Uh oh...
http://news.sky.com/story/1185078/mortgage-misery-for-millions-if-rates-go-up
And
http://news.sky.com/story/1185319/christmas-debts-wont-be-cleared-until-june
full of festive joy aint you 😕
'Bout time.
Always been ready for the return of the 13% plus interest rate, now that was pretty tough.
What a dull/boring thread 😉
This is why there are no flashy cars on the drive at trail rat towers.
Just looking at remortgaging atm.... Runs out in march. Unless things show real signs of picking up rather than speculation ill stick on my svr till last minute.... One things for sure boe would be foolish to ramp rates up .....although it might realign the markets all it will do in reality is make for a huge crash- thats the last thing boe/gov want .....and will cause mass unemployment and a cut in our growth - dont be dissilussioned our apparent growth and cut unemployment comes largely from the fact that the building industries going insane right now.
return of the 13% plus interest rate
I can remember a period of my mortgage between 18% to 25%. Now that was tough!
The clue was buggerallpercentintrestrates............it was never going to get cheaper. *reminices about 15% interest rates....them were t'days. We 'ad it tough, lived in a septic tank etc,etc*
The Bank of England will only begin to consider to put up interest rates when unemployment drops to a certain level.
http://www.bbc.co.uk/news/business-23588958
No idea how close we are to this level mind.
teamhurtmore - Member
The recent numbers that concern me more related to household debt. According to last week's FT1/3 of all mortgage debt is held by households who have borrowed more that 4x their income
1/6 is held by households who have less than £200 left a month after spending on essentialsSo if current UN trends carry on and go <7% poss in 2014 and interest rates start to rise, there are lots of very vulnerable, indebted people out there. Good job one of our main policies is not to encourage them to take on more debt at the moment - oh wait a minute????? The current upturn is being driven by consumption and housing - incredible!?!?
If we want to attack the coalition, this seems far safer ground to focus on.
From several days ago - you heard it here first!
I guess not a popular view, but good. Fed up with no interest on our savings, paid mortgage, so bring on 10%.
Sorry.
Paying off the last bit of our mortgage in about 6 months hopefully - not to be celebrated though as it's tied to my Mum passing away 3 weeks ago 🙁
The BoE have clearly stated that they wont even consider raising interest rates until unemployment falls below 7%.
Current predictions are that this will be late 2014/early 2015. Even then other factors will be considered and base rates would only increase to 0.075%
Any increases will be at a slow level as to help people with there high debt levels, but I wouldn't envisage base rates to reach 5% anytime before 2020
I bet it was the EU and they're health & safety laws.
I bet it was the EU and they're health & safety laws.
apparently Romanians borrowing heavily to buy gas barbeques to cook swans were responsible for the sub-prime crisis, theyve had to resort to burning Lady Di tea towels since the banks clamped down on them.
richmars - are you an idiot? Even a selfish person would realise the fallout of interest rates that high would cause more damage for them than good.
I don't have a mortgage and would be happy with % or 2 above inflation.
Is it my imagination or was the gap between base rate and the standard mortgage rates you could pick up much smaller back in 2004/5/6 than it is now?
When mortgage rates do go up that's when middle England will realise we have been in a recession. Most of us have seen pay rises (if any) significantly below the rate of inflation with utility and food bills going up but not really felt it as our mortgages have been quite cheap. With mortgages back to 'normal' the real cost will be far more apparent.
Is it my imagination or was the gap between base rate and the standard mortgage rates you could pick up much smaller back in 2004/5/6 that it is now?
Yes. The mortgage market was much more competitive than it is now, so banks were willing to run at a lower margin to win business.
Lower than 80% LTV expect to pay 2.5% above base rate
[i]Is it my imagination or was the gap between base rate and the standard mortgage rates you could pick up much smaller back in 2004/5/6 that it is now? [/i]
I had mortgages 1985-2012 and it was always smaller, usually about 1% for your average mortgage. Although we got lucky (or can choose well) and for the last 5 years and had a mortgage at base-rate.
[i]Yes. The mortgage market was much more competitive than it is now, so banks were willing to run at a lower margin to win business.[/i]
Not sure I agree that was the reason, when I got my first mortgage we'd only just had Big Bang and previously my folks had to practically beg for theirs (or be 'known' to the Bank Manager) and they never paid over 1% 'margin'.
Yes. The mortgage market was much more competitive than it is now, so banks were willing to run at a lower margin to win business.
