Interest rates go up! Now 4.75%

vishpatel

The media seem to think this is bad news for FTB's...

Thats pretty short-sighted if you ask me...

FaTB

vishpatel wrote:

The media seem to think this is bad news for FTB's...

Thats pretty short-sighted if you ask me...

That' just their spin on it.

I suppose it is bad news if you are an FTB'er that is actually buying NOW.

But it seems to me that most are just potential FTB'ers at the moment,
so if your waiting and saving, and the IR rise does suceed in slowing HPI, then its VERY GOOD NEWS !!

mdb99jh

Xbigman wrote:

A 200k house will still be worth 200k but it will cost 207k to buy it.

Isn't that a contradiction? Something is worth what someone is prepared to pay for it...

mi-key

Xbigman - I can see what you are saying, but also agree with the post above - when working out the affordability of a house purchase, most buyers are going to look at what it will cost them monthly, if a house priced at £200K is now going to cost them £50 a month more, and they dont have, or dont want to pay that, then they would now be looking at houses priced at £195K ( for example ) as this will be within their budget - or they will be looking to offer less on the 200K house.

I have to admit ( being a very cautious sort ) I had expected this raise to happen, and all my budgeting on mortgages has been based on 'if we can a rate of X, then great, but if the rate went up to Y, then we could still afford it'

We have a big enough finanical buffer built into our figures that interest rates would have to rise another 0.5% before it would even start to make much of a difference.

meanmachine_2

I'm still waiting for the A&L website to update to test whether they really do lend on the basis of "affordability".

In which case, with IRs up a bit, they should only be prepared to lend me X amount, unlike two days ago.

Hmm...

Also, why hasn't the amount they'll lend gone down in recent months, to counteract my soaring petrol and utility bills?

Bunch of shysters.

Joe_Bloggs

@Meanmachine
A mortgage quote in principle may cost a credit search. This costs no money but other lenders get a bit suspicious if too many appear in a short space of time. Can you clarify, for the wider readership, how you found out how much the A&L would lend you ?
Most lenders sites were completely unprepared for the rate hike. Many with tracker rates are still quoting the old B of E rate.
Good luck with the premium bonds.
J_B.

meanmachine_2

I'm just referring to the affordability calculator on the A&L site which roughly tells you how much they're prepared to lend, based on salary, bills, dependents etc.

By my reckoning, a 0.25% rise should knock a few grand of that final figure.

movieman

But then again, inflation is creeping up which should mean higher payrises

Which will lead to far higher interest rates: I believe both Gordon Brown and Mervyn King are on record as stating that high wage inflation is the one thing that would inevitably lead to rising interest rates.

The problem is, by the time wages start inflating it's way too late to cut inflation by the odd 0.25% rise... if we get an inflationary spiral rates could double or worse.

[Deleted User]

mi-key wrote:

Lloyds TSB put their rates up 8 weeks ago because they thought this was going to happen - would be interesting to see if the greedy !!!!!!s use this as an excuse to put them up again !.

Mi-key, Lloyds TSB have announced they are upping their base rate to 4.75%.

"Lloyds TSB Bank plc will increase its Base Rate from 4.5 per cent to 4.75 per cent for
balances as at the close of business on 3rd August 2006 until further notice."

http://www.mediacentre.lloydstsb.com/media/docs/2006/Aug/9006baserateincrease.pdf

realwildone

What makes me laugh is the VI's.

They stated when the rates dropped by .25 that it will make a big impact on the housing market and it did. Now that they have gone up .25 they say it will make no difference.

Ah well up they go again then.

This and the probability of another rise will have a great impact on the 2nd half of this year.

Furthermore there is more scaremongering in the media about debt and insolvancies which will make people think twice.

There are 29 people in this forum and 135 in Debt free. It was the other way round last year.