Interest rates

mewbie_2

whathavewedone wrote: »

A friend of mine earns 70k, her oh earns 100k, they bought a 950k house in 07 with a 10% mortgage, interest only - works out at about 4k per month.

Sometimes you can only marvel at

1. People's stupidity
2. How much stupid people get paid.

No offence meant.

whathavewedone

I know.

I'm just as stupid though as I was REALLY jealous at the time when I saw the photos of the house. It is mad money for a 3 bed house though, even if it is gorgeous and in a great location.

I'm not jealous any more. In fact every time I worry about negative equity I think oh well at least I'm not in so and so's position...

Thrugelmir

mewbie wrote: »

Sometimes you can only marvel at

1. People's stupidity
2. How much stupid people get paid.

No offence meant.

and people are forecasting house prices to recover :eek:

ad9898_3

whathavewedone wrote: »

I don't really think it is all that likely that we are going to get inflation in double figures in the next five years.

It depends, we now are on the plateau of peak oil, no more is ever likely to be pumped than 85 million barrels a day (total liquids, which as been pretty much level for 2 years before the recession), we saw this in the summer, it was masked of course as speculation but does anyone seriously think that if the Saudis or any other oil producing nation could have pumped more they wouldn't have done it ?? with prices at £148 a barrel ?? Most experts believe we will come off that plateau and down the other side of Hubbert's curve in around 3-4 years.

When the economy starts to show signs of life, so will the oil price, fuelling inflation. Sorry to be Dr Doom.

whathavewedone

Thing is though, as I said on another thread, I don't think we should be punishing people for making reckless decisions if that is going to cause even greater economic instability.

It would cause HUGE problems if all the people with large mortgages had to pay the sort of interest rates that we saw in the 80s and 90s when property was a lot cheaper.

The example I've given is extreme but there are a lot of people who will have mortgages of around 200k who live in fairly modest family homes. If we have price crashes of 50% or more followed by very high interest rates there will be absolute carnage unless negative equity mortgages at reasonable fixed rates are brought in.

Whichever government was in power at the time wouldn't stand a hope in hell of getting in for decades.

ad44downey

Pobby wrote: »

It appears that quite a lot of folk posting here are far more savvy than me when it comes to predictions. I, for many years, experienced interest rates on average of around 8%. How long to you think they will remain low? How high could they go and when. Be very interested in what people think.

Raging inflation will take hold within the next 3 years and interest rates will then shoot up to heady levels. Woe betide anyone who borrows large amounts of money now in the belief that interest rates will stay at 1%. They're going to come seriously unstuck

mewbie_2

whathavewedone wrote: »

Thing is though, as I said on another thread, I don't think we should be punishing people for making reckless decisions if that is going to cause even greater economic instability.

Well currently we are punishing every pensioner in the land who has been careful with their money and saved it hoping to ease their financial situation in retirement.

Dan:_4

I can't see interest rates shooting up while we're in recession.

Pobby

whathavewedone wrote: »

Thing is though, as I said on another thread, I don't think we should be punishing people for making reckless decisions if that is going to cause even greater economic instability.

It would cause HUGE problems if all the people with large mortgages had to pay the sort of interest rates that we saw in the 80s and 90s when property was a lot cheaper.

The example I've given is extreme but there are a lot of people who will have mortgages of around 200k who live in fairly modest family homes. If we have price crashes of 50% or more followed by very high interest rates there will be absolute carnage unless negative equity mortgages at reasonable fixed rates are brought in.

Whichever government was in power at the time wouldn't stand a hope in hell of getting in for decades.

Yes but on a £58k mortgage nearly 20 years ago we were paying, with the endowment, around £700 a month. A lot of money. When things settled down I remarked to my wife that mad hpi was finished for good! How very, very wrong was I.

Dan:_4

ad44downey wrote: »

Raging inflation will take hold within the next 3 years and interest rates will then shoot up to heady levels.

Wow! How do you know this?