Savvy home buyers .....

macaque_2

.... or financial turnips?

Around 74pc of people with a mortgage admitted they did not know how a 1 percentage point rise in the Bank of England base rate would affect their monthly outgoings, according to the newly formed Consumer Financial Education Body (CFEB).

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/7876910/Most-home-owners-unaware-of-impact-of-interest-rate-rise.html

Really2

I managed to work out what a 5% fall would lower my outgoings but then I am on a BOE BR tracker.;)

But is this survey a bit of a turnip around 50% of people are on fixed rates so it would not affect their outgoings at all.

It would only affect for certain those on BOE trackers, I dare say less than 74% of mortgage owners are not on BOE trackers.

So a 1% increase in base rate in many cases would not indicate their outgoing would go up for certain.
Just like a 1% drop in base rate would not for certain mean their outgoing would drop for certain.

System

What percentage of people are on SVR?

74%?

Not surprised they wouldn't have a clue.

phil_b_2

It's kinda fair enough that they dont know how much 1% would pump up their mortgage, most probably dont care.

Where they are daft is this bit:

More worryingly, 15pc of people do not even know what type of mortgage they have, such as whether it is a fixed-rate deal, which would make them unaffected by an interest rate rise, or whether it is a variable-rate one, meaning their monthly payments would go up.

A further 15pc also do not know when their current mortgage deal comes to an end.

that's just slack.

HAMISH_MCTAVISH

A £150,000 repayment mortgage at 0.5% is £533 per month.

A £150,000 repayment mortgage at 2.5% is £678 per month.

A £150,000 repayment mortgage at 4.0% is £800 per month.

A £150,000 repayment mortgage at 5.0% is £886 per month.

I spend more than that on eating out....... But not on Turnips.

But on a more serious note, interest rates can increase dramatically, double, triple, whatever, but actual mortgage amounts rise by a far smaller percentage.

RenovationMan

A 1% increase in rates would increase my mortage by £225 per month, which is pretty bad, but had I not overpaid the mortgage by £30k, it would have raised the mortgage by £250, so it could be worse. This is the reason I'm praying that rates stay the same for a while! :eek:

ILW

You spend more than £886 per month on eating out!

nearlynew

HAMISH_MCTAVISH wrote: »

A £150,000 repayment mortgage at 4.0% is £800 per month.

A £150,000 repayment mortgage at 5.0% is £886 per month.

And about £25,000 over the term of a 25 year mortgage.

IveSeenTheLight

ILW wrote: »

You spend more than £886 per month on eating out!

It must be on toffee's
One of my son's favourite books

Blacklight

Really2 wrote: »

I managed to work out what a 5% fall would lower my outgoings but then I am on a BOE BR tracker.;)

But is this survey a bit of a turnip around 50% of people are on fixed rates so it would not affect their outgoings at all.

It would only affect for certain those on BOE trackers, I dare say less than 74% of mortgage owners are not on BOE trackers.

So a 1% increase in base rate in many cases would not indicate their outgoing would go up for certain.
Just like a 1% drop in base rate would not for certain mean their outgoing would drop for certain.

And that's the reason the 'interest rates are going up sometime soon and then the world will end' argument is total turnip.

IveSeenTheLight

nearlynew wrote: »

And about £25,000 over the term of a 25 year mortgage.

Hence why it is better to have a mortgage when rates are lower than when they are higher?

Over the term of the mortgage, the longer you are on low rates the better