5% Interest Rate

Ali-OK

Seaxwyn - Post your SOA (start a new thread) - the DFWs will find some savings in there I bet!

immoral_angeluk

We don't have a mortgage. This is the one time I'm actually glad not to be on the property ladder! lol!

D&DD

We don't have a mortgage (on council due to repossession) but do remember when we owned our flat rates were 14.7% :eek: We were paying over £500 a month on a £50k mortgage...

leni

we currently pay £415 on 61k mortgage with 21years remaining, on varible so ours will go up

PigginSkint

My mortgage will increase by (I think) about £5 pcm, my homeowner loan by about £1.50 pcm and the finance for my windows by £1 pcm. Could be worse but it doesn't help!!

HairyHandofDartmoor

It won't affect our mortgage as we have 1 year to go on a fixed rate of 5.5% (I know it's really cr*p, we took it out before we discovered MSE) and we have just transferred our last credit card debt onto a 5.9% life of balance offer.

But it is a worrying trend and could push some people over the edge. What does it mean for the future I wonder?

I am glad we are in a better position than this time last year as we have paid off approx 1/3 of our debt thanks to MSE and a lot of willpower.

HairyHandofDartmoor

I just had an email from ICICI Bank to say that they are paying more interest on my savings account! (holiday savings. I know, I can't afford a holiday but it is our only luxury and we are doing it for the kids, excuses, excuses!).

James240

Does any body think at the way things are going i.e. interest rate hike, the high cost of housing, etc that something is going to give in the ecnomy? I just get the feeling that something big will happen and it will take a lot of people with it. Im thinking along the lines of something like Black Wed/Thursday in the 80's or 90's? i just think that it cant keep going the way it is cos its going to get to a point where no one will be able to afford anything

climbgirl

No, I don't think there's anything big coming. Big recessions like the ones you're thinking of James usually follow a period of big inflation and that's been reasonably stable recently. I think that house prices will (must?!) slow soon. Traditionally troughs always follow peaks - the prices never plummet, but they do go down or slow. But that doesn't mean a crash is coming, no.

Interest rates are very low at the moment, historically. About a third of what they have been in recent years. A small rise in rates might spell disaster for some household budgets, but it doesn't mean a big economic crash is coming.

Ali-OK

James - It's because inflation was creeping up that the BoE have put the base rate up. Inflation has been caused by our utilities prices rising, but it was also coming through in the retail prices as companies pass it on to the consumer (just look at things like bread going up 7p a loaf for example).

Putting the BoE rate should alleviate this by (a) consumers not spending so much and (b) prices remaining or reducing as consumers don't buy and (c) taking people's money for them by higher interest payments. If they didn't, consumers wouldn't spend less, inflation might rise alot more and then we'd be heading (at what speed, who knows) towards that boom/bust possibility.

Where it seems to get messy is that house prices still keep rising as people are still getting on the property ladder and also people releasing equity in their homes, so the mortgage lenders say yes, it's going strong and therefore safe to put up rates (as it won't slow it down), the rest of the country say no, it's not safe - people are already spending less, saving more and paying off their credit more.

It's a bit of a conundrum and I don't profess to know anything more than what I've been reading and deduced from that. It's just my view on things.