Interest rates

[Corradobrit]

BOE hiked 0.5%

Politician's syllogism

Still less than 8.7% I was paying in the mid 90's in the USA. Talk of bailouts and subsidies makes me real angry.

 

[larrylamb]

As my builder said last week " we are an island that's only getting busier and busier, why would prices drop"

 

[larrylamb]

I started off in a 2 bed flat and a banger, starting out now in my area people demand detached, 3 beds min, 2 baths etc. and parking for the new leased car.

 

[Wildcamper]

Still less than 8.7% I was paying in the mid 90's in the USA. Talk of bailouts and subsidies makes me real angry.

In the 1970s I was paying 17 or was it 18%! This on a salary of £1333/year!

 

[willwander]

We’ve owned our house outright since 2015 and only debt is on the Van, but that’s on a 5 year PCP at 2.8%. If inflation cannot be controlled, we’ll be paying off the balloon payment in devalued pounds. Thank you VW finance, I’ll be forever grateful.

Inflation does decrease the real value of debt especially government debt. Which is nice. I think.

 

[willwander]

I started off in a 2 bed flat and a banger, starting out now in my area people demand detached, 3 beds min, 2 baths etc. and parking for the new leased car.

Hmmm, there may be a few millennials having second thoughts about that leased Tesla

 

[2into1]

I started off in a 2 bed flat and a banger, starting out now in my area people demand detached, 3 beds min, 2 baths etc. and parking for the new leased car.

Whilst taking many exotic trips every year (in the case of my OH's late 20 somethings).

 

[Corradobrit]

Just be thankful you don't have property in Turkey. Gov as just set interest rate at a whopping 15%

 

[RockinNRollin]

Whilst taking many exotic trips every year (in the case of my OH's late 20 somethings).

I started off in a 2 bed flat and a banger, starting out now in my area people demand detached, 3 beds min, 2 baths etc. and parking for the new leased car.

This is exactly the problem; people living beyond their means. It's all very enjoyable until your circumstances shift even very slightly, then it becomes completely unsustainable.

 

[Amarillo]

Due to the number of people already on fixed rate, their may be a lag between now and house price crash, recession and doom. Of course it may not happen at all. There may be a long period of choppy churn, where as some default, others buy the dip, this and lack of supply, moves prices sideways. Who knows.

Thankfully we are mortgage and debt free. Feel so fortunate to only have crippling inflation eroding our income, savings, and future pensions.

You raise an interesting point.

In 1990 when I took out my first mortgage, fix rate periods were a rarity.

Does the way the banks push people onto fixed rates subvert the BoE’s tool of raising interest rates to cool the economy?

I was mortgage free in 2004. I then mortgaged my flat in 2011 to raise the deposit for my house, borrowed for the house and ended up with both a flat and a house.

 

[Mansfieldman750]

You raise an interesting point.

In 1990 when I took out my first mortgage, fix rate periods were a rarity.

Does the way the banks push people onto fixed rates subvert the BoE’s tool of raising interest rates to cool the economy?

I was mortgage free in 2004. I then mortgaged my flat in 2011 to raise the deposit for my house, borrowed for the house and ended up with both a flat and a house.

Absolutely. When most mortgages were variable rate, interest rate changes affected mortgages straight away.
Now there can be a 5 year delay. I believe 5 year fixes are the more common than 2 year now.

 

[willwander]

Just be thankful you don't have property in Turkey. Gov as just set interest rate at a whopping 15%

Turkey's interest rate up 6.5% in a single day. Bonkers inflation rate, bonkers president.
They do however benefit from cheap dentistry.

 

[willwander]

Just be thankful you don't have property in Turkey. Gov as just set interest rate at a whopping 15%

...or in the Netherlands. The Dutch are introducing rent caps, they've also proposed a new housing act where you can only sell your home to low and middle income groups, forcing you to accept a lower price than market value.

 

[RockinNRollin]

...or in the Netherlands. The Dutch are introducing rent caps, they've also proposed a new housing act where you can only sell your home to low and middle income groups, forcing you to accept a lower price than market value.

Wow, that's quite a position to take. Is that across the board on all property, or ring-fenced to certain price brackets?

 

[willwander]

Wow, that's quite a position to take. Is that across the board on all property, or ring-fenced to certain price brackets?

I believe it's ring-fenced to some degree.

 

[soulstyledevon]

As my builder said last week " we are an island that's only getting busier and busier, why would prices drop"

That’s why he’s a builder and not a banker.
When property becomes unaffordable, as it’s getting. The market starts to shrink and prices drop.
How do nurses or firemen get on the property ladder with their salaries…?

Eventually the trickle down, effects all.
Doesn’t what part of the market you’re at. Mortgage approvals down month on month, property exchanges slowing.
There’s only one way for this market to go now.

 

[Mansfieldman750]

That’s why he’s a builder and not a banker.

That’s the best first line ever

 

[Corradobrit]

That’s why he’s a builder and not a banker.

