MSE Ness: Home owners told to prepare for 5% base rate

ILW

When I first bought, the rough rule of thumb was repay £100 per month for every £10k borrowed. If you are working on a lot lower than that then you could be heading fro trouble.

themull1

i was paying 14% mortgage rate in 1991. But never knew rates went to 20%!!

mrylandb

Just reading through the various posts and it has led to some intersting comments.
One theme is that 5% is "normal"
I guess my comment to that is that the entire economic landscape has changed in the past few years so that "normal" in the way that we remember is somewhat different now. Lehmans, Banking crisis after crisis, madoff et al has lead to a different mindset in banking, the government, risk taking, investments etc Winners and losers will always be created, but I just can't see the BOE increasing the rates that quickly, I reckon that there will be 0.25% per quarter with a cooling period to assess the impact. But not starting until well after Q1 2011.
The VAT and fuel price increases, the train fare rises are all going to take their toll, but the BOE has it's own inflation worries to deal with
. Rock and a hard place and I don't know which I prefer!

chucknorris

debraose27 wrote: »

I have little sympathy with anyone who did not take the opportunity to reduce their indebtness, fair is fair time to lower your living standard and improve mine
OAP

With my cash earning a higher rate of interest than my mortgage why on earth would I want to pay off the mortgage? I will enjoy the difference between the two rates for as long as it lasts, then reduce it. It will be some time away too before the two rates pass each other.

parkmun

I'm really pleased that so many with savings will see the benefit but please spare a though for mortgage payers working hard who didn't get the benefit of the interest rate cuts. We're on a BOS mortgage paying 4.84% so a 5% increase on our SVR could put us up to 9.84% which would indeed cripple us.
We have no debt, and only pay out gas/elec/insurances/water/council tax/food/school meals and phone. We have no expenditure which can be reduced.
We are on a SVR due to the bank having an IT issue back in 2008 which meant that the letters advising us that our mortgage deal was coming to an end were sent to France. They admitted their error but the offer of £120 compensation was outrageous and we are still stuck on a bum mortgage deal which no doubt BOS will use to their full advantage and put rates up as soon as the BOE do.

Just wondering if this puts anything in perspective for any of those who seem so happy about the forthcoming rate rises?

Keane16

parkmun wrote: »

Just wondering if this puts anything in perspective for any of those who seem so happy about the forthcoming rate rises?

If you borrowed sensibly of course not. And it sounds like a pretty big banking error if what you say is true - one that could ened up costing you thousands in interest charges. How anyone could be happy about that is beyond me. Yours appears to be a one-off case which is unfortunate.

The people "happy" to see rate rises want to see some normality return to the over inflated housing market. Hard working, sensible borrowers won't fall behind on payments. And I think that's the important thing to remember when reading about these rate rises:

* If you borrowed within your limits - you'll be fine when rates return to close to their long term average. Because you'll have budgeted for the inevitable rise.
* If you borrowed as much as you could get your grubby mitts on - you'll struggle when rates rise, who's fault is it? Nobody's but your own. Do something about it now before rates rise - overpay, get onto a fix etc. Most importantly I hope these people learn from their mistake!

It's about what you can afford - not what you can borrow.

Lynsey

Keane16 wrote: »

It's about what you can afford - not what you can borrow.

Lot of sense there, unfortunately the lenders didn't follow this sensible advice. NR for example were offering loans of 110%+ and over 35 years and they were being snapped up due to the hype and fear of not getting on the housing ladder. The crash was inevitable and fingers got burned...............though lots of pockets were lined as well.

Lynsey

telboyo

JimmyTheWig wrote: »

I agree. But it's the people tied in to existing trackers who will have problems.

I don't think that statement is true in all cases. Back in Nov 2007 I changed my mortgage to .49% above base fixed for the life of the loan so even if rates are raised to 5% (which I believe will be at least 18 months away) 5.5% will be still a fantastic rate.

OverlandLandy

telboyo wrote: »

I don't think that statement is true in all cases. Back in Nov 2007 I changed my mortgage to .49% above base fixed for the life of the loan so even if rates are raised to 5% (which I believe will be at least 18 months away) 5.5% will be still a fantastic rate.

I'm on aprox the same rate..... Its good if you stay put.....however many lenders have changed their polices and you may find that you can't port your mortgage any more if you move - also watch out for added fees in case you need/want to borrow more or indeed pay back extra.... They get you all ways!:mad:

hillcats

Same position here, we have a lifetime tracker mortgage that is now BofE +0.62 for life.
No intention of ever changing this one as I doubt it will be able to be beaten for a looooong time.