Not really - the problem is that although interest rates are low the are artificially low so that if a bank borrows money it has to pay a lot more than the BoE base rate so it's the margin on this that gives the profit not the margin over the base rate.
mudshark - Member
richmars - are you an idiot? Even a selfish person would realise the fallout of interest rates that high would cause more damage for them than good.
Not true at all. At the moment, interest rates are being kept artificially low in a deliberate policy of mis-pricing risk. Yes, in the bastions of capitalism across the world, unelected banks are distorting markets and stealing off those running surpluses (savers). If that was not bad enough, this is resulting in many who are running deficits (borrowers) behaving in a way that they cannot support (a return to consumption) and inflation and distortion in asset prices. The same behaviour that we saw in the build up to the crisis. Who are the idiots?
This is a polite way of saying stealing off those who have surplus savings. This is being done to fuel consumption by many who are not in a position to finance that consumption.
So we should have low interest 'for ever' so the fools who over extended themselves can pay of their debts?
Who's the idiot?
Mortgage you say..
I say what mortgage 😆
A rate of 10% when inflation is 2% or so is not sensible right?
Imagine all the repossessions and job losses what do think that would do to the value of your assets?
Blatant Christmas scaremongering from Sky.
Bank of England reminded us last week that interest rates won't move until unemployment drops below their target (7.5% ?) and that looks some way off. We are going to have low rates for some time yet. Mortgage rates are quite high relative to bank base rate (due to increased borrowing costs for banks and cost of new regulations) so there may not be a rise in mortgage rates equivalent to a change in base rates.
edward2000 - Member
The Bank of England will only begin to consider to put up interest rates when unemployment drops to a certain level.http://www.bbc.co.uk/news/business-23588958
No idea how close we are to this level mind.
It dropped to 7.4% this quarter apparantly. However, there's a strong suspicion that this number is reduced by a rise in part time workers to support the Christmas period, and post 31/12 it may well go up again.
Not my research, a report from BBC news last night.
The housing market is effectively now being taxpayer subsidised. This government came in saying the economy needed to be rebalanced. They then printed billions and gave it to the banks for them, not to fund any [i]actual[/i] economic growth, but to artificially inflate another housing bubble, by fuelling demand and doing nothing about supply
But hey, property owners can now get limitless credit again, to buy shit they don't need, as they borrow against their newly recreated ever-growing equity. And we shall label this an economic recovery !
What could possibly go wrong?
Anything which gets house prices back to a level where people on average earnings can afford to buy has got to be a good thing.
Putting up interest rates is going to result in more people being able to buy a house?
Need to build more for that, not sure how the SE will look in a few decades time but not as green as now that's for sure.
Richmars = I'm alright Jack
With house prices being what they are, any average working family on average wages has had no choice other than to overextend themselves if they want their own home.
Putting up interest rates is going to result in more people being able to buy a house?
Being able to borrow huge amounts cheaply is driving up prices to unreachable levels.
Too much money chasing too few goods - classic inflation.
when I got my first mortgage we'd only just had Big Bang
**** me that's a long mortgage 😯
brooess - so we need to build more right? Not that I want that particularly living in the frickin' over crowded SE with more and more people wanting to live here. Road riding's gonna become an extreme sport.
So whats your solution then mud shark ? Logans run approach to overcrowding ?
Or chinese 1 kid restriction.
Good luck in utopia.
brooess - so we need to build more right?
If you think building more will reduce house prices you're as much as an idiot as I am.
The whole thing is a mess. Most of my friends in their 30s earn good money (rich if some numpties are to be believed) they've had to stretch themselves massively to get on the ladder as they didnt benefit from the equity increases others are happily banking. A lot of them have zero savings and no pensions. They simply don't have the spare cash after bills. Those slightly younger than us are still just getting on the ladder by mummy and daddy giving the the dose (basically the equity from their inflated house) this will work for a generation, but not the next.
People will be dying in work, dying still owning a mortgage. I think the future for a lot of people is looking pretty grim. There is very little they can do about it, which I think is encouraging the **** it attitude to spending. I know a couple of my friends plans for retirement is to hit state pensionable age penniless and live of benefits, both think they won't even get that far....
Dt78 - certainly true for alot of my peers .
