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Interest Rates could hit 6% very soon!
phlash
Posts: 883 Forumite
http://business.timesonline.co.uk/tol/business/money/mortgages/article1821368.ece
I do believe that interest rates of this magnitude and above will start to have a very serious affect on the housing market. (Yet 6% is only the long term average)
Its time to take things a little more seriously I think, the kind of returns on property that we've seen over the past 10 years of booming, may now really be
coming to a end.
This isn't a housing crash prediction, I'm just weighing up the fact that the RISK element of housing investment has increased SIGNIFICANTLY over the last 12 months.
I do believe that interest rates of this magnitude and above will start to have a very serious affect on the housing market. (Yet 6% is only the long term average)
Its time to take things a little more seriously I think, the kind of returns on property that we've seen over the past 10 years of booming, may now really be
coming to a end.
This isn't a housing crash prediction, I'm just weighing up the fact that the RISK element of housing investment has increased SIGNIFICANTLY over the last 12 months.
I can take no responsibility for the use of any free comments given, any actions taken are the sole decision of the individual in question after consideration of my free comments.
That also means I cannot share in any profits from any decisions made!;)
That also means I cannot share in any profits from any decisions made!;)
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well done sherlock
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I can take no responsibility for the use of any free comments given, any actions taken are the sole decision of the individual in question after consideration of my free comments.
That also means I cannot share in any profits from any decisions made!;)0 -
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6% is nothing!! If they get up to 15% then maybe... unless lots of people have been foolishly borrowing to their limit with no back up money... but that would just be crazy!!Should've = Should HAVE (not 'of')
Would've = Would HAVE (not 'of')
No, I am not perfect, but yes I do judge people on their use of basic English language. If you didn't know the above, then learn it! (If English is your second language, then you are forgiven!)0 -
6% is nothing!! If they get up to 15% then maybe... unless lots of people have been foolishly borrowing to their limit with no back up money... but that would just be crazy!!
OK This " There won't be a crash as we will never see interest rates at 15% again" is getting a little tiring.
The last boom cycle started around 1985 and ended in 1990 with spectacular style. It was triggered by IRs making a 1% leap to 15% in 1990.
I think we all agree that it very unlikely that we ever see IRs of that level again.
However, during the period of growth 1985 to 1990, the lowest IR during that period was 7.5% for a (short time in 1988)the average was closer to 10%. At the time lending credit was tight with 2.5x salary being the norm. This was deemed to be the level of "affordability" at that time. The trigger for a crash was the average period of IRs during that period of growth ( 10% ) x 1.5 = 15%
The parallels with today:
We have had a large period of growth 2000 to present. During that period, lending institutions have told us that income multiples no longer matter as it is "affordability" that counts. ( and have loosened their lending criteria to match this. 5X etc) During long periods of low inflation and low IRs this could be argued as true.
"Affordibilty" during the last boom has been replaced by "affordibility" of the current boom. The average IR during this current period of growth has been around 5%.
<strong>Therefore, IRs will only have to get to 7.5% to have the same effect as the last boom/ bust scenario.</strong>
Fixed rates do have an effect. Fixed rates come to an end soon for many and will continue to end as IRs rise.
Lending institutions will also have to recalculate "affordability" as higher IRs look to be around in the medium term. This will mean tightening the lending criteria driving prices down.0 -
today's market is today's market, and markets in the past were HISTORY.
Things are completely different in today's world, so you can analyse past statistics all you like, and make whatever predictions you like based on info from the PAST, but in today's world you're never going to know what's gonna happen, and it can't be predicted, so why waste all this time and energy trying to predict it?!?!
Just enjoy your property, go have a beer and chill!
No one knows what the market is going to do. No one can know, and no one will know, so you can make predictions until you're blue in the face, but it's nothing but speculation and guessing games in reality, so a waste of time.Should've = Should HAVE (not 'of')
Would've = Would HAVE (not 'of')
No, I am not perfect, but yes I do judge people on their use of basic English language. If you didn't know the above, then learn it! (If English is your second language, then you are forgiven!)0 -
Hmmm, anyone with a crystal ball out there? .... But seriously, at what point in the future are prices going to be driven down? Next month? Next year? (worried FTB)0
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Hmmm, anyone with a crystal ball out there? .... But seriously, at what point in the future are prices going to be driven down? Next month? Next year? (worried FTB)
Er... i think a crystal ball would be your best bet. still no slow down in demand where i live.
Lots of rich people in this country, state pensions are rubbish, and over a period of 20 years, one would hope a house increases in price, hence plenty of people still willing to invest in the long term.
Buying a house is always a risk. it just depends if you wanna take a risk or not, or whether you're happy to spend your entire life in rented accomodation.Should've = Should HAVE (not 'of')
Would've = Would HAVE (not 'of')
No, I am not perfect, but yes I do judge people on their use of basic English language. If you didn't know the above, then learn it! (If English is your second language, then you are forgiven!)0 -
Buying a house is always a risk. it just depends if you wanna take a risk or not, or whether you're happy to spend your entire life in rented accomodation.
Like Warren Buffet. The third/fourth whatever richest man in the world.
You're right though pinky.
I've got nothing against home ownership.
It's greed and stupidity I despise.
I forgot to mention, a poorly educated population is another prerequisite for a global workforce. Have you noticed educational standards dropping by any chance?Whenthemusicstopsmakesureyou'renotleftstanding0
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