There are more than a few bankers who shouldn't be bankers.

 

[Amarillo]

FTSE down to 7500. A good day to top up S&Ss ISA.

 

[Lambeth Cali]

We now have to pay 3 ‘large’ monthly bills.
Our mortgage. Our pensions. And save for a very large deposit for our 2 children who are currently 10 and 13yrs. They’re going to need it. I can’t imagine having 3 or 4 children.

I’m a relatively old dad (42 yrs older than my son) but if I live to my optimistic 90 then my son would be 48 when I die. And I read a statistic the other day that 1 in 5 women will live to 95yrs, which would make him 58 when my wife dies and he inherits half our worldly goods. They can’t wait until then so will need maybe £50k each minimum for deposits. Yikes.

 

[The Tall Luthier]

Am I reading the last few dozen posts wrongly or is it littered with old gits, in comfortable houses that have a damn sight more equity than their repayments have ever earned them?

…..Having zero compassion for their children and grandchildren that have paid through the nose for small houses on many many multiples of their earnings.

Hopeful that they can afford the massive percentage of their tiny salaries, that haven’t risen in real terms for twenty years.

Banking on the fact that interest rates, that have not really moved since 2010 at 0% don’t do anything too silly?

Many of these same people complaining about the effect these changes are having on their tenancies. All because they had 15% rates on their houses that they bought for £18,000

Or have I read them wrong?

 

[Mansfieldman750]

Am I reading the last few dozen posts wrongly or is it littered with old gits, in comfortable houses that have a damn sight more equity than their repayments have ever earned them?

…..Having zero compassion for their children and grandchildren that have paid through the nose for small houses on many many multiples of their earnings.

Hopeful that they can afford the massive percentage of their tiny salaries, that haven’t risen in real terms for twenty years.

Banking on the fact that interest rates, that have not really moved since 2010 at 0% don’t do anything too silly?

Many of these same people complaining about the effect these changes are having on their tenancies. All because they had 15% rates on their houses that they bought for £18,000

Or have I read them wrong?

That all seems a bit garbled to me so I’ll work through it paragraph by paragraph.

1. I am 70 so yes an old git, a boomer in the the modern parlance. Comfortable house ? Normal 4 bed in Mansfield. I suppose we should downsize and free it up for a young family but you know what, we like it here and we can‘t be bothered moving.
More equity than we deserve ? Well yes I suppose. House prices kept going up. I suppose we were born at a good time, couldn’t help it.

2. Zero compassion for our children. Resent that, we love our children like most parents.

3. They are not on tiny salaries. One is a GP, certainly as a junior doctor she was poorly paid but now it’s ok. Her brother is an accountant and his partner is a schoolteacher so yeah, doing ok. No grandchildren, we live in hope.

4. They both have mortgages and fully understand that 0% interest rates could only go one way.

5. I don’t have any tenancies. I have a house and I live in it.

Now can I turn the table and ask you :

Do you own several properties ?

Are the interest rate rises getting to you ?

 

[subthree]

Just be thankful you don't have property in Turkey. Gov as just set interest rate at a whopping 15%

And Erdogan gave the public sector a 45% pay rise just before the election. Inflation is officially 42%, but in reality far, far higher.

 

[CLTB]

Yeah this is the quandry and I guess is exactly what the BoE are hoping for! I am paying for the Cali in cash so even doing nothing with that money will return ~£3.5k a year in interest if I leave it sitting in a savings account…that’ll get me a fair few weekends each year in a hire Cali.

On the flipside, tomorrow isn’t promised to anyone and I have two young kids; likelihood is that by the time I’ve paid off the mortgage they’ll no longer want to come away with their old man and we’ll have missed out on years of spontaneous memories. I was never fortunate enough to do anything like this with my Dad much as I would have loved to. I do have some contingencies which will offset a future increase in the mortgage rate, most significantly I’ll have shed about a grand a month in childcare costs by next renewal so hopefully won’t be any worse off a month unless the rate keeps climbing, but will obviously need to keep paying my mortgage for longer in that scenario.

Problem is mortgages and finances are pretty quantifiable, even amid all the uncertainty. It’s much harder to put a price on memories and experiences. For all I know I may never see the end of my mortgage term, even if I overpay as much as I can!

Our view is be sensible but you have to live for today as well. We have a little one and have prioritised enjoying the Cali with him while he wants to be with us at weekends. At the same time we are careful on other costs to keep a balance. The Cali is clearly a big luxury but so long as having it isn’t creating any financial damage it might be the luxury to have.

 

[willwander]

Am I reading the last few dozen posts wrongly or is it littered with old gits, in comfortable houses that have a damn sight more equity than their repayments have ever earned them?

…..Having zero compassion for their children and grandchildren that have paid through the nose for small houses on many many multiples of their earnings.

Hopeful that they can afford the massive percentage of their tiny salaries, that haven’t risen in real terms for twenty years.


Or have I read them wrong?

You read them wrong