Interest rates to hit 1.25% by year end

Thrugelmir

Batchy wrote: »

What merv is trying to say is in 2012 when there is NO VAT RISE, and NO FUEL DUTY RISES inflation will probably be around 2%, ie its Target or below it.

Mr Brown factored in 5 years of fuel duty rises.

This was part of Labours plan to raise taxes to cut the deficit. Noticably a topic they steer well clear of.

RenovationMan

Throughout their terms in office Labour seemed to always follow the same plan.

1. Overspend and break the economy.
2. Tax everyone to the hilt to reduce deficit and fix broken economy.

They never really could grasp the idea of reducing spending to reduce a deficit.

Thrugelmir

FTBFun wrote: »

The historical norm is to have very low levels of owner occupancy with most properties having private landlords.

Taking London alone around 1.3 million homes were damaged or destroyed in the blitz. So post war and into the 50's saw the construction of social housing (council estates).

Much of the pre-war housing in the major industrial cities was poor quality and at best slums.

Gorgeous_George

Vincenzo wrote: »

... EG C&G's is 2% above base so their SVR is currently 2.5%. If the base rate rises by 1.5%, so will their SVR...

You are wrong.

SVRs are NOT tracker mortgages so there is no guarantee that SVRs will rise by 1.5% with a rise of 1.5% in the base rate.

My tracker is 0.74% above base rate so paying 1.24%. My mortgage was affordable when the base rate was 5.75% and I expected rates to rise. The low rates have allowed me to save a few quid and if/when rates rise, my mortgage will be more affordable because 1) I have a higher salary and 2) I earn interest on the savings that i have accrued while rates were low.


Tracker example.
Anybody with £100K outstanding on a tracker at 1% above base and with 15 years remaining on the mortgage would be paying £621 today. Every 0.25% rise would cost them £11.32 per month. If base rates rose to 5% they'd be paying £223 more (at a mortgage rate of 6%).

The fools who have taken huge margin trackers (base + 3.99% for example) while rates were low will need to switch deals quickly if rates rise sharply.

GG

Vincenzo

Gorgeous_George wrote: »

You are wrong.

SVRs are NOT tracker mortgages so there is no guarantee that SVRs will rise by 1.5% with a rise of 1.5% in the base rate.

My tracker is 0.74% above base rate so paying 1.24%. My mortgage was affordable when the base rate was 5.75% and I expected rates to rise. The low rates have allowed me to save a few quid and if/when rates rise, my mortgage will be more affordable because 1) I have a higher salary and 2) I earn interest on the savings that i have accrued while rates were low.


Tracker example.
Anybody with £100K outstanding on a tracker at 1% above base and with 15 years remaining on the mortgage would be paying £621 today. Every 0.25% rise would cost them £11.32 per month. If base rates rose to 5% they'd be paying £223 more (at a mortgage rate of 6%).

The fools who have taken huge margin trackers (base + 3.99% for example) while rates were low will need to switch deals quickly if rates rise sharply.

GG

No, I am not! I was referring specifically to the C&G example. C&G have an SVR of 2.5%, this is because their T&Cs say their SVR will never be more than 2% above the base rate. I guarantee their SVR will rise in line with the base rate.

Besides, historically most lenders have raised their SVR with base rate increases since their SVR is usually set at a premium to base.

Batchy

Graham_Devon wrote: »

LOL at all this.

...
Going forward, the biggest problem with rising rates and mortgages, is all those who will not be able to remortgage, who assumed they always would be able to.

Its not funny, the problem is not only laid out to bare on the ones looking to remortgage.

its the FTBers want to save to get a mortgage... we are almost seeing returns to 5% and 10% deposits

At the slight hint of falls hitting the market, back will come 20% deposits requirement, or punishment on the rate you borrow at.

Thrugelmir

Batchy wrote: »

Its not funny, the problem is not only laid out to bare on the ones looking to remortgage.

Life is full of choices not automatic rights. Borrow less, make overpayments and move up the ladder more slowly. Less interest paid more equity in ones property.

Gorgeous_George

Vincenzo wrote: »

No, I am not! I was referring specifically to the C&G example. C&G have an SVR of 2.5%, this is because their T&Cs say their SVR will never be more than 2% above the base rate. I guarantee their SVR will rise in line with the base rate.

Besides, historically most lenders have raised their SVR with base rate increases since their SVR is usually set at a premium to base.

Are you the MD of C&G? How can you make such a bold guarantee?

Trackers track - the clue is in the name. SVRs compete with other SVRs. If C&G SVRs track and others do not, C&G end up with no customers.

GG

Vincenzo

Gorgeous_George wrote: »

Are you the MD of C&G? How can you make such a bold guarantee?

Trackers track - the clue is in the name. SVRs compete with other SVRs. If C&G SVRs track and others do not, C&G end up with no customers.

GG

You appear not to understand pricing. Their SVR is 2% above base because they are constrained by their T&Cs. It is the cheapest on the market and less than most trackers on the market currently. Competition:

http://www.thisismoney.co.uk/mortgages-and-homes/mortgages-features/article.html?in_article_id=498085&in_page_id=58

So u think if the base rate rises to say 1%, C&G will hold their 2.5% SVR with just a 1.5% premium?

Let's wait and see but in the meantime, some food for thought:

Lloyds press release on reducing rates in line with the base rate (SVR & trackers):

http://www.mediacentre.lloydstsb.com/media/pdf_irmc/mc/press_releases/2009/March/3209pressrelease.pdf

Lloyds (as with Nationwide previously), abandoning their cap of 2% against base for new SVR customers:

http://www.which.co.uk/news/2010/05/lloyds-tsb-hikes-mortgage-rate-from-2-5-to-3-99-215776/

Tracker’s don’t always track….. Nationwide’s SVR (2.5%) is cheaper than all of its tracker mortgages, after they imposed the collar of 2.75%. This also means that some of their trackers might not rise with the initial (small) increases in the base rate:

http://www.thisismoney.co.uk/mortgages-and-homes/mortgages-features/article.html?in_article_id=463011&in_page_id=58

The devil is in the detail.

RenovationMan

Thrugelmir wrote: »

Life is full of choices not automatic rights. Borrow less, make overpayments and move up the ladder more slowly. Less interest paid more equity in ones property.

Life is full of choices based on your own circumstances. Mine has been a well paid job in a secure market, meaning I had the security to borrow more and move up the ladder quickly.

My ladder consists of 2 bed starter home, 4 bed 'executive' detached, 5 bed stone farmhouse all on the maximum I could borrow against my salary and all on interest only loans.

Overpayments help, but more important is keeping your monthly outgoings down. No flash cars with finance, no mobile phone contracts, no Sky TV, no credit card debts, no expensive holidays for me. The priority was running up the ladder but with a safety harness on. I feel I have achieved that.

Where people get into trouble is when they have the nice house and feel they need the nice car, nice clothes, kids in private school. i.e. the lifestyle to go with the house.

There is nothing wrong with using cheap credit to fund an investment, as long as the return on that investment is greater than the cost of the credit. In my experience, it invariably is.