OECD says UK interest rates must rise to 3.5% by 2011

Really2

abaxas wrote: »

The two are linked, if anything inflation would destroy us quicker than rate rises.

Eating is more important to people than the value of their homes.

But the economy is more than house prices is it not (But a nice try to turn round what "financial stability" is ) ? (they may be linked, but not targeting financial stability is far more dangerous than 5% inflation at the moment)

It is even harder to feed without a job!:eek: than with a job than 5% inflation.

carolt

Harry_Powell wrote: »

I know it won't because we've had rates at 5% or greater (can you imagine that!!!) already, and we still had a housing boom. I can hardly be grasping at straws when what I say is historically factual.

In the 90s when rates went up by less than 50%, house prices crashed.

Now we're talking rates going up to 7 times their current level!

Of course that will have a dramatic effect on all those who are only just coping now.

Yakubu22

...a lot of people I know -especially friends' parents. They are asset rich and cash poor. People are generally pretty much paying out enough on food/bills/hols/etc as it is. Without potentially increased mortgages payments to contend with too.

I'd say a lot of people in above average housing are just "coping" with things too. But increases in mortgage payments -obviously (the most expensive cost you have) would have an impact.
There will surely be a huge amount of people who would consider downsizing to release capital. Rather than curbing their lifestyle - just to run a bigger house?

Really2

carolt wrote: »

In the 90s when rates went up by less than 50%, house prices crashed.

Now we're talking rates going up to 7 times their current level!

Of course that will have a dramatic effect on all those who are only just coping now.

Carol that is a poor comparison as you are missing off the fact they fell 92% in the last 2 years. (don't think they did that in the 90's)

So they would still be 40% lower than 2 years ago if it went to 3.5%.

So sorry carol that ones a fail.

sss555s

carolt wrote: »

Of course that will have a dramatic effect on all those who are only just coping now.

If people are just coping now, what were they doing 3 years ago?

Most people agree that your taking a gamble if you can't afford to service a 6% mortgage.


There are worse issues to deal with, like why some people on benefits are raking in more than the equivalent minimum wage.

We need the work ethic back and that is always going to be hard while it pays better for many not to work.

StevieJ

Graham_Devon wrote: »

Printing presses would get very excited!

700 biiiilllions dollars

Congratulation Dev :beer: just noticed your avatar.

StevieJ

carolt wrote: »

In the 90s when rates went up by less than 50%, house prices crashed.

Now we're talking rates going up to 7 times their current level!

Of course that will have a dramatic effect on all those who are only just coping now.

When was that, I don't remember rates going up in the 90's, in fact they came down, I don't remember a crash either. They did double in the 80's from 7.5% to 15%.

http://www.bankofengland.co.uk/statistics/rates/baserate.pdf

You conveniently miss out the fact that a 7 fold increase in BR will not result in a 7 fold increase in mortgage rates.

Gorgeous_George

It would be fun to see base rates rise. A lot of middle and lowerincome Tory and Lib Dem voters would get what they deserve.

GG

lvader

Rather than raise interest rates it would be better for the government to make more cuts, both cool inflationary pressures but cuts are more useful at the moment.

treliac

Harry_Powell wrote: »

I know it won't because we've had rates at 5% or greater (can you imagine that!!!) already, and we still had a housing boom.

But that was when mortgage credit was readily available. And before it became apparent that people were surviving by getting deeper and deeper into debt.... debt that large numbers of them would never be able to service unless interest rates were at rock bottom.