Interest rates 'may hit 8pc' in two years

Graham_Devon

Really2 wrote: »

Surprise,

You are failing to see why people get the benefit GD.

If you cant see why people get it and how different their situation is to saver I can't help you.

I think all of them would rather not be in the situation of having the tax payer support. Same as the renters in the same boat, they would rather have a job.

So compare a saver to someone who has lost their job and now who looks like they are punished by all of the current situation?

This is just more tangents.

The point is simple. Hamish asks why savers should get compensation (in his terms, what he really means, is higher rates).

Considering Hamish has been all for mortgage rescue and any other scheme to help home owners out, I just found it weird that he would be pro one because they are a homeowner, and against the other simply because they are savers (or hoarders as he calls them).

Thats all there was to it. Christ. It's hard work innit!

Why do people ignore this when looking at the current problem?

I didn't

Really2

Graham_Devon wrote: »

The point is simple. Hamish asks why savers should get compensation (in his terms, what he really means, is higher rates).

Considering Hamish has been all for mortgage rescue and any other scheme to help home owners out, I just found it weird that he would be pro one because they are a homeowner, and against the other simply because they are savers (or hoarders as he calls them).

If that is it the answer is simple.

BASE RATE IS NOT A REWARD OR PUNISHMENT SET FOR ANYONE, IT IS SET ON REACTION TO INFLATION OR ECONOMIC STABILITY. (how many times)

Saving is not investing, never has been, it was done to keep money secure.
This latching on to it being rewarding in terms of revenue is a left over of the last 30-40 years of boom.

To get reward you have to take risk, we did the ice save example before so lets not go there.

But I seem to remember pointing out even over the last 40 years (I think it was that long)
On average savings accounts have only ever come out as a 0.5% income over inflation on average.

In inflationary times in real terms they tend to be worse (EG inflation 10% savings rate 8%)

If you are looking for reward, saving is a very bad example it basically keeps your money at around the same value as it was when you put it in. (real terms)
That is only if you never touch the money and leave all the interest in the same account.

Graham_Devon

Really2 wrote: »

If that is it the answer is simple.

BASE RATE IS NOT A REWARD OR PUNISHMENT SET FOR ANYONE, IT IS SET ON REACTION TO INFLATION OR ECONOMIC STABILITY. (how many times)

Saving is not investing, never has been, it was done to keep money secure.
This latching on to it being rewarding in terms of revenue is a left over of the last 30-40 years of boom.

To get reward you have to take risk, we did the ice save example before so lets not go there.

But I seem to remember pointing out even over the last 40 years (I think it was that long)
On average savings accounts have only ever come out as a 0.5% income over inflation on average.

In inflationary times in real terms they tend to be worse (EG inflation 10% savings rate 8%)

If you are looking for reward, saving is a very bad example it basically keeps your money at around the same value as it was when you put it in. (real terms)
That is only if you never touch the money and leave all the interest in the same account.

Better than a sleeping pill.

All that stuff about risk, yet don't seem to have cottoned on to the fact that buying a house on a mortgage is exactly that. But no!! Save the homeowner = good. Savers getting a half decent rate = bad, they need to take risk if they want anything.

Night

treliac

ILW wrote: »

Seem to remember 10 or so years ago rates were around 7 or 8%, wasn't a complete disaster then. Most would get through it OK.
Anyone that didn't factor 8% into a house buying decision is an idiot and probably deserves to lose their home anyway.

Most might, but a good many wouldn't. It was before people who couldn't really afford to buy a house got lulled into taking on a huge mortgage.

As for being 'an idiot', what percentage of the population would you categorise as such?

treliac

wymondham wrote: »

Lots of them have never known any different to these historically low rates so lets hope whatever happens is gradual..

Exocet wrote: »

I can't find the link, but someone in a paper was saying that interest rates may well reach that figure in a couple of years. Something to do with banks continuing to preserve margins rather than cutthroat touting for business.

Graham_Devon wrote: »

I was told only the other day on here, there is absolutely 0 chance of this happening.

How could they possibly go up that far in a couple of years? What would happen to all the displaced people?

pop_gun

interest rates won't go beyond 2% for the next decade at least. the rates are low so we can afford to pay off some of the national debt.
once they rise it becomes increasingly harder to do.

