Interest rates 'may hit 47pc' in two years

Yoshua

IveSeenTheLight wrote: »

Indeed.
Also when you consider that mortgage rates are lowering.
Would that really be happening if they thought interest rates would be so high in two years time.

HSBC offer a 5 year fix from 3.95%
https://mortgages.hsbc.co.uk/product/186-5-year-fixed-special

No one really knows what will happen everything is so unstable at the moment.

Blacklight

47% should see a lot of repossessions by the banks and a lot of cheaper property on the market. Great for first time buyers who want to get a foot on the ladder.

50% off the average price would about £80k!! With a 20% deposit that's a monthly repayment of just £2,500... great news for first time... wait, what!?

Kenny4315

Base rates in 2 years will be no more than 4%, a year from now will be 1.5% to 2%. The economy will still be in a mess so rates will be going nowhere fast.

tomterm8

chucky wrote: »

This is a rubbish thread

True, but it is still better than the average rubbish thread.

des_cartes

Cleaver wrote: »

www.interestratenews.com/mentaliststuffinnit.htm/

This is worrying news. A mortgage of £150,000 is currently £625 per month in interest repayments when calculated at 5%. If rates do go to 47% then people will see the interest part of their mortgage rocket to around £5,875 per month. Is this affordable?

If people are paying £5,875 a month on their mortgage how will they afford the essentials? You can easily see people having to forgo their usual bottle of Pinot Grigio and instead have to plump for one of those cheap boxes of wine that never taste quite as good. There will be riots on the streets.

Luckily when we got our mortgage we had a deposit of 97%, borrowed 0.003 our salary and made sure that if one of us lost a leg, the other lost their job and rates happened to go 70% we could still easily afford our mortgage. That seems the sensible MSE Debate House Prices forum methodology, so we'll be okay. Everyone else is gonna be f**ked though.

Interest rates are bound to rise but I would think around 10% is about the level they might go to. Even this must be very worrying for anyone who has a high mortgage or is a highly leveraged BTL
investor. As someone who lived through periods when mortgage repayments doubled over a very short period, I know how difficult this can be even when the value of the mortgaged property is not falling. Now, todays homeowners are faced with falling property values and rising mortgage payments over the next few years. Not a good place to be.

Kenny4315

des_cartes wrote: »

Interest rates are bound to rise but I would think around 10% is about the level they might go to.

In what time frame are we talking 1 year, 2 years, 10 years ???

I just don't see what is going to force interest rates up in the next 2 years to a significant level.

If property values are falling personal wealth and thus spending power will drop, the result will be a drop in consumer expenditure and downward pressure on inflation. At one point I did think that QE could be a trigger but due to the scale of the issue the recovery will force downward pressure for so considerable time.

des_cartes

Kenny4315 wrote: »

In what time frame are we talking 1 year, 2 years, 10 years ???

I just don't see what is going to force interest rates up in the next 2 years to a significant level.

I think that would depend on what happens with inflation. Inflation, particularly imported inflation looks to be heading higher, a recent survey of UK producer input prices showed that inflation is over 9% which would mean that eventually the price of things they produce will have to be passed on to consumers. Add to this increased prices for food and clothing and it is quite`easy to see inflation of over 5% in the near future. Of course the government are keen to get house prices into CPI figures and reduced prices for houses could offset price rises elsewhere. That aside, if inflation does rise as expected then the boe could leave IR's at a low level providing wage inflation is kept in check. Either way, the house owning mortgaged consumer is in for a difficult time. Inflation + low ir's + stagnant wages or Inflation + higher IR's + wage increses translates into if you forego a pay rise you can keep low mortgage rates but pay more for everything else or if you want a pay rise we'll put your mortgage up and you'll still pay more for everything else.

Kenny4315

I don't see how inflation is going to rise if people aren't spending, because they have no money, or an available credit line. The result would be in fact be the reverse, if supply remain constant and demand reduced due to affordability.

The goods sold would be cheaper 'value' products rather than more expensive branded goods.

IveSeenTheLight

Yoshua wrote: »

No one really knows what will happen everything is so unstable at the moment.

So unstable that they decide to lower the rates
Surely it must be an indicator that they didn;t expect rates to be rising fast.

If they did think the rates rising would be volatile, they would not be lowering the rate I would have thought.

Incidently, you can get a 5 year fix from 3.94%
https://mortgages.hsbc.co.uk/product/186-5-year-fixed-special

I thought I read somewhere that they are expecting this to lower further in the coming weeks to compete with the likes of coventry who offer 5 year fixes from 3.99% but with only a 25% deposit requirement instead of 40%
http://www.coventrybuildingsociety.co.uk/mortgages/schemesStandard.aspx