Anyone else worried about the interest rate rise?

nrsql

It was worse than that
http://www.moneyextra.com/dictionary/Interest-rate-history-003455.html

But then inflation was quite high so wage inflation soon brought down the mortgage proportion.

Actually if you think about it during times of high inflation although the mortgage rate is high people would struggle for the first few years to pay but after that wages catch up and everything is ok (hence low start mortgages).
As things are at the moment with low mortgage rates, low inflation and (hence) high house prices people struggle to pay the mortgage at the start but wages don't increase much so they continue to struggle for many years.

Why do people think that such low inflation is such a good idea?

pennylane99

pudding06 wrote:

I remeber interest rates of upwards of 13%

no i'm not panicking - lifes too short to worry about what might happen if and when.

If it happens you'll deal with it hun

pudds

I remember too....the first flat I bought way back in 1985...interest rate then was just over 15%....

Uniscots97

How did people cope before sites like this and places like ebay, amazon marketplace etc for advice and making a little extra money on the side to cope?

mrslawrence2003

KatrinaC wrote:

Personally I'm feeling OK about the rise as all of my debts are on a fixed interest rate and so this will not affect my expenditure.

Also (and I KNOW that this is very selfish so please don't all shout at once!)I'm secretly hoping that if the interest rate rise depresses the housing market enough, it might mean that I will be able to afford to buy a house. {Hangs head in shame}.

Nationally though, how can the interest rate rise be viewed as a good thing when we are already getting reports of record numbers of bankruptcies and IVAs?

Kat

dont worry - you're not the only one thinking that. luckily all my debts are fixed rate (am sure) so wont really effect me yet. however i do have a strong feeling that we are heading into a global recession. i work in international shipping and the rates are very high at the mo and have been for a while (pushed up mostly by China's huge increase in output). however, this also means that there are a large number of ships being built, and when they all come onto the market end of next year, i think the rates will drop and the market will crash. and so it will go.......

Intoodeep

pennylane99 wrote:

I remember too....the first flat I bought way back in 1985...interest rate then was just over 15%....

But what a lot of people don't think about when going on about how high interest rates were, is the ACTUAL increase in the rate ie.

13% to 13.5% is an actual increase of 3.84% in real terms whereas

4.5% to 5% is an actual increase of 11.10%

The same thing with our Uncle Gordies increase in National Insurance (TAX) contributions from 10% to 11%, the ACTUAL increase was 10% not 1% as trumpeted by the man from no.11

dips_3

unixgirluk wrote:

How did people cope before sites like this and places like ebay, amazon marketplace etc for advice and making a little extra money on the side to cope?

People didn;t need to 'cope' because they weren't in debt.

Mortgages went up but so did inflation so the cost of mortgages was eroded as wages rose. Wages will not rise this time to erode that debt.

!970's - no credit cards for most, no sky t.v, no new cars for most, high tech toys, overdrafts, etc

Things were hard but everyone was in the same boat and most people were happier than today because they didn;t have to worry about paying of huge loans or credit cards - we just did without.

Too many youngsters have got no idea what it was like in the 70's or in the 90's when house prices crashed and their was massive unemployment. I fear some of the youth are about to find out.

ZTD

unixgirluk wrote:

The company where I work has paid off 70% of its workforce in five years. Worried about that too but less so as they'll have to pay me redundancy.

Be sure to check their fiancial state regularly. If they go bust, they won't.

immoral_angeluk

I'm just glad I don't have a mortgage.

Pobby

unixgirluk wrote:

How did people cope before sites like this and places like ebay, amazon marketplace etc for advice and making a little extra money on the side to cope?

Mainly through wage inflation!

ZTD

nrsql wrote:

Why do people think that such low inflation is such a good idea?

It isn't. No inflation is a good idea.

Inflation distorts what you measure everything against - money. So hence it distorts the measure of everything.

It's like continually shrinking the inch.

You might think "Yeah - that's great my living room is now 3 miles by 7 miles", but its the same old thing, and you can't tell whether that length of wood you've just bought is bigger or smaller than the last one you'd bought.

After all whether 2 miles is longer than 6 feet depends on the date it was measured.