BoE warns of risks of rate rises.

wotsthat

Mr._Pricklepants wrote: »

Well yes, one could continue renting or live with mum I suppose.

Or get a mortgage on extremly low rates now, and start preparing for any future potential rises from day one.

I know what I'd do.

I know what I would do too.

Others though seem to think everyone should stay cowering at their mums because real life can be so scary.

GhIFA

shortchanged wrote: »

But surely this is a warning to everyone about the risks of taking out large mortgage debts and the drag they will be on any potential recovery in the economy.

So if I'm understanding you correctly, you think that not one single person who has taken out a mortgage since 2008 has given any kind of consideration to what will happen when interest rates go up??

Do you not think your fear is clouding your perspective somewhat?

grizzly1911

HAMISH_MCTAVISH wrote: »

Also from the article....



And in the meantime, the BOE are considering something else entirely....

A Mr Bean holding asenior position with the BOE gives me so much comfort.

shortchanged_2

GhIFA wrote: »

So if I'm understanding you correctly, you think that not one single person who has taken out a mortgage since 2008 has given any kind of consideration to what will happen when interest rates go up??

Do you not think your fear is clouding your perspective somewhat?

Not quite. Of course everyone needs to be aware of the potential risks of interest rises and many will take note of the risks. However there will also be a large number of people who will be short sighted and only look at the current situation without considering future rate rises.

HAMISH_MCTAVISH

shortchanged wrote: »

there will also be a large number of people who will be short sighted and only look at the current situation without considering future rate rises.

A 25 year fix is available at 5.39% with no early repayment penalty after 7 years.

I reckon you'd be a mug to take it, as it's incredibly unlikely we'll see mortgage rates average that high over the next 25 years, but it's there if you want it.

wotsthat

HAMISH_MCTAVISH wrote: »

I reckon you'd be a mug to take it, as it's incredibly unlikely we'll see mortgage rates average that high over the next 25 years, but it's there if you want it.

Looks like the ideal vehicle for those who are paralysed by the fear of rates increasing. 5.39% doesn't look too expensive for guaranteed peace of mind.

lisyloo

"Take action" could be as simple as working a few more hours a week or spending less on other things.

I know very few people who could easily increase their income.
In my IT job there is no such thing as overtime, so we don't get paid for extra hours.
Spending less on other things is arguable - I'm sure it's possible for some, but much harder for others.

Very easy for those at the BOE to trot out - "work a few extra hours" or "get a second job" or "spend less", but in reality for some people these things are impossible.

HAMISH_MCTAVISH

lisyloo wrote: »

I know very few people who could easily increase their income.
In my IT job there is no such thing as overtime, so we don't get paid for extra hours..

Almost anybody can increase their income.

Part time work as a second job on evenings and weekends, taking in a lodger, etc.

I'm quite confident that 99% of the people that have to will find a way.

wotsthat

lisyloo wrote: »

I know very few people who could easily increase their income.
In my IT job there is no such thing as overtime, so we don't get paid for extra hours.
Spending less on other things is arguable - I'm sure it's possible for some, but much harder for others.

Very easy for those at the BOE to trot out - "work a few extra hours" or "get a second job" or "spend less", but in reality for some people these things are impossible.

The reality is that if someone's mortgage payment increased the impossible (reallocating spending or increasing income) would become possible.

Those who really do find it impossible will become part of the arrears and repossessions stats - if rates increase as a result of an improved economy there won't be much of a blip.

Conrad

shortchanged wrote: »

However there will also be a large number of people who will be short sighted and only look at the current situation without considering future rate rises.

I've been seeing this same comment every week since first stumbling across HPC in 2004. Don't you guys ever tire of this?

A small proportion will always struggle to sustain a mortgage, the vast majority come what may do sustain one.

What is the point of this relentless fixation with the small proportion that get into trouble?

This is modern day puritanism - the pious lot tsk tsking the dangerous choices of the masses.

It minds me of someone I know that tells me and some other Dads we shouldn't play footie with the kids (c13 y/o's) in case we crush one. It's called living life!