How high would base rates have to rise before..

Pete111

10% or higher

nembot wrote: »

I've put 10% as my situation is completely different to those who bought within a few years of peak.

Research in the public domain suggests nearly a million mortgage holders are on a financial knife edge, just a couple of percent increase on say a balance of 130k+ would undoubtably push them into hardship.

I bought in Sept 07 with a near 400k mortgage - can't get much peakier

Having made large overpayments since then and helped very nicely by the low base rate, I can safely say that if interest rates rose 10% (and leaving aside the point I'm on a fixed rate) I would still be in no danger of losing my home

Thrugelmir

HAMISH_MCTAVISH wrote: »

Interesting poll results so far....

It does rather seem the bears are wrong in their analysis of how "squeezed" or "stretched" most people are.

Maybe this forum is unrepresentative.

One-in-Four Britons Can’t Afford Debt If Rates Rise, ITV Says


Almost one-in-four Britons say they are concerned they won’t be able to afford their debt repayments if the Bank of England increases its key interest rate, according to a ComRes Ltd. survey carried out for ITV Plc.

About 23 percent of 2,024 respondents in the study said they will not be able to afford mortgage or loan repayments by the end of this year if interest rates rise, ITV said in an e- mailed statement today. Bank of England policy makers will announce their monthly policy decision tomorrow.

Thirty-three percent said a “significant rise” will put them in “severe financial difficulty,” compared with 50 percent who disagreed, the U.K.’s biggest commercial broadcaster said. About 48 percent said they will put off making “big financial decisions” until later in the year, ITV said.

http://www.bloomberg.com/news/2011-03-09/one-in-four-britons-can-t-afford-debt-if-rates-rise-itv-says.html

Loughton_Monkey

10% or higher

HAMISH_MCTAVISH wrote: »

And I've now responded in the other thread, to contradict your contradictions where you accused me of contradicting myself.

Hope that's not too contrary for you...;)

This is all rather incongruous.

I cannot predict how high the rates would be before my pips squeaked. I once had a fully offset offset mortgage at 1% over base. So all I care about is the difference between that and whatever savings rate I can get. If base rate went up to 7% then as long as I could get more than 7½% after tax on the savings, then fine. If not, then sh*t, the game's up and I just shove it all back in the offset account again.

In any case, in my day, 15% mortgage rates were no big deal. But then again we didn't lie about our earnings when taking the mortgage.

property.advert

What will kill people is the fact that they have forgotten or not factored in the fact that their everyday costs are now substantially higher than they were when rates were higher and those price rises have been largely absorbed by the income freed up due to lower mortgage repayments. Add in inflation and there could be a crisis brewing.

There are already posts from people who are so near breaking point that they cannot absorb any base rate rise. They are well and truly stuffed.

pinkteapot

Base rate of about 55% would start to be difficult.

I don't think this board provides a representative sample for a survey to be honest.

geoffky

10% or higher

mortgage free..but would not like to see high rates because the economy will go to hell. i mean by high anything over 8%

HAMISH_MCTAVISH

10% or higher

Loughton_Monkey wrote: »

In any case, in my day, 15% mortgage rates were no big deal.

We had 15% mortgage rates, and they were a big deal to any young couple or person at the time.

Of course, in those days, people bought a house and then did little else but sit on the second hand or gifted furniture, unable to afford to heat it much, and being pretty miserable for the first few years.

Because in 1990, the average mortgage payment took up 68% of net income.....

If rates rise significantly, I certainly expect that to become the norm again. But it didn't stop people buying houses then, and it won't now.

geoffky

10% or higher

HAMISH_MCTAVISH wrote: »

We had 15% mortgage rates, and they were a big deal to any young couple or person at the time.

Of course, in those days, people bought a house and then did little else but sit on the second hand or gifted furniture, unable to afford to heat it much, and being pretty miserable for the first few years.

Because in 1990, the average mortgage payment took up 68% of net income.....

If rates rise significantly, I certainly expect that to become the norm again. But it didn't stop people buying houses then, and it won't now.

wrong...it took me three years to sell in the eighties because so few were buying after the end of mortgage relief and sky high interest rates.

Hamish had you bought by 1980?

HAMISH_MCTAVISH

10% or higher

geoffky wrote: »

wrong...it took me three years to sell in the eighties because so few were buying after the end of mortgage relief and sky high interest rates.

Hamish had you bought by 1980?

Pretty sure I was talking about 1990, not 1980.

lostinrates

Hamish firstly thank you for the thread. I had to do a bit of research that should have been being done anyway to contemplate the question.


we bought with the aim of overpaying while rates were low and meeting payments on our variable rate mortgage up to a certain percentage from the month of purchase. But when buying a wreck things other than over paying always seem important. This year DH's salary rose by around 5%, next year should be ITRO 8%, year after a bit more still. Hopefully this will keep things ''stable'' compared to rate rises. Of course, things to offset against that include higher cost of living generally, and personally increased costs relating not just to house purchase but to lifestyle and business start up. we have some things coming in we didn't used to, but thee are small, and new expenditures too. Additionally, some other incomes are not as fruitful as in the past. And, I'm hesitantly setting my sights on a bigger goal, for which there would need to be a dramatic increase in business lending.

It is an impossible thing to look at independently because so very many other calls on expenditure and ther areas we could rein in if needed.