What Interest Rates Percentage Are People Factoring In When Planning To Bu

geoffky

When you are buying or planning to.What percentage of interest rates are you using to plan for future affordability... i would reckon if i was not paying cash i would be using around 8.5% at least.. or do some not even do it?

mewbie_2

Is it 18%? - lol.

lil'H

I'm going to pay mine at 8% rate from start, although fixed at a lot less. I expect them to go much higher, but hoping and praying that when my fixed ends I'll a) fix again at reasonably low rate or b) the overpayments i'll have made will conteract rises above the 8% or c) i'll be screwed!

novazombie

Why so much?

Rates are like 4% over base at the moment base is like 1%.

The reason gov drasticaly dropped the base rate is because we are so deep in sh.t right now, are you expecting things to get better any time soon?

The only way base rate will go back up is if things get better, I cant see that happening this generation.

If they raise the base rate even though things are getting worse it will mean devastaing consiquenses. Repo`s will be happening in every street in the UK!

abaxas

novazombie wrote: »

Why so much?

Rates are like 4% over base at the moment base is like 1%.

The reason gov drasticaly dropped the base rate is because we are so deep in sh.t right now, are you expecting things to get better any time soon?

The only way base rate will go back up is if things get better, I cant see that happening this generation.

If they raise the base rate even though things are getting worse it will mean devastaing consiquenses. Repo`s will be happening in every street in the UK!

It depends what happens in the near/mid term.

If as expected we go grovelling to the IMF we will probably lose the ability to set out own rates. If inflation has kicked in by then, expect much higher rates.

A currency crisis could also put rates up as the effect of rising import prices could effect people more than higher borrowing rates.

In terms of the OPs question. You should be able to exist on a rate of 0-10% as this is the historic norm. No point planning for higher as you'll have more pressing things to worry about by then. Eg food and warmth.

Dithering_Dad

If you're worried about 8% interest rates, then why not get a 5 or 10 yr fix at 5%? You can then use the other 3% to pay into a pension, build up your emergency savings or to overpay your mortgage.

Hurry up and buy though, because if !!!!!! is right, we'll be having hyperinflation in a couple of years and interest rates will be at 18%. If !!!!!! is right, mind.

beingjdc

I think we might be in for an extended period of low rates. Personally to buy, all else being equal, I'd want somewhere that made sense at long-term rates of between 6 and 7%.

Dithering_Dad

beingjdc wrote: »

I think we might be in for an extended period of low rates. Personally to buy, all else being equal, I'd want somewhere that made sense at long-term rates of between 6 and 7%.

No, !!!!!! has said hyperinflation in a Zimbabwe stylee. You should be looking at interest rates at 15% to 35%.

You're kidding yourself if you think different.

carolt

I'd only be looking to buy with a long-term fix - 10 years minimum - given what I think of global economic stability at the moment, and the likelihood of it being sorted out speedily.

I was offered a 5.49-5.69% for a 10-15 year fix a couple of years ago, so that's what I base my calculations of affordability on. Difficult to come by right now. Obviously, if the long-term fixed rates were higher, I'd factor that in to my calculations as to how much I'd be prepared to offer - and it's the final monthly figure versus my rent which is the deciding factor.

So I don't think you can view rates in isolation - high rates usually make for cheap prices, so for some on here, high rates might mean they can buy outright without needing a mortgage at all!

mbga9pgf

Fixing for 10 years, then planning to pay of remainder lump sum at the end of the term.

Currently 4.87% with britannia BS (40% deposit)

http://www.britannia.co.uk/home/mortgage/fixed/10_year/index.html

carolt

mbga9pgf wrote: »

Fixing for 10 years, then planning to pay of remainder lump sum at the end of the term.

Currently 4.87% with britannia BS (40% deposit)

http://www.britannia.co.uk/home/mortgage/fixed/10_year/index.html

Sounds good - but the average buyer hasn't got 40% equity, especially in these days of falling prices, I think.