Handle9: IMO there’s at least another hundred basis points (1%) of OCR increases coming in the next 12 months. It could well be more. We are coming away from the bottom of the interest rate cycle and I doubt it will get that low again in the next 30 years. I was paying over 10% around 2008-2009, admittedly on a relatively small mortgage.
It’s always painful when you start a mortgage. Inflation makes it easier as you go. You get salary increases, you get used to paying your mortgage and managing your finances. It’s pretty challenging at the start though.
That is why I can't understand why banks were willing to stress test at relatively low levels. I heard some banks were stress testing at between 5-6% when the rates dropped to the lows over teh last few years. When it is entirely possible interest rates could go well over 6%. Even 6% is low historically. If banks had been required to stress test at more normal levels, I don't think house prices would have risen anywhere near as high. IMO it could be a slow car crash situation. A lot of people seemed to think that house prices wouldn't drop, due to a lack of supply. But we now have more houses on the market than there have been for a long time, and houses aren't selling . Agents are dropping prices everywhere and I have never seen so many prices dropped. Many of the ones on my own watchlist have dropped.