Interest rates go up! Now 4.75%

Prosaic

BBC news tonight estimated todays rise would cost about £19 a month on a 120k mortgage

This was bound to happen - rate rises going on in he US, Australia, even Japan. This won't be the last in the next 12 months either IMO

Oh well, anyone fancy a pint? We pass this way but once :beer:

wibble68_2

hitman_uk wrote:

i have put off buying for a while now due to the excessive cost. I could afford it but my rent is more than 50% cheaper. My main question is how much will his effect someone in £'s per month or £'s per year. I was thinking not much maybe £30 per month on a 120k mortgage But then i suppose with the utility bills rising then it will all add up...people must be living so close to the bone if this has a major effect. Can someone give me an example of the cost?

I've just done a few rough calculations myself.

On a 150k mortgage your looking at about 25 quid a month more.

However affordability will be knocked by about £3500 also based on a 150k mortgage if the lender uses monthly affordability as opposed to income multiples.

Therefore if the maximum that you can borrow is 150k, you will only be able to borrow about 146.5k after the .25 rate hike.

Please correct me if the math isn't quite right. It's been a long day.

Wibble

mystic_trev

PoorDave wrote:

Prove it! Also depends what we mean by historic. I looked at the BoE data back to about 1950ish (might be a few years out), and it seems to start with many peaks and troughs which (by eye) look to average at 7 or 8%, compared against which, rates in recent years look low.

I didn't realise history started in the 1950's Obviously you must have learnt all you know at Bash Street School of Economics.

movieman

I didn't realise history started in the 1950's

'Historical data' is pointless, because for most of Britain's history we had gold-backed currency which couldn't be printed at will, and after we came off the gold standard we had restrictive lending policies until the 80s or so.

With a pure fiat currency you have a choice of one or more of:

1. High interest rates.
2. Strict lending controls
3. High inflation.

If we want to cut inflation then either we need strict lending controls or we need high interest rates. And I can't see lending controls in the UK doing much now when the credit bubble is global.

F_T_Buyer

Prosaic wrote:

BBC news tonight estimated todays rise would cost about £19 a month on a 120k mortgage

Not the BBC and their shady reporting again... Why estimate it? I'll tell you to the penny what extra it will cost. £25.00 a month more.

Xbigman

wibble68 wrote:

I've just done a few rough calculations myself.

On a 150k mortgage your looking at about 25 quid a month more.

However affordability will be knocked by about £3500 also based on a 150k mortgage.

Therefore if the maximum that you can borrow is 150k, you will only be able to borrow about 146.5k after the .25 rate hike.

Please correct me if the math isn't quite right. It's been a long day.

Wibble

It really makes no difference, banks will lend you 150k anyway. Especially as hardly anyone worries about whether they can afford a mortgage or not.
And over time the banks will increase their multipliers so that 90% of buyers can afford a house, just as they have done for years.

Until the crash that is.
Regards



X

Dan29

F_T_Buyer wrote:

Not the BBC and their shady reporting again... Why estimate it? I'll tell you to the penny what extra it will cost. £25.00 a month more.

Erm not everyone pays the same rate though do they, so maybe the BBC's calculation is actually more accurate than yours?

Xbigman

It does not matter what % rate you start on, a .25% increase is a .25% increase whatever the starting point .

However, those of us with long memories realise that the BOE base rate only directly impacts on tracker mortgages. On other types the lenders do not have to increase rates by .25, it could be any number.
Meanwhile you also need to factor in other costs. I refixed with C&G at 5.09, then three months later they cut to 4.99 but put the arrangment fee up by £100 and it all came out pretty even. I guess this was because 4.99 is a much more attractive number than 5.09.
Regards



X

wibble68_2

Xbigman wrote:

It really makes no difference, banks will lend you 150k anyway. Especially as hardly anyone worries about whether they can afford a mortgage or not.
And over time the banks will increase their multipliers so that 90% of buyers can afford a house, just as they have done for years.

Until the crash that is.
Regards

X

I should of stated in my post that my calculation was based on monthly affordability because some lenders use this as opposed to income multiples.
Which I assume you realized anyway.

But point taken.

But if interest rates went to high they wouldn't be able to lend as much which ever way it's calculated

nelly_2

I banks just dropped the ammount they are willing to lend by £3500 as said above does that mean house prices just dropped £3500 to match it?

Nice