Interest rates to hit 1.25% by year end

julieq

B_Blank wrote: »

Yes it is historically very high because it has been a long struggle in this country to take power, property and wealth away from the landed class.

So the "norm" is basically the aftermath of a dictatorship (the monarchy). This only really started to lose its power after world war 1, when the monarchy no longer held much real power.

Property was a racket, and the wealthy landed classes simply exploited normal people by charging them extreme rents. We need to do everything we can to ensure that buy-to-let people (with 100's of houses) dont reestablish a monopoly on property (which they already do in London), and artificially drive up property prices and rents.

They basically all agree to charge high rates and we have no alternative but to pay it, we have to live somewhere right?

Buy to let people are the lowest of the low as far as I am concerned. And by that I mean people with 5+ properties and not people who inherited a house.

Nice rhetoric, but this is historically inaccurate. It was actually Mrs Thatcher's reforms to banking which opened up mass home ownership, as well as right to own legislation. Prior to that rents and prices were hardly excessive because no-one had really taken that much interest in housing as an investment and we didn't have the massive supply/demand imbalance we have now.

And property rental is a perfectly legitimate business activity which has not had any significant effect on prices - that is a verifiable fact from recent analysis. It's no different from lending money to businesses to provide employment against a return, which is how a great many pensioners earn their pension (indirectly).

You don't pay high rents because of some conspiracy of landowners to force prices up. In a highly competitive landscape with multiple small businesses operating, which is what small BTL investors provide, rentals will actually tend to settle lower than if a small cartel sets the prices.

Rents are ultimately determined by what the market will stand, and that's conditioned by the numbers of households being created against the rate of home creation. There's only one way it can go until we build more homes.

Gorgeous_George

Vincenzo wrote: »

You appear not to understand pricing. Their SVR is 2% above base because they are constrained by their T&Cs.

Was it 2% above base when base was 5.75%? Not very competitive if it was.

GG

Vincenzo

Gorgeous_George wrote: »

Was it 2% above base when base was 5.75%? Not very competitive if it was.

GG

I cannot recall C&G's rate but a quick Google search shows that in Sept 2007, the base rate was 5.75% and the average SVR was 7.69%.

http://www.telegraph.co.uk/news/uknews/1562895/Mortgage-rates-hit-nine-year-peak.html

Gorgeous_George

Vincenzo wrote: »

I cannot recall C&G's rate but a quick Google search shows that in Sept 2007, the base rate was 5.75% and the average SVR was 7.69%.

http://www.telegraph.co.uk/news/uknews/1562895/Mortgage-rates-hit-nine-year-peak.html

Thanks for the link.

So, when banks stopped lending, SVRs were nearly 2% above base rate.

I rest my case.

GG

Vincenzo

Gorgeous_George wrote: »

Thanks for the link.

So, when banks stopped lending, SVRs were nearly 2% above base rate.

I rest my case.

GG

What case? You asked what the SVR was when base was 5.75. It is surprisingly difficult to get historic SVR info and that was the best I could do. It is true that in the boom before 2007 margins fell as lenders fought for business.

You have to consider the current situation. 2% above base is the cheapest SVR on the matket currently! Most are much more.

I think we will have to agree to disagree and wait to see what happens. For the record I predict C&G and Nationwide will raise their SVRs (those with the 2% cap) in line with the base rate for some time to come.

Thrugelmir

RenovationMan wrote: »

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.

I don't disgree with your views. I'm merely looking forward not backwards. We are where we are. The wider financial picture in the next 10 years is so different to the previous 10.

According to Charlie Bean, deputy of the BOE. The net effect of the property boom has been to transfer around £250 billion of wealth between generations (and certain individuals).

"Cheap credit" is great if you were lucky to obtain. The next generation is going to pay over the odds though for your good fortune. As ultimately the lenders have to make a profit.

Until you cash in the investment the return is unknown. I've seen people make large profits on paper. Totally convincing themselves that their strategy is sound and there's no reason to cash in even part of their investment. Then of course an event or circumstance occurs and the investment crumbles to dust.

Most successful business people have one idea or stroke of luck that sets them up for life. As once you've got capital in the bank thats more than most will achieve in a lfetime.

As the saying goes. Money makes money.

RenovationMan

Thrugelmir wrote: »

I don't disgree with your views. I'm merely looking forward not backwards. We are where we are. The wider financial picture in the next 10 years is so different to the previous 10.

According to Charlie Bean, deputy of the BOE. The net effect of the property boom has been to transfer around £250 billion of wealth between generations (and certain individuals).

"Cheap credit" is great if you were lucky to obtain. The next generation is going to pay over the odds though for your good fortune. As ultimately the lenders have to make a profit.

Until you cash in the investment the return is unknown. I've seen people make large profits on paper. Totally convincing themselves that their strategy is sound and there's no reason to cash in even part of their investment. Then of course an event or circumstance occurs and the investment crumbles to dust.

Most successful business people have one idea or stroke of luck that sets them up for life. As once you've got capital in the bank thats more than most will achieve in a lfetime.

As the saying goes. Money makes money.

I dont disagree with you about investments, I have said as much to the Gold and Silver bugs. Until the investment is banked as hard cash, then the result is not known.

However, the result is known with my house investment. I have a static mortgage that can only go down, meanwhile I get to enjoy 20 or more years living in a beautiful house in an amazing location. My investment is one that pays every day because I get to enjoy it every day.

As to your other comments, highlighted in green. You seem so sure of the future that its astonishing. In reality, you have no idea of what it will be like in the next decade, let alone what it will be like for the next generation.