What would you do if Interest Rates were 18%

Cat695

themanbearpig wrote: »

I'm fairly certain that rental prices will not rocket if interest rates climbed to a high level. Simple supply-demand economics really. Rental prices have historically remained stable, and will continue doing so. Prices cannot suddenly be forced up without huge numbers of tenants either not paying, or moving out into a property which isn't so highly geared.

The tenants will not bail out the landlord because he can't meet his payments, that not a part of the deal. In this scenario, the landlord would have to either sell the property, or find another source to cover HIS debts.

I don't know the figure but how many LL DON'T have a mortgage on the property that they let??? the more demand means they can raise the prices.....thats how it works surely

If people can't buy(because interest rates are so how) they will rent therefore raising prices.......BTL LL still have to pay the mortgage....the renter pays the mortgage

Gorgeous_George

IveSeenTheLight wrote: »

I'd be fixing my mortgage long before it was at 18% and putting all my money into savings

Seems the obvious mitigation plan but did Icelandics get sufficient time to put the plan into action? Would we be any different?

Are Icelandics a nation of homeowners? If so, how are they coping?

Personally, if I couldn't fix, I'd pay off my residential mortgage and expect the rent to cover my small BTL mortgage.

GG

thriftybabe

Would love it as have no mortgage. My savings would be great and would not need to go to work!

MRSTITTLEMOUSE

It would'nt bother me.I fixed at the end of 2007 for the rest of my mortgage.
I think we could all see trouble coming then and I was'nt going to risk the high interest rates we have a chance of seeing in the future.
I've seen it happen all before and was'nt going to risk it.

cupid_s

Mine would be about £760 a month so easily affordable especially considering I could expect about £300 interest on my savings if rates were about 18%

[Deleted User]

tirano wrote: »

The central bank of crisis-hit Iceland kept its key interest rate unchanged on Thursday at a record 18%

Would you be able to cope with that, £1500 monthly interest on a £100,000 mortgage !!

what would i do?i`d do exactly what i did when they were 18% get on with it

[Deleted User]

thriftybabe wrote: »

Would love it as have no mortgage. My savings would be great and would not need to go to work!

if history is anything to go by,if interest rates were 18% then inflation would be 20/21% giving you a net loss of 3% on your savings

clobber_2

Cat695 wrote: »

but would you be rubbing your hands if your rent shot up to pay the LL mortgage?? (thats if he/she has a mortgage on the house and if you're renting privately)

I'd move! I'm not so attached to my flat that I wouldn't drop it like a hot potato if he tried that one, and there is a glut of empty two-bed flats round here so he would be bloody stupid to try it.

If I was attached to the flat I would challenge any unreasonable rent rise, they can't just double the rent because they made a bad financial decision

IveSeenTheLight

Gorgeous_George wrote: »

Seems the obvious mitigation plan but did Icelandics get sufficient time to put the plan into action? Would we be any different?

Are Icelandics a nation of homeowners? If so, how are they coping?

Personally, if I couldn't fix, I'd pay off my residential mortgage and expect the rent to cover my small BTL mortgage.

GG

True, but talking personally I'm looking to fix at the end of the year on both my BTL's for 5 years. Without changing any payments, currently they are cleared in 8 years, but I am aiming to ramp up and clear by the end of the 5 year fix.

Do I think interest rates willl ramp up before the end of the year? No
I'm actually hoping the drops slow down so that there is a chance that the interest rates are the lowest by the end of the year

If I do manage to fix at the end of the year, then I have absolutely no concerns over interest rate increases :T

Gorgeous_George

My BTL tracker is now 1.89% for the life of the mortgage. I'm not sure I'll see a reasonable fixed rate that will tempt me away from my tracker.

Good luck.

GG