Generali

pop_gun wrote: »

interest rates won't go beyond 2% for the next decade at least. the rates are low so we can afford to pay off some of the national debt.
once they rise it becomes increasingly harder to do.

The base rate is the rate at which the BoE will enter into a repo agreement (a type of secured lending) with a bank.

The market sets the interest rate which the Government pays on debt.

treliac wrote: »

How could they possibly go up that far in a couple of years? What would happen to all the displaced people?

If interest rates rise very quickly then some people will end up being repossessed presumably. Those houses will not cease to exist however.

Perhaps someone currently renting will buy it, freeing up a rented home for the repossessed person to move into. Perhaps a landlord will buy it and rent it out.

@Really2 - great post. Absolutely spot on IMO.

HAMISH_MCTAVISH

Generali wrote: »

If interest rates rise very quickly then some people will end up being repossessed presumably. Those houses will not cease to exist however.

Perhaps someone currently renting will buy it, freeing up a rented home for the repossessed person to move into. Perhaps a landlord will buy it and rent it out.
.

Except in the real world it doesn't work like that.

Because of the housing shortage, a significant percentage of FTB's come out of their parents house into their purchase, or from a house share. Which doesn't free up suitable accommodation for the family that has just been reposessed, so they end up in council funded B&B as emergency homeless.

I've mentioned before I have a friend who runs a guest house. An 8 bedroom b&b type place. In the 3 months of summer he takes in tourists at a high rate, and in the other 9 months he takes in council b&b work at a lower rate.

Last year he was almost completely full all year, with most of his council customers being there for 6 months on average before the council found them somewhere else.

Well this summer he has been bombarded with phone calls from the council, offering up to £100 per room per night, just to get people in as everywhere is full.

If you take the example of a family who has been evicted as the house is repo'd, then you're talking two, possibly three, b&b rooms, for an average of 6 months, at up to £100 a night per room.

It would have been far cheaper for the taxpayer for the council just to pay their mortgage for a couple of years.

Barnetbear

The Express has this as their headline - suggesting mortgages to soar etc. Quite a change from the usual house prices to soar. I believe that someone posting under the name Sibley has said on the DE website that interest rates will not soar and will stay sub 2% for some years.

Can I just say, I agree with that Sibley.

Regrettably for some, this might now mean that Sibley is wrong at this juncture, as I tend to agree with the wrong pundits most of the time.

I could furthermore completely trash the UK housing market by now making a purchase at last. If any of you wish to have a whip round for the deposit, I can almost guarantee house prices will be down 40% nominal within 24 months following my getting the title deeds. How badly do you want a house price crash? Think about it, then let me have your cheques. I am the jinx you all need.

http://www.dailyexpress.co.uk/posts/view/194886#comments

Generali

HAMISH_MCTAVISH wrote: »

Except in the real world it doesn't work like that.

Because of the housing shortage, a significant percentage of FTB's come out of their parents house into their purchase, or from a house share. Which doesn't free up suitable accommodation for the family that has just been reposessed, so they end up in council funded B&B as emergency homeless.

I've mentioned before I have a friend who runs a guest house. An 8 bedroom b&b type place. In the 3 months of summer he takes in tourists at a high rate, and in the other 9 months he takes in council b&b work at a lower rate.

Last year he was almost completely full all year, with most of his council customers being there for 6 months on average before the council found them somewhere else.

Well this summer he has been bombarded with phone calls from the council, offering up to £100 per room per night, just to get people in as everywhere is full.

If you take the example of a family who has been evicted as the house is repo'd, then you're talking two, possibly three, b&b rooms, for an average of 6 months, at up to £100 a night per room.

It would have been far cheaper for the taxpayer for the council just to pay their mortgage for a couple of years.

It does overall.

If someone a repo'd one person is thrown out of a property and a property becomes vacant.

The person/family made homeless may go into your friend's doubtless very lovely B&B or may live with parents or friends until they can get back on their feet.

It may be cheaper for the Government to pay the mortgage of those people in your friend's B&B for a year or 2 but ultimately people have to pay for their own debts rather than look to the Government to pay them or the courts to write them off. After all, people not paying back their debt got us into this mess in the first place!