Interest rate held at 0.5%

Graham_Devon

Heyman wrote: »

In reality, no-one on a Tracker or SVR mortgage will fail to notice that there has been a rise and it really won't be the end of the world.

No, but sentiment will take an absolute battering...and thats when people will start battening the hatches. They know it's only going on way from then on.

chucknorris

Graham_Devon wrote: »

No, but sentiment will take an absolute battering...and thats when people will start battening the hatches. They know it's only going on way from then on.

For me it will be the end of an era, but it's only a return to normality which is inevitable, you can't expect to be in paradise forever. The longer this low interest period lasts though the closer my savings are getting to up to the level of my mortgages.

IveSeenTheLight

Graham_Devon wrote: »

Just listened to an interesting analysis on this one.

Commentator reported that the BOE was more likely to boost stimulus, via QE, and more likely to reduce rates than increase them in the near term.

However, he also commented that we are now playing with fire. He thinks people now see these rates as normal and a "dangerous sense of apathy" is setting in. He stated that it is now critical that everything that can be done is done to inform people that rates WILL go up. He stated if this doesn't happen, more people will get used to these level of mortgage payments, and in his words, an increase later rather than sooner, would be "catastrophic" as household budgets have now aligned themselves with new lower payments.

On inflation, he reckons it's been left to do pretty much what it wants.

Wouldn't this mean that the likely scenario would be to raise the rates slowly in order to allow people to become used to the new rising rates?

Base rates returning to 5% would not necessarily cause a problem and many mortgage products are around that level anyway and people have been paying that level for a while now.

I would agree that if the blip of high rates that was seen taking the rates to 15% was to happen again, there would be many people unable to service their mortgage (unless they're on a fix)

IveSeenTheLight

Percy1983 wrote: »

It does seem that many people are just spending more, I will say that I will be looking at mortgages and also looking what happens if rates go upto 10% before jumping in.

I would say, make sure you fix before they rise to anywhere near that level.

RenovationMan

Graham_Devon wrote: »

No, but sentiment will take an absolute battering...and thats when people will start battening the hatches. They know it's only going on way from then on.

If a near global meltdown of the banking industry, record bailouts and money printing, a lasting recession, a stock market crash, a house price adjustment, major job losses, austerity budgets and announced tax rises hasnt already made people batten down the hatches, then I cant imagine that a few BoE base rate increases would make much of an impact on them.

IveSeenTheLight

RenovationMan wrote: »

If a near global meltdown of the banking industry, record bailouts and money printing, a lasting recession, a stock market crash, a house price adjustment, major job losses, austerity budgets and announced tax rises hasnt already made people batten down the hatches, then I cant imagine that a few BoE base rate increases would make much of an impact on them.

It won't and once it doesn't, they'll be on to the next little false alarm
The low interest rates will be around for a while I think.

tomterm8

In some ways, BoE base rate rises are a good sign, because they would only really do them if they thought the economy needed to be slowed down a little.

RenovationMan

IveSeenTheLight wrote: »

It won't and once it doesn't, they'll be on to the next little false alarm
The low interest rates will be around for a while I think.

The mass population just seems to endure and carry on regardless, doesnt it?

Heyman_2

Graham_Devon wrote: »

No, but sentiment will take an absolute battering...and thats when people will start battening the hatches. They know it's only going on way from then on.

I agree that people will be prompted to look at their own situations and possibly take action but you'd have to be a fool not to know that this situation is on the horizon. As you say, the only way is up and I'm sure the Daily Mail and Express will barely be able to contain their frothing hysteria on the front pages when the first rise eventually happens.

But I would question how quickly future rises will occur - the speed of the interest rate drops at the end of 2007 was in direct response to the banking crisis and was appropriately dramatic. I don't see the economy spinning upwards out of control any time soon, which would be the sort of catalyst required to see interest rates raised with the same gusto as they were cut.

So I think people will have a lot of time to make their decisions - I can see a few months going by after the first rise or rises with the rate staying where it is.

In short - I don't think rates are going to be back at 5% for a good few years.

Graham_Devon

RenovationMan wrote: »

If a near global meltdown of the banking industry, record bailouts and money printing, a lasting recession, a stock market crash, a house price adjustment, major job losses, austerity budgets and announced tax rises hasnt already made people batten down the hatches, then I cant imagine that a few BoE base rate increases would make much of an impact on them.

I guess, all I can say to that is....we'll see.

We are talking real people here. People who have only seen payments fall. We can talk about payments rising for ages. It's not until it actually happens people stand up and take noticed, in general. IMHO anyway.

Spending on the high street has gone up, as mortgage payments have gone down. Is this coincidence?