Mortgage Interest Rates

[JonB]

Hi all,

Just about to buy a house, but I'm trying to do some future planning.

I am fixing for 5 years at 3.79%, but what I'd like to know is what a typical interest rate from a bank was before the crash? I can find bank of England rates, but not what the banks were doing themselves.

Cheers.
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[Matt B]

You want the base rate?

https://www.housepricecrash.co.uk/graphs-base-rate-uk.php

7.5% in '97
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[BakesBeans]

A decade ago it was typically 1-2% more than the base rate. Don't ask me before the turn of the century though.

If you want it in a spreadsheet, some bright spark has done it here:
https://www.housepricecrash.co.uk/forum/index.php?/topic/40360-historic-interest-rates-historic-average/
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[arry]

I signed a 2 year fixed at 6.15% in 2007

[Ste]

[JonB]

if interest rates go that high. I may well be homeless.
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[Kickstart]

Hi

Another vote for being 1~2% above the BoE base rate. Varies a bit but reasonable rule of thumb.

High interest rates are possible. Base rate was ~15% shortly after I bought my first house (so mortgage rates a bit over that). Between 5% and 10% would be a reasonable guess though.

All the best

Keith
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[daemonoid]

Taking my lifetime as the start of time, up until the crash, almost 50% of the time the rates were above 10%

We've been in an unusual period of low rates, but I always work out my affordability based on 12%

Then again, after 5 years you'll probably be in a better situation so maybe don't worry too much.
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[_Will_]

[Polarbear]

I remember it at 17%. That was the worst I can remember since I first bought property. It didn't stay that high for long.
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[Copycat73]

[stevo as b4]

could bank interest rate charges rise as much as or more than 1% a year based on the current economy and the rate it may change however?

I think many people that are now paying 2-4% mortgage interest rates, would struggle to keep their home if it went up to 9-10% in the current climate, and with the rate of wage rises vs inflation.

I also cannot see 10% mortgage interest rates rates for the next few years, house building is still start/stop, uk industry is very sporadic and if you isolate London (weird little sub climate) then the rest of the uk, would not stand up to massive house price rises, or mortgage rate rises.

I think plenty of people would be throwing their house keys back to the bank/building society at 12% bank interest rates, and I also think that these same people don't really need to worry about doing so for the next 5years either!

[_Will_]

What people forget is from 0.5% to 1% is a 100% rise, so maxing out your budget on rates at their lowest point isn't prudent for future planning, so as stevo says, it would be repo city.
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[mentalboy]

Not sure what the deals are like nowadays, as I've been mortgage free since 2010, but rates very much depended upon how much hunting around you did and luck of timing. Between '92 and 2010 I had an cracking fixed rate deal for about two years and then found a lifetime below base rate deal that meant I paid pennies in monthly interest.
Three tips for a mortgage: Get one with flexible payments and put any spare funds at the end of each month into it. Never reduce your monthly payments, so if the rates rise and then fall keep your repayments at the highest rate they reach. When buying a new house don't extend the life of your mortgage, try and keep it's completion date the same as it was when you took out your first mortgage. (Obviously only do it if at all possible!!!)
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[Kickstart]

Hi

Base rates back to 1975 are here:-

https://www.bankofengland.co.uk/boeapps/iadb/Repo.asp

The rate was 14.875% for a year from October 1989.

Odd situation was that interest rates were pushed up then due to inflation, a large part of which was house price inflation. That is something that doesn't seem to bother those setting the rates any more.

All the best

Keith
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[JonB]

Thanks all.

I'm just stress testing. Reckon I could get by at 9-10%.

It'll be interesting to see where we are in 2020...
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Be careful whose advice you buy, but, be patient with those who supply it. Advice is a form of nostalgia, dispensing it is a way of fishing the past from the disposal, wiping it off, painting over the ugly parts and recycling it for more than it?s worth.

[Omega]

I don't see it going to 10-15% in the near future because of the number of people that wouldn't be able to afford it. Houses are bought at the limits of what people can borrow now rather than what they can really afford or what the houses are worth. It wasn't quite the same when interest rates were really high in the past. 10% interest then might have meant finding an extra £250 per month maybe? Now it would be more like £1k.

I'm happy sticking with my mortgage capped at 2% above base rate. Saving up separately for if the shit hits the fan.

[Itchy]

[Itchy]

[Matt B]

[Polarbear]

[J4mes]

We're about to remortgage from 4.24 to 2%, making the payments £250 cheaper a month. It also has unlimited overpayment, meaning that the £300 a month we have been overpaying now becomes £550 a month. Taking our 30 year mortgage down to 15. Well that's the plan anyway!

Get it paid off... Because then no cunt can take it off you.

[Kickstart]

[mentalboy]

Agree with Keith there, I think interest rates were at 10% when I bought in '92, higher again when my parents bought back in the 70's.

Interest rates don't just stop because the gov't/ housebuyer can't afford them. If you don't get a fixed rate mortgage then you are basically playing the stockmarket like everyone else.
Government obviously doesn't want to see huge fluctuations in interest rate movements but they only have a minimal input on these things, the market decides whether to screw you or not (and don't forget that YOU and everyone else are the market - participate in their games and you have to pay the consequences!)
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[Phoenix]

It's not really possible to predict what the base rate is going to do, the base rate is altered in response to the economy and to try and manipulate inflation/deflation rather than help or hinder home owners mortgage payments but as mortgages and savings are the only real things that most people see affected by base rates changes they think that base rate policy is heavily steered around the mortgage conditions.

Before the recession the base rate was between 4.5-5%, a good fixed was available at between 5-6% I got 5.05% for 2yrs back in 2006 which was only 0.2% above base rate, deals were good back then and lending rules were slack, hence the problems.

You'll find when you go for a mortgage now it's not like it used to be (or shouldn't be), they will actually stress test your payments against future rate rises to see what you could absorb before problems arise. Base rates will only go up from here and of course mortgage rates will follow so you need to expect to be paying a lot more in the future and if you go on a variable or tracker then this may affect you gradually but if you fix for a long time you could be in for a bit of a shock to your finances in 5 years time. As long as you expect it and monitor things then you should be ok.

I see no problem in fixing at that rate for a few years but check the lenders standard variable reversion policy, how it tracks the base rate and if it has any caps/collars as if rates are high when you come off the fix then you could end up on the SVR for a while if there's no good deals around at the time or you can't afford to switch so you want it to be a good one.