When interest rates to go back to normal many more distressed sellers?

StevieJ

purch wrote: »

What level do you mean as "normal" ?

(8.4% average Base Rate over last 35 years, 7.13% over last 25 years, 5.024 over last 15 years, 4.379% over last 10 years or 4.124% over last 5 years)

Interestingly the average rates over recent history (5-15 years) look the norm if you were to take that average back to 1694.

http://interest.rates.cx/bank_of_england_base_rate/

kabayiri

For me it's job security, not interest rates, which will influence events.

I've mentioned here before about people who were made redundant on very generous terms since the crunch. Despite the financial cushion they have continued to spend as though in work. They were probably hoping the recession would be over by now, but it's proving much more protracted.

novazombie

HAMISH_MCTAVISH wrote: »

Why does this site attract people with below average intelligence?

Like for instance people who have been saying for years that gold and silver were going to crash 100% guaranteed?

Do you still insist this is 100% guaranteed Hamish?

The title of this thread is a very reasonable question? Care to say why you think its below average intelligence to discus it?

nembot

purch wrote: »

What level do you mean as "normal" ?

(8.4% average Base Rate over last 35 years, 7.13% over last 25 years, 5.024 over last 15 years, 4.379% over last 10 years or 4.124% over last 5 years)

What gives you that idea ??

Interesting percentages there purch, kinda shows what a mess we're in currently.

Really2

Base rates wont be back up to 5% until the economy recovers.

So in theory there would be less defaults as we would be in a boom, the rates would be a reflection of that.

celler

Would be interested to know differance between average std variable rate and BOE rate over a 20 or more year period.

Seems to me its currently higher than normal.Maybe the first few rises may get sum absorbtion there?

nembot

Really2 wrote: »

Base rates wont be back up to 5% until the economy recovers.

So in theory there would be less defaults as we would be in a boom, the rates would be a reflection of that.

Maybe so, but even 0.5% isn't stopping the downward trend of house prices and in terms of personal borrowing, rates have barely changed.

Really2

nembot wrote: »

Maybe so, but even 0.5% isn't stopping the downward trend of house prices and in terms of personal borrowing, rates have barely changed.

Mortgage rates of barely changed, so why do you think rates should go up if there is a downward trend?

mbga9pgf

Lack of finance availability. Less liquidity = higher premium.

Thanks to Option ARM destroying bondholders faith in the system and weakening banks' ability to maintain capital ratios.

The BOE requiring their 400 bill in SLS support isnt going to help matters either.

This is one of the reasons I bought. After a bespoke comparison of mortgage lending rates I anticipate, it was cheaper buying at 30% off valuation and accepting a small chance of a decrease in value, than continuing saving in a low rate environment and potentially ending up paying 5% over the term. Instead, I am paying 1.99% over base for the life of the mortgage.

IronWolf

Rates going back to "normal" (I assume you mean around 5%?) won't hugely affect house prices I dont think (though it definitely wont help!), most owners Ive spoken too arent even getting the benefits of the low interest rates as the banks are reluctant to pass them on.

But what if we get a repeat of the past with double digit interest rates? That could mean trouble for the housing market. Noone knows how likely this is to happen, maybe in 5 years the economy will be looking peachy and inflation will be rampant. Who knows.