Three-quarters of homebuyers fear interest rate hike that could 'push them over the e

MacMickster

wymondham wrote: »

The problem is that rates have been this low for so long that they are considered the 'norm' - a whole generation of people have never seen rates above a few percent and hence have not budgetted accordingly.

Interestingly I got caught out with 'when rates go high' rather than 'when rates go back to normal' a few posts back, and I've paid rates of 15% on my mortgage in times gone by!

People regularly refer back to 15% interest rates without acknowledging that they increased to that level only because most (but not all) people could manage to service them.

The average borrower would not get a loan of more than 3 times income, and MIRAS relief was in existence (basic rate tax was 30% in the mid 80s) which significantly reduced the effective rate of interest paid.

In terms of affordability, 15% interest rates then are equivalent to rates of around 8% now.

TedButler

Which is more unusual 0.5% or 15%? I think 0.5% for so long is more shocking and so far out of wack from norm.

System

This is 14 months old, right?

Edit: Sorry, I meant Forest's post.

robmatic

TedButler wrote: »

Which is more unusual 0.5% or 15%? I think 0.5% for so long is more shocking and so far out of wack from norm.

There are reasons why it's 0.5% though. Why do you think it would rise right now to above 5%? Interest rates don't rise and fall like a force of nature.

TedButler

robmatic wrote: »

There are reasons why it's 0.5% though. Why do you think it would rise right now to above 5%? Interest rates don't rise and fall like a force of nature.

Of course there are reasons why its so out of wack from the long term norm. When things get this out of wack, they have a habit of snapping back faster than anyone thought and overshooting on the correction.

Occams_Razor_2

TedButler wrote: »

Hamish will not like what Odey is saying, 7% and that is not a ceiling.

You need a lot of nerve to stay on a tracker for the next few years. Those who fix soon can sleep well at least for the term of their fixed rate.

what nonsense?

if you fix for any period of time, you are getting a massively prejudicial rate as the spread right now is unusually large.

so you will be overpaying for quite some years, and when the base rate increases, so will the SVR, tracker and available fixing rates when the offer period expires.

not to mention, that the real key with trackers is the spread over base.

Occams_Razor_2

geneer wrote: »

Fixed that for you.




Yet in reality its clear the Bulls are the real culprits when it comes to constantly trying to redefine what the crash is.
Nominal falls are currently similar to what they were in the last crash. It was a crash then. It is a crash now.
End of story.


You don't really have a clue as to my personal position Julieq,
though like the rest of Geneers Gals, it does seem to be an enormous source of fascination for you. I'm flattered by the attention.


I've always felt that the bulls were a collection of magpies, happily picking up and regurgitating memes with little thought.

It really does tickle me when posters like Julieq and Hamish
are obviously (and perhaps even unconsiously) picking up the observations regularly directed at our bullish community and foolishly attempting to deflect it back.

look you again.

your circumstance is not really relevant, other than that your analytical skills and understanding are very low. from there it's a reasonably simple extrapolation to your personal situation.

there is also the simple matter of motivation and incentive.

what I wouldn't mind knowing at some point is: with your very high level economic understanding you seem very keen to pay the highest rents in decades, and not take advantage of the lowest mortgage rates in same. fine, whatever it takes all sorts.

But... what investment vehicles are you putting all your savings into? what strategies do you recommend for all those renters, saving their deposits, for when the market comes crashing down?

someone of your finely nuanced perspective, must have a few tips on the out perform asset classes and strategies that offer better returns

what are they? where do you put all the vast wealth you are accumulating ?

Occams_Razor_2

TedButler wrote: »

Of course there are reasons why its so out of wack from the long term norm. When things get this out of wack, they have a habit of snapping back faster than anyone thought and overshooting on the correction.

this rhetoric conveniently overlooks any discussion on what the drivers are for increased interest rates.

what will need to happen for base rates to rise toward the 3 to 4% mark?

lisyloo

But what if there is no recovery and things keeps getting worse as the global credit crisis keeps worsening.

Interest rates will stay low (as they are forecast to) and we'll possibly get more QE.

I think some people confuse what they want with what is likely to happen.
Wishing for something or continually saying it should happen does not make it more likely.

ess0two

lisyloo wrote: »

Interest rates will stay low (as they are forecast to) and we'll possibly get more QE.

I think some people confuse what they want with what is likely to happen.
Wishing for something or continually saying it should happen does not make it more likely.

Yeah its also tiresome that the sample people keep signing back up after being ppr'd.Tedbutler goes to be replaced by sop.