved higher today, bringing the average lender back near 4% in terms of conventional 30yr fixed quotes for top tier scenarios.  Most lenders were back in line with last Thursday's rates, which were the highest in roughly 2 months. 

In terms of day to day changes, nothing about the recent mortgage rate environment is terribly alarming.  It's only when you add up each day's movement over the past 3-4 weeks that things look a bit more serious.  During that time rates have risen as much as any other comparable period of time in nearly a year.  The biggest concern would be that "this time is different" and that instead of bouncing back down into a calm, narrow range that's prevailed for most of 2017, rates continue back up into the 4's.

more http://www.mortgagenewsdaily.com/consumer_rates/799571.aspx

 

 

 

There was a time in 2013 where there was a bit of freaking out in one article, with 30 year something like 4.6%, but it edged right back down quite quickly.

Turned out to be nothing (again).  Just another tease, then back to more HPI.

h/t HPC 'Willie'

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2013

Mortgage rates have had a far worse week than than you've been told anywhere else, and today was even more freakishly destructive than the previous two days. Taken together, this is the worst week for mortgage rates we have on record. Today is one of two times in the past 10yrs where the average borrowing rate for top tier scenarios moved up by at least a quarter of a point. A quarter of a point may not sound like much, but in terms of day-to-day movements in 30yr fixed mortgage rates, it's catastrophic. That leaves best-execution at a stomach-churning 4.625% today.

PLEASE UNDERSTAND, this is real. Freddie Mac may have been out yesterday with the industry's most commonly cited benchmark for weekly rate movements, but this is merely an average that's tallied through Wednesday. Thursday took rates another eighth to quarter higher and today took rates another quarter higher again. If you're a consumer staring at a rate quote in disbelief, or a Loan Originator who doesn't happen to be a member of MBS Live, please know that today's movements are very real and very justified based on the price movements in MBS.

http://www.mortgagenewsdaily.com/consumer_rates/313878.aspx

 

And San Fran is just powering to manic-manic prices.  Article of the other day, and comments.

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San Francisco housing still in manic phase:  Dump that is “uninhabitable” with fire damage has pending offer at $1.4 million.
2 Oct, 2017

Well being back in the Bay Area I realize once again how delusional people have become when it comes to chasing unicorn startups and all things real estate.  I ran into multiple people and it seems like everyone is talking about real estate.  Some of these people were showing me “deals” on apps like Zillow or Redfin on their phones.  “This place with some work can then be flipped in a month for a $200,000 profit.”  Why work when you can speculate on housing? 

.... http://www.doctorhousingbubble.com/san-francisco-uninhabitable-home-million-dollars-fire-damage/

 

 

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12 hours ago, Venger said:

"£450,000... yeah but look at low rate deal."  "We can attack the debt with low rate fix, throw excess savings at it, and pay down the debt during the fix years."

This seems to be the narrative for a few people now posting on here.  Like there's going to be a next leg up to the boom. People have become divorced from intrinsic worth and when rates rise it's going to be a blood bath.

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On 10/6/2017 at 11:23 PM, Maynardgravy said:

'...David Hollingworth advised anyone thinking of taking out a mortgage "not to hang around", as rates are likely to rise further....'

Twunt

aka. buy now or you are going to loose out.

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1 hour ago, LondonBooming said:

You are not the only one, I almost bought house in 2015 but we pulled out.

Me too. Placed offer on a house in Harlow in 2013 but thought its a bit overpriced and didn't go ahead.

It was 4 bed £345k at that time with HTB .

Later somebody bought it for £329k and sold it for £400k.

This is that house.

http://www.rightmove.co.uk/house-prices/detailMatching.html?prop=55472957&sale=34639599&country=england

Not bad, but if I had taken HTB loan, would have been in a bit of soup with increased equity which I would have to pay back to Govt.

It was built by Croudace Homes. One of the 2 4 bed detached houses in the development at that time.

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1 hour ago, Simhadri said:

Me too. Placed offer on a house in Harlow in 2013 but thought its a bit overpriced and didn't go ahead.

It was 4 bed £345k at that time with HTB .

Later somebody bought it for £329k and sold it for £400k.

This is that house.

http://www.rightmove.co.uk/house-prices/detailMatching.html?prop=55472957&sale=34639599&country=england

Not bad, but if I had taken HTB loan, would have been in a bit of soup with increased equity which I would have to pay back to Govt.

It was built by Croudace Homes. One of the 2 4 bed detached houses in the development at that time.

 

Well HtB loans work both ways sometimes government earns more money on the back of your sale sometimes losses. If you have a hpi that fine but imagine if the value of the houses drop let's say 20% or even more. Who;s gonna be one the hook for the payment - us a.k.a. taxpayers.

 

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1 hour ago, LondonBooming said:

 

Well HtB loans work both ways sometimes government earns more money on the back of your sale sometimes losses. If you have a hpi that fine but imagine if the value of the houses drop let's say 20% or even more. Who;s gonna be one the hook for the payment - us a.k.a. taxpayers.

 

yes its a disgrace...why is the UK government speculating in the housing market..?  Since when has this been the role of the state and a good use of tax payers money...I don't know why folks are more angry...I want out, I wish I paid attention in my Spanish classes at school !!!

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  • 297 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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