Neither of our parents were in a position to help us out , i made a big sacrifice to get our first house. I basically gave up racing just as i was coming into my prime to go work abroad for 2 years and saved as much as i could to get a house. A house we dont intend to move from unless work forces us. - no ladder for us. I does get a bit tiresome when coleagues make digs at our parents having had to have helped pay for the place because it isnt a flat in town like most young folk buy for their first house..... We noticed 2 bed flats in town were similar prices to 3 bed semi detached houses on the edge of town so decided not to bother with a flat....... My parents have helped but it wasnt in money. My dads provided labour skills advice and teaching for us to renovate the place.
What i have also noticed is that "we cant save because of the cost of renting" brigade in my peers mostly have the best of phones and modern prestige cars because "its only xxx a month to have them ...."
I know a couple of my friends plans for retirement is to hit state pensionable age penniless and live of benefits,
They do realise that today's benefits won't be available to them when they get to that age? Too many old people and too few young to pay those kinds of amounts.
This decision is being forced by simple demographics... expecting to live off a state pension in 20 years time = penury
What i have also noticed is that "we cant save because of the cost of renting" brigade in my peers mostly have the best of phones and modern prestige cars because "its only xxx a month to have them ...."
See it all the time. It would be interesting if cars had a cartoon bubble on the top indicating how much debt was left on them as they drove around.
Well thank god mine will be fixed for the next few years then 🙂
They do realise that today's benefits won't be available to them when they get to that age? Too many old people and too few young to pay those kinds of amounts.
I suspect it will be available to those that need it but those who've saved will get not a lot. Anyway, policy seems to be to grow the population through immigration so that the working population will increase, unfortunately this just puts more pressure on house prices. So no alternative but to build more hence the planned change to the greenbelt around London.
if you borrow money you have to pay it back.. its fairly simple.. borrow more than you can afford and thats only one persons fault..
Hope to pay off my mortgage before the New Year - bank holidays and the Royal Mail permitting. A big relief after 25 years. Don't envy folk who have just started on the property ladder.
Well there is only one way that interest rates can go. Up. Although it doesn't seem that they will be going up any time too soon.
A rapid rise in interest rates wouldn't be good for savers or borrowers. Not good for savers since it would probably come with inflation and hence you are relatively not getting more money back.
[i]Don't envy folk who have just started on the property ladder.
[/i]
This, because for all the 'it was just as hard in my day', it wasn't if you now look back.
I bought my first house nearly 30 y/o when earning an average wage, you couldn't buy the same house now earning averages wages.
Interest rates were lowered in theory to boost the economy. However the real reason was to boost banks balance sheet. Base rate is 0.5% but banks have added a large margin on top of that when compared to pre crash. Now banks are turning a profit, interest rates may well go up but in turn banks will reduce their margins. So in short, calm down it'll be OK.
...banks will reduce their margins. So in short, calm down it'll be OK.
Possibly a bit niaive....
Until house prices drop back towards 3.5 times per average income this is only going to getworse. Lowering the interest rates hasn't helped. There probably is a shortage of hoysing in the country but that is not what caused house prices to rocket out of control. Easy credit did that and low interest rates are part of it. The housing market isn't your usual supply and demand situation, access to credit is what sets the prices, not the cost to build or availability. Lenders cap what they want to lend to 3.5 times avedage salary, average house price will be around 3.5 times average salary (probably a bit higher due to inheritance etc skewing the figures), remove the cap or make it 6.5 times and the average pricegoes to 6.5 times. Bottom line is same people are in the same house having paid a lot more. The only winners are people downsizing / inheriting and the banks, everyone else sees more of their income go on rent and mortgage.
Trouble is to get out of the mess will crucify a lot of people a second time who have bought in the last 10 years as they end up in negative equity.
More houses isn't the full answer either, there will never be enough desireble housing so whilst people can borrow too much the value of the houses many people aspire to will be silly expensive.
Go azeri on the issue ....
25% max mortgage . 15-25% interest rates( high savings rates too though)
2 bed appartment in central baku 200k ......
Takes a while for average waged average person to buy a house there....
Its not helped by the lenders getting bigger returns on bigger loans. Expecting the banks to sort it out is daft.
Possibly a bit niaive....
Not really. Banks are in the business of lending money. If individuals and businesses can't afford to borrow at a given rate they will need to make it affordable right ? Furthermore repossessing property is not a good way to make money. It would make no sense for banks to bloody mindedly keep margins at 3-5% if by doing so they get hardly any business.
Good point longj - i guess 3% profit on lots of money is better than 8% on not much money.