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Why are 30yr fixed rate mortgages 7% and up so massively from just a few years ago? Shouldn't the interest on the mortgage be about the expectation of average i

Why are 30yr fixed rate mortgages 7% and up so massively from just a few years ago? Shouldn't the interest on the mortgage be about the expectation of average interbank rates for the coming years, plus some margin? Sure interest rates shot up recently, but did banks go from believing we'd have 3% long term average to 7%? My mortgage (not UK) are just fixed in various parts on various semi-short terms (3 months, 1year, 3 years etc). The shortest ones are basically the current interbank rate plus 1%. The 3 year one is the banks expectation of interest over 3 years, plus a small margin and so on. For 10 year or longer the current rates are 4%. Why are interest rates so much higher for mortgages in the UK, despite often demanding longer fixed terms? Is the risk massively higher? (My loan uses the home as collateral but also future income, meaning if the home becomes worthless I'm still on the line for repaying the lone for as long as it takes, I can't just leave the keys and let the bank eat the risk).

ta1243 2y ago
There are no* 30 year fixed rate mortgages in the UK. The typical one is 5 years. I renewed last September for 5 years at 4.49% with about 80% LTV. The problem buying a house for me was always getting the deposit together while paying rent. Most people in the UK seem to rely on gifts from parents. * very few -- there are some very specialised brokers
- alkonaut 2y ago
  Ok. Weird that there is such a lot of talk about the 30yr mortgages if no one has them. I'd also be completely unable to afford the deposit for the home I own now (£500k loans at 80% LTV or so). The key was of course buying a small flat, selling that, buying a larger flat with the profit from the first as deposit on the next, selling that. The "income" in terms of property value increase from these month over month for 20 years was almost constantly higher than what I made working each month. If I didn't have the past trades behind me, I'd be renting to my grave. There is zero chance I'd even begin saving for a £100k deposit. It would be 100% of my fun/vacation money for ten years at least.
  - ta1243 2y ago
    This is a story about the US market.

ta1243 2y ago

There are no* 30 year fixed rate mortgages in the UK. The typical one is 5 years. I renewed last September for 5 years at 4.49% with about 80% LTV. The problem buying a house for me was always getting the deposit together while paying rent. Most people in the UK seem to rely on gifts from parents. * very few -- there are some very specialised brokers

alkonaut 2y ago
Ok. Weird that there is such a lot of talk about the 30yr mortgages if no one has them. I'd also be completely unable to afford the deposit for the home I own now (£500k loans at 80% LTV or so). The key was of course buying a small flat, selling that, buying a larger flat with the profit from the first as deposit on the next, selling that. The "income" in terms of property value increase from these month over month for 20 years was almost constantly higher than what I made working each month. If I didn't have the past trades behind me, I'd be renting to my grave. There is zero chance I'd even begin saving for a £100k deposit. It would be 100% of my fun/vacation money for ten years at least.
- ta1243 2y ago
  This is a story about the US market.