Why Mortgage Interest Rates Will Remain High

purch

Worst case for the country would be a bond strike, as that would necessitate a huge increase in taxation, together with massive cuts in public expenditure.

In the strange surreal world of the "Uber-Housing-Bear" these things are all good news, as apparantly it will have no effect of their 'master plans' to buy property at the exact point the market bottoms, and then profit hugely by rampant HPI.

chucky

mbga9pgf wrote: »

Lets face facts, its win win for the bears with big deposits.

If rates stay low, its because we are in a deflation scenario (my personal choice of what will happen for the next 12 months at least). If this is the case, high unemployment and uncertainty will push prices lower.

If inflation raises its ugly head, Rates will go up, better returns on cash is a bonus, plus, all those stupid or unable to fix at present will face massively rising rates. This is a serious risk as we look to recovery, once money starts to flow and money velocity recovers, we could scupper ourselves with inflation. Not that I think serious inflation is a risk, as massive government taxation is going to drag out this downturn for a fair while yet.

And if you think all those global gilt holders will tolerate inflation without massive rises in rates, you need to do your research. Worst case for the country would be a bond strike, as that would necessitate a huge increase in taxation, together with massive cuts in public expenditure.

Plus, if we get inflation, that will not push up house prices. Not in the slightest. we will experience soft commodity price rises (food, oil etc) wheras assets are going to be boogered.

that's at least 5 "if's" in you post in 5 points that you make, so they're all assumptions that you're making unless you can predict the future economic events - the facts are that if you are on a tracker or an SVR currently you have a good opportunity to repay large amounts of your mortgage debt as rates are and will be historically lower for quite a while.

kennyboy66_2

Thrugelmir wrote: »

Then you should spend more time looking after your money. :rolleyes:

The point is that it is a depositer protection scheme, and the logic should be that savers should pay for this protection.

Likewise it should be borrowers who are paying an appropriate premium for their risk. Undoubtedly risk was hugely under-priced during the boom.

The banks are being bailed out in two ways, taxpayer money and pitiful savings returns.
Savers are bailing out the !!!!less borrowers and poor management.

It is only the terminally dim who don't understand that savers are getting shafted - just like they were when we had raging inflation.

mbga9pgf

and then profit hugely by rampant HPI.

I dont think you will find many bears wishing for that. In Fact, most want ltvs and multiples restrained to prevent speculation by wideboy developer W*nkers that do little other than push prices up to the stratosphere.

Why, when I can expect to upsize probably twice in my life, would I want prices rising faster than wage inflation?

that's 5 "if's" in you post in 5 points that you make - the facts are that if you are on a tracker or an SVR currently you have a good opportunity to repay large amounts of your mortgage debt

the 5 Ifs cover what I consider the likely scenarios to play out, they are mutually exclusive. They do not rely on a prior if. The first 2 are actually the same if if you bother to read what I wrote. Do you want to let us all know what you think is going to happen in the next 12 months? Undoubtebdly green shoots ahoy then?
Want to tell me where the money will come from for a recovery, facing:

3 million+ peak unemployment?
rising taxation to pay for bankers sins and government loan interest?
Rising commodity prices?
Global restrictions on credit and no return to the old days of free cash?
Rates rising at some point on the horizon (all though I concede mot for a while yet)
UKs global finance centre falling from its perch, together with our export motor industry and reduced investment in high tech research and manufacture taking place in the UK?



I agree, those on trackers are lapping it up, but the question is, how many are actually paying down debt at the mo in excess of their monthly mortgage rates? From recent retail spending, it would appear not that many. I agree some of the sensible ones will be. How many as a % of total borrowers are on these products? How many of those on those products have lost their jobs? How many as I have pointed out are doing the sensible thing and paying down the debt whilst they have the opportunity and are not instead spanking it up the wall on that 52 inch plasma they have always dreamed of owning?

Thrugelmir

kennyboy66 wrote: »

The point is that it is a depositer protection scheme, and the logic should be that savers should pay for this protection.

Likewise it should be borrowers who are paying an appropriate premium for their risk. Undoubtedly risk was hugely under-priced during the boom.

The banks are being bailed out in two ways, taxpayer money and pitiful savings returns.
Savers are bailing out the !!!!less borrowers and poor management.

It is only the terminally dim who don't understand that savers are getting shafted - just like they were when we had raging inflation.

My point is that it is possible to achieve higher returns than those you quoted.

If savers want far higher savings rates then they too need to accept higher risk. Instant savings accounts have never been attractive when taking favctors such as inflation into account.

I don't disagree with your sentiments towards the banks. Though in the case of the Nationwide they are being penalised even though they've always run their business well. To the benefit of their members.

ad44downey

Low interest rates are no good anyway. They discourage saving and merely encourage people to borrow too much, hence the present economic meltdown.

PasturesNew

Thrugelmir wrote: »

Average SVR is 4.14% currently. Is that low?

That is unbelievably low.

That is about HALF of what the long-term interest rates are usually over the duration of a mortgage.

mbga9pgf

And yet prices still fall like a stone...

pickles110564

ad44downey wrote: »

Low interest rates are no good anyway. They discourage saving and merely encourage people to borrow too much, hence the present economic meltdown.

High interest rates were no good for you either, otherwise you would have saved enough to buy at this so called low that you predicted.:rotfl:

mewbie_2

pickles110564 wrote: »

High interest rates were no good for you either, otherwise you would have saved enough to buy at this so called low that you predicted.:rotfl:

Jesus Pickles, if you get this hysterical when we are only part way into the crash I fear for your sanity in a year or so's time.