Yet another BOE warning shot across over debted homeownerss heads

globalds

I am one of the people benefiting from low rates and would like to see it carry on for another few years ..

It seems people are only mentioning good things happening leading to an opportunity for a rate increase.

My slightly pessimistic view is that we may have our hand forced.I just don't know what would force the UK to have to raise rates.

MrEnglish

StevieJ wrote: »

Higher interest should strengthen STG (in theory) which would in turn reduce the price of imported goods.

But not good for those who have bought a house recently who can only just afford the monthly payment now.

movilogo

But not good for those who have bought a house recently who can only just afford the monthly payment now.

The world should never be smooth ride for people who don't know to live within their means.

StevieJ

MrEnglish wrote: »

But not good for those who have bought a house recently who can only just afford the monthly payment now.

Somehow I think if someone has bought a house (FTB) recently they will be paying premium rates anyway (6%+).

Heyman_2

globalds wrote: »

I just don't know what would force the UK to have to raise rates.

Right now, there isn't anything realistically on the immediate horizon to cause it.

Unless you count the Press Agenda, consisting of journalists frantically quoting (and misquoting) Andrew Sentence every other day in an effort to force it to happen now.

It will happen eventually of course - the economic circumstances will dictate the neccessity, but it doesn't make sense to raise rates when government cuts and increased taxes are set to stifle the recovery this year.

quantic

I'm hoping the rate stays low for the next 2 years (until my tracker ends) but I have costed for this when taking out the mortgage originally.

ess0two

StevieJ wrote: »

Why? most people bought their houses at much higher rates, another HPC myth. The reason that rates are low was to fight off deflation not to give mortgage holders an easy time.

Many of the 'tools' fail to realise that the majority are currently paying 4 to 5% rates at the moment.

A lucky select few are benefitting from 0.5%.

Sibley

I've taken a chance that rates will stay ultra low for 2 years. We'll see if I'm right. I put my money or rather the banks money where my mouth is

MrEnglish

movilogo wrote: »

The world should never be smooth ride for people who don't know to live within their means.

Its a bit too late though, what about all the poor folks who have bought a house recently? When their fixed mortgage deal comes to an end, will they be able to afford it?

julieq

Erm, why shouldn't they be able to afford it?

Let's go back over this again. The average loan to salary multiple during the boom was 3.5x. That is affordable for anyone staying at that nominal level of salary and remaining in work, so on average there is no structural problem in the structure of UK lending. Yes there are some people with higher multiples (generally better risks), but by the same token there are people with lower multiples. The marginal outcome is a low rate of default.

Interest rates are very low now, will be historically low at the end of next year, will be historically low at the end of the year after that and aren't likely to get anywhere near pre crisis levels until maybe 3 or 4 years time. Even then they are historically relatively low.

Unless there were to be a massive inflationary boom. For that to happen, wages have to rise. And debt shrinks.