What BOE interest rates will really cause financial disaster?

chucky

rates are being held low because of the economic issues.

all things being equal rates will/should start to increase when there is decent growth in the economy.

in theory when there is growth in the economy, you already know what happens to house prices and earnings...

you make your own choices...

Generali

Thrugelmir wrote: »

Lenders don't borrow at base rate.

They do if they enter into a repo agreement with the BoE.

bendix

chucky wrote: »

there are 11,000,000 mortgages in the UK.

50% approx are on SVR on tracker so let's say 5,500,000.

8% of property was in negative equity last summer (let's take that number for arguments sake) - that's 440,000 from 5,500,000

unemployment is around 9% from the 440,000

which would be about 39,600 mortgages may be at risk from increasing rates - that's 0.36% of all mortgages and 0.16% of all properties in the UK. that's not a huge amount....

that obviously doesn't include part-time workers and assuming people don't have savings or redundancy payments etc... etc...

What ridiculous logic. Why would it only be those who are on trackers, in negative equity and who are unemployed who are badly affected.

What about those working yet have signed up to large mortgages at low rates and are currently stretched with repayments, and likely to be more so as and when rates rise?

chucky

bendix wrote: »

What ridiculous logic. Why would it only be those who are on trackers, in negative equity and who are unemployed who are badly affected.

What about those working yet have signed up to large mortgages at low rates and are currently stretched with repayments, and likely to be more so as and when rates rise?

you dived in without reading the post properly Benders.

only those on trackers or SVR's would be at risk of interest rate moveements - those on Fixed Rates don't get affected by movements in the BOE rate unless the Fixed Rate ends

it was an example of those that are immedietly affected by rate movements not everyone that has a mortgage... you got a better example to show us?

Graham_Devon

chucky wrote: »

you dived in without reading the post properly Benders.

only those on trackers or SVR's would be at risk of interest rate moveements - those on Fixed Rates don't get affected by movements in the BOE rate unless the Fixed Rate ends

They all end. Therefore, a lot of people on fixes will be effected....unless they are extremely lucky and they manage to get the fix at the absolute perfect time....

chucky

Graham_Devon wrote: »

They all end. Therefore, a lot of people on fixes will be effected....unless they are extremely lucky and they manage to get the fix at the absolute perfect time....

of course they all end - we're looking at now Devon

if rates went up today - how many people could be affected?

bendix

My point is that everyone who isn't fixed will be affected, and those on fixed will be affected in due course. We are at historic low levels and - unlike the US - we don't have 30 year fixed mortgages here.

Sure, some will be more affected than others, but it's patently obvious that there are tens - if not hundreds of thousands of households who are currently struggling to pay their mortgages currently (with many in default) while those rates are low. The implication of what happens when the rise is obvious.

I was on another forum just today (a football forum ironically), when someone said they can barely make their mortgage payments now while they are paying something tiny like 3%, and that any rise will literally cripple them.

bendix

chucky wrote: »

if rates went up today - how many people could be affected?

It's a trick question, isn't it? Everyone who is not on a fixed rate mortgage. Everyone with credit cards. Everyone with any kind of loan.

Do I win a banana?

chucky

bendix wrote: »

My point is that everyone who isn't fixed will be affected, and those on fixed will be affected in due course. We are at historic low levels and - unlike the US - we don't have 30 year fixed mortgages here.

Sure, some will be more affected than others, but it's patently obvious that there are tens - if not hundreds of thousands of households who are currently struggling to pay their mortgages currently (with many in default) while those rates are low. The implication of what happens when the rise is obvious.

I was on another forum just today (a football forum ironically), when someone said they can barely make their mortgage payments now while they are paying something tiny like 3%, and that any rise will literally cripple them.

yes we know all of this - it was a simple example taking those not on fixed mortgages now (today) and what would happen if rates rose (today). i read the other day that 60% of all new mortgages were now Fixed Rates so people are insulating themselves against any rate rises.

it was a simple example of a subset of people that would/could be exposed - unless you can show me another good example apart from telling me it's wrong i'm not sure what your point is.

chucky

bendix wrote: »

It's a trick question, isn't it? Everyone who is not on a fixed rate mortgage. Everyone with credit cards. Everyone with any kind of loan.

Do I win a banana?

that was the point - you can't answer it but you still tell me my example is wrong.

no banana but you can have a plantain