Low interest rates will support house prices until 2014

whathavewedone

GRRR wish we had a tracker instead of a 5.25% fix. When I think of how much we could have saved and knocked off our mortgage it makes me feel quite green.

From an entirely selfish point of view I hope he's right because our fixed rate ends at the end of 2011. Although if rates have crept up by even half a percentage point by then I will probably fix again for as long as I possibly can. I think when things do change they will probably change quite quickly and then banks will be reluctant to offer decent fixed rates.

ess0two

jenner wrote: »

well reading the tracker thread on here has opened my eyes as to just how advantaged some mortgage payers are on their very low tracker rates. i cant believe it, im stuck on nearly 5% i could have paid off my debts by now if i had the money knocked off my mortgage payments id be living the life of riley!

Dont forget everyone is benefitting from low rates,and when they go back to 5%,were all cooked.
You like me are paying nearly 5%,along with thousands of others.

worldtraveller

The man's a fool!

"So what do I do?
If you're thinking of buying, I can't see much point in delaying. Until interest rates rise, property isn't going to get cheaper (unless there is a second global economic seizure)".

What has a global economic seizure got to do with it? The economic seizure will be in the UK! The rest of the world's economies will largely be recovering IMHO, but the UK economy will largely stagnate. The issue is then global inflation and why does he think that the UK will be protected?

At the same time unemployment will continue to rise in the UK market, taxation will increase, public spending will decrease, credit card & loan defaults will increase, repossessions will increase, all of which will build further pressure on house prices.

Harvey, you are wrong, wrong, wrong!

StevieJ

davidjwest wrote: »

House prices will crash again before 2014 as rates will start to rise fairly soon and there'll be quite a few people who wont be able to afford the mortgage when they go back up to the 5% plus mark. Repossessions will be reaching record highs IMHO.
.

Why? they were paying those rates it in 2007/8 and many are paying them at the moment I don't think the BOE expect raging inflation for quite a bit yet.

Cleaver

My imaginary couple earn £60k between them. They bought a lovely house for £150k a good few years ago with a lovely £30k deposit that they had from the magic deopsit bunny.

Their gross income per month is around £5,000, or around £3,600 net after all that nasty stuff has been taken off.

Before the crash they were on an interest rate of 5%, then the crash came and lo and behold they find themselves on 2%. Happy times! Then inflation hits a few years later and they find themselves on 7%. Boo.

5% = £709 per month or 20% of net income
2% = £512 per month or 14% of net income
7% = £858 per month or 24% of net income

Please, for the love of sweet Christ on a unicycle, no debates on average wage. I'm just painting a picture.

Aside from the scenario of someone losing a job (which I know will be slightly more prevalent over the next few years, but can happen at any time if you're unlucky), is the above scenario such a nightmare for average people? You adjust your spending accordingly, tighten your belt in hard times and most sensible people will save a bit of money during the good times.

I fully realise that people who have stretched themselves stupid, fall on to bad luck and don't look around for sensible mortgage deals will go under. But what percentage meet this criteria? When we got our mortgage we worked out what it would be at 10%, understood that we'd be pretty much okay and live accordingly.

ess0two

Cleaver wrote: »

My imaginary couple earn £60k between them. They bought a lovely house for £150k a good few years ago with a lovely £30k deposit that they had from the magic deopsit bunny.

Their gross income per month is around £5,000, or around £3,600 net after all that nasty stuff has been taken off.

Before the crash they were on an interest rate of 5%, then the crash came and lo and behold they find themselves on 2%. Happy times! Then inflation hits a few years later and they find themselves on 7%. Boo.

5% = £709 per month or 20% of net income
2% = £512 per month or 14% of net income
7% = £858 per month or 24% of net income

Please, for the love of sweet Christ on a unicycle, no debates on average wage. I'm just painting a picture.

Aside from the scenario of someone losing a job (which I know will be slightly more prevalent over the next few years, but can happen at any time if you're unlucky), is the above scenario such a nightmare for average people? You adjust your spending accordingly, tighten your belt in hard times and most sensible people will save a bit of money during the good times.

I fully realise that people who have stretched themselves stupid, fall on to bad luck and don't look around for sensible mortgage deals will go under. But what percentage meet this criteria? When we got our mortgage we worked out what it would be at 10%, understood that we'd be pretty much okay and live accordingly.

Top post,gets annoying hearing when rates go up the grim reaper will be calling.
For the majority rates never changed when BOE dropped,i'm literally chewing my arm off at the elbow to take advantage of low rates when my FR ends next May.

chucknorris

StevieJ wrote: »

Why? they were paying those rates it in 2007/8 and many are paying them at the moment I don't think the BOE expect raging inflation for quite a bit yet.

Exactly! I was making a nice profit when rates were at that level but very happy to make extra in the meantime (thanks Gordon).

I think some of the bears prefer to run down the street in their underpants screaming 'we're all doomed' instead of just reaching for the calculator and discovering it aint necessarily so. On that point I nominate !!!!!! for the drama queen oscar.

nembot

Oh Really2

HammerSmashedFace

StevieJ wrote: »

Why? they were paying those rates it in 2007/8 and many are paying them at the moment I don't think the BOE expect raging inflation for quite a bit yet.

Fair point, but I believe back in the day banks were fighting each other for business, they were quite happy with 0.5% above base rate on many fixed rates and trackers, they were all after quantity rather than quality.

Now, many believe that the banks are not fussed about taking on crappy risky business and may keep their rates considerably higher than the base rate hence if/when rates hit 5%, trackers and fixed rates will be 7%+ and SVR's (which millions seem to have fallen onto) will be higher than that, this would cause havoc, but is plausible.

I'm not too sure how it will play out but 2-4% above base rate, I feel is more likely than loans available just above base and if there are loans available just above base, large deposits are likely to be required (60% LTV's).

Who knows, I just have a feeling we are reaching a high water mark in current manufactured upturn, the news going forward isn't good. As Labour used to say..... "Things..... can only get [STRIKE]better[/STRIKE] worse".

the_ash_and_the_oak

I mostly agree with Cleaver - but have to add in that I don't agree that 'everyone was managing ok on what they were paying back before rates got cut so would be fine again if it went back to that" - obviously many were managing just fine but I think there has been a concerted effort to help people who might be struggling to keep their homes - and that this is a good thing. (as to numbers in this category - I don't know)

Anyway I don't think there'll be signif reposessions and I think its the wrong end of the stick to look at it this way. For me its more to do with the availability and price of credit to future borrowers that is more the point - the ultralow rates are not available to them. For me a continuation of the current scenario means current owners with no real need to sell, and a reduced number of buyers - the intention being stabilization