When will interest rates rise?

RenovationMan

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and mine

StevieJ

I was just checking some old documentation and chanced upon some old mortgage payment docs, amazing really. I took out a FTB mortgage in 1988 (38k), it wasn't that long before I was paying £394 + £49 = £443 (early 1991). I decided to check it against a FTB mortgage now, I used the Nationwide 3 year tracker at 4.69% and the numbers were £390 interest only and £566 repayment ( £100k mortgage balance after £20k deposit)
Of course I realise interest rates will increase at some point so I tested the cost at 4% BR + 3% margin = 7% and the figures were £583 & £706. Those figures seem to justify the common held belief that house prices are easily affordable (compared to the past) if the banks would lend the money.

Graham_Devon

StevieJ wrote: »

I was just checking some old documentation and chanced upon some old mortgage payment docs, amazing really. I took out a FTB mortgage in 1988 (38k), it wasn't that long before I was paying £394 + £49 = £443 (early 1991). I decided to check it against a FTB mortgage now, I used the Nationwide 3 year tracker at 4.69% and the numbers were £390 interest only and £566 repayment ( £100k mortgage balance after £20k deposit)
Of course I realise interest rates will increase at some point so I tested the cost at 4% BR + 3% margin = 7% and the figures were £583 & £706. Those figures seem to justify the common held belief that house prices are easily affordable (compared to the past) if the banks would lend the money.

Hang on. So you have compared mortgage rates of 12%+, to rates of 7% and used an arbitary figure of a 100k house, at least 30k under the average FTB home....and come up with the conclusion that this therefore reinstates your view that houses are therefore easily affordable.

Nice one.

vivatifosi

Graham_Devon wrote: »

at least 30k under the average FTB home....

Wow, what are FTBs buying? You can get a nice 1 bed flat or maisonette here for 130k and I live in the South East, if that's the average nationwide where houses are cheaper, are they waiting and buying bigger?

vivatifosi

I was discussing this earlier in the week with a group of relatively well informed people. Their view was shifting towards one where relatively high inflation (though not back to the highs of the 70s) became commonplace as a second plank to the government's strategy as they can pay off debts cheaply and inflate them away at the same time.

DervProf

RenovationMan wrote: »

All I know is that if rates hold out until October, then my renovations will be complete and I'll be well on my way to rebuilding my finances after such a huge outlay. It certainly looks as though my BoE rate gamble is paying off.

Whoopee do.

Please continue to share your "good fortune", if it continues. You obvioulsy think it's important to tell us about it.

As I`ve said before, your posts seem to suggest someone who is quite concerned about their personal finances, someone living "close to the edge".

Graham_Devon

vivatifosi wrote: »

Wow, what are FTBs buying? You can get a nice 1 bed flat or maisonette here for 130k and I live in the South East, if that's the average nationwide where houses are cheaper, are they waiting and buying bigger?

Analysis from the trade body shows the average value of a first-time buyer home is currently £136,842, an increase of 558% on the average cost of £20,810 in Q1 1983.

The average deposit needed by a first-time buyer was 23% of the asking price or £31,474 in December 2010, more than the total value of the average first-time buyer home in 1983.

http://www.mortgagestrategy.co.uk/housing-market/cost-of-average-ftb-home-increases-seven-fold-in-a-generation/1029472.article

With the average age of FTB's around 32. Maisonettes just simply won't work for them. I do get what you are saying, but in reality, a mainsonette would be a complete waste of time.

StevieJ

Graham_Devon wrote: »

Hang on. So you have compared mortgage rates of 12%+, to rates of 7% and used an arbitary figure of a 100k house, at least 30k under the average FTB home....and come up with the conclusion that this therefore reinstates your view that houses are therefore easily affordable.

Nice one.

I compared the current selling prices for a similar house (have you got a problem with that?). You are not doing a Chewbacca again are you

StevieJ

Graham_Devon wrote: »

http://www.mortgagestrategy.co.uk/housing-market/cost-of-average-ftb-home-increases-seven-fold-in-a-generation/1029472.article

With the average age of FTB's around 32. Maisonettes just simply won't work for them. I do get what you are saying, but in reality, a mainsonette would be a complete waste of time.

BTW my example was a 3 bedroom semi, one of those Barratt Wimpey type ones.

Graham_Devon

StevieJ wrote: »

BTW my example was a 3 bedroom semi, one of those Barratt Wimpey type ones.

3 bedroom semi, 100k?

You must live in an area with outstandingly lower value housing then.