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Future interest rates: what the "experts" are saying
Comments
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what about those with massive mortgages who turn to jelly when they contemplate a 0.5% rise?
I don't actually think many such people exist outside of the fantasy world of internet housing bears.
Lets examine the facts....
Most people would have taken out a mortgage when base rates were 5% or so. If they could afford it then, they can almost certainly still afford it today if need be.
97% of the people in full time employment before the recession remained in full time employment during and after it.
Of those who did lose their jobs, 75% were back in full time work within 6 months.
If your assertion is that a vanishingly small number of people "turn to jelly" at the thought of a 0.5% rate rise, then I suppose it is theoretically possible such people exist.
If it is your assertion that the numbers of such people are in any way significant, then the facts clearly show you to be wrong.
Contrary to popular belief, base rates are set to control liquidity within the economy. Helping out homeowners is just a fringe benefit. Lower rates increase spend and act as a stimulus. When the economy and bank lending is healthy once again, and the money supply is increasing, rates will rise.
Not before then.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
what about those with massive mortgages who turn to jelly when they contemplate a 0.5% rise?
My mortgage is £270k and would go up by £112.50 per month with a 0.5% rise. While I would certainly prefer not to be paying an extra £112.50 per month, it is certainly not going to turn me to jelly to part with it.
Now, a 7% rise, that would turn me into jelly, but even the most bearish commentators in the article only see that happening in 2015. I'll have my mortgage below £180k by then, and so my monthly premiums would be £1400 per month. That's still not jelly time.0 -
If that is the case, what is the point of discussing these predictions?
Because most of the time, most of the "experts" are at least directionally right.
Very occasionally, some highly improbable event will come along and skew the picture. But such events are rare.
Anything is theoretically possible, but most people make decisions based on what is probable.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Most economists predictions on interest rates are as hopeless as their predictions on house prices (not one single economist predicted house prices would rise in 2009). What their predictions are, is an exercise in group think (much like most of the posts in this forum) so in that respect they have some use as markets are driven in the short term by sentiment.
My personal opinion is that with the incredible fiscal tightening over the next five years under the government’s plans (the deficit going from 11% of GDP to 0%, something which has never before been attempted in modern history in the U.K) rates will have to remain low for some time as this is the only thing that is keeping the economy afloat. There will be considerable political pressure for this to happen as is the case at the moment.0 -
When I hear "experts are saying..." I translate them as "not worth listening to..."
Happiness is buying an item and then not checking its price after a month to discover it was reduced further.0 -
RenovationMan wrote: »My mortgage is £270k and would go up by £112.50 per month with a 0.5% rise. While I would certainly prefer not to be paying an extra £112.50 per month, it is certainly not going to turn me to jelly to part with it.
Now, a 7% rise, that would turn me into jelly, but even the most bearish commentators in the article only see that happening in 2015. I'll have my mortgage below £180k by then, and so my monthly premiums would be £1400 per month. That's still not jelly time.
I suspect that if interest rates rose to anything like 7%, there would be a hell of a lot of people unable to meet their mortgage payments. When something like that is forecast to happen the government generally jumps in with a save-all strategy.
No government wants to see thousands repossessed, it doesn't encourage votes. Even the well off don't want to be stepping over bodies on the pavement when they venture out from their homes.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
I think people who turns to jelly at the thought of 7% rates are those with debts other than mortgages.Plan
1) Get most competitive Lifetime Mortgage (Done)
2) Make healthy savings, spend wisely (Doing)
3) Ensure healthy pension fund - (Doing)
4) Ensure house is nice, suitable, safe, and located - (Done)
5) Keep everyone happy, healthy and entertained (Done, Doing, Going to do)0 -
If rates goto 7% the least of your worries will be affording payments it will be whether or not you still have a job!Plan
1) Get most competitive Lifetime Mortgage (Done)
2) Make healthy savings, spend wisely (Doing)
3) Ensure healthy pension fund - (Doing)
4) Ensure house is nice, suitable, safe, and located - (Done)
5) Keep everyone happy, healthy and entertained (Done, Doing, Going to do)0
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