Just heard interest rates have gone up

meanmachine_2

Man, the upcoming inflation data for December must be really BAAAAD, I mean really BAD for them to have hiked rates in January.

There's no other explanation.

Although I suspect Danny Blanchflower blanched at the news.

daveski

On the plus side hopefully the banks will raise their savings rates to allow those that are saving to get a bit more. On the other hand it is a bit harsh on those who have bought recently..i saw figures on C4 News tonight that show mortgages completed at their highest level since 2003 in Dec even after the 2 previous interest rate rises.

we were quite fortunate in choosing a fixed rate for 2 years last June but am not looking forward to the inevitable remortgage in 17 months.

Gorgeous_George

daveski wrote:

we were quite fortunate in choosing a fixed rate for 2 years last June but am not looking forward to the inevitable remortgage in 17 months.

It's those who fixed in Spring 2, 3 and 5 years ago who will be hardest hit by ant IR increases especially if they are tied in beyond the fixed term. The difference that they will need to find will be hard to swallow and is one reason why I prefer trackers - at least rises are gradual.

I trust your fix didn't cost an arm and a leg to set up and has no tie-in period.

Hopefully this rise will have the desired effect(s).



GG

PoorDave

F_T_Buyer wrote:

There is a higher chance of another rise, than not. This shouldn't come as a surprise, i've been mentioning it for a while as the data supported it.

Going to put money on this?

PoorDave

Snow_Dog wrote:

Humerous note:- and over on HPC a post started at 12:19 today gleefully points out a link to the FTSE, crowing about how badly the market has reacted to the IR rise, much talk about brokers jumping out of 10th floor windows etc.

Much coughing and changing of subject when someone later in the day points out the fact that the FTSE has now risen on the day.

Do you reckon if HPC have regular meets their recognition sign is little "the end of the HPI is nigh" placards? Perhaps they have a folded copy of the property advertiser under their arms.

The small number of HPC'ers that do actually have arms can't hold stuff under their arms because of the webbing. Also, they can only meet by accident, and can't see each other when they do as the view from within their own rectums leaves a lot to be desired.

PoorDave

tomstickland wrote:

If someone is on a variable rate mortgage then they could compute the extra cost per month of a 0.25% rise and put that amount onto Betfair. If there isn't a rise they lose the equivalent of one months extra, and if there is a rise then they receive a few months worth of extra money to cover it.
Isn't this what people do with share prices and spread betting etc?

I'm 6 months into a 2 year fixed rate of 4.39%. I remember asking on MSE about fixed vs variable and was told that it was down to my personal opinion as to what was best. After a few days thinking about it I went fixed. It's not going to be so good when I move mortgages in 18 months time though. On the good news front it means that having savings rather than paying off mortgage becomes the correct way round.

Spot the matched better!

FleetFanatic

BTman wrote:

You are very lucky to have paid off your mortgage...

I can not afford a house/mortgage. I work hard and have seen property ownership edge away further and further whilst having had my nose rubbed in HPI for the past 10 years by greedy multiple home owners bragging about their investments.
So higher IR's may not be a good thing if I want to take out a mortgage, but I can't anyway....
So I celebrate my savings rate increasing (for when I can buy, one day..)
It's hardly selfish. (funny you should mention bubble..;) )

Very well said, I am in the same boat.

I earn an above average salary yet cannot afford to buy.
Is that my fault?

So every interest rate rise is welcome, as my savings get a boost.

If it's OK for homeowners to rejoice in interest rate cuts, then we can do so for increases.

tomstickland

PoorDave wrote:

Spot the matched better!

Actually, a proper matched better would do the simultaneous equation so that they pay the same amount in total the next month regardless of outcome.

Imagine that a 0.25% rise would add £x to their mortgage and they could back a rise on Betfair at odds of O with a stake of S. The two outcomes for the next month would be:

rates rise / mortgage cost profit / bet outcome profit
true / -x / S*(O-1)
false / 0 / -S

So balancing those two up
-x + S*(0-1) = - S
=> S = x/O
Imagine that the odds were 30.0 and the monthly increase was £30.
They'd put £1 on and either lose £1 or win £29 but pay out £30 extra on the mortgage. ie: £1 down regardless of what happens.

Actually, having done the analysis, this is a bit of a waste of time TBH. I was hoping to find a way to save on mortgage costs. As the odds get close to 1.0 (ie: very high chance of a rise) you stand to pay out the same amount whichever way it goes.

mr.broderick

tomstickland wrote:

Actually, a proper matched better would do the simultaneous equation so that they pay the same amount in total the next month regardless of outcome.

Imagine that a 0.25% rise would add £x to their mortgage and they could back a rise on Betfair at odds of O with a stake of S. The two outcomes for the next month would be:

rates rise / mortgage cost profit / bet outcome profit
true / -x / S*(O-1)
false / 0 / -S

So balancing those two up
-x + S*(0-1) = - S
=> S = x/O
Imagine that the odds were 30.0 and the monthly increase was £30.
They'd put £1 on and either lose £1 or win £29 but pay out £30 extra on the mortgage. ie: £1 down regardless of what happens.

Actually, having done the analysis, this is a bit of a waste of time TBH. I was hoping to find a way to save on mortgage costs. As the odds get close to 1.0 (ie: very high chance of a rise) you stand to pay out the same amount whichever way it goes.

what worrys me is that i understood every bit of that, im going to bed..

alias7

Another rate increase. Argghhh. Financially this doesn't affect me, because I have no debts or anything. However, I work for a mortgage company. And this means that my job, which is normally laid back and quite easy going, will remain frantic for another month with people going mad because their mortgage payments have gone up!

If you phone your mortgage company up to query your payments etc....be nice to us!