BoE warns of risks of rate rises.

wotsthat

Graham_Devon wrote: »

Yer - wouldn't that imply they would struggle otherwise? :undecided

They wouldn't have to "find" extra money or cut back elsewhere if they didn't struggle to meet mortgage commitments!

Don't know -they didn't imply that in the financial stability report. It's an odd way of expressing the issue - wouldn't everyone take action if their mortgage rate increases by 2%?

If a 2% rate rise would mean 20% of people struggling then rates won't rise by 2%.

HAMISH_MCTAVISH

Graham_Devon wrote: »

but that doesn't really dismiss the findings of the article..

The article was presenting what is effectively a "worst case" scenario for the BOE.

That rates rise without any increases in average pay.

And that 100% of those rate rises are passed on to the public, and that an increase in lending does not bring down bank margins and hence actual mortgage rates to fully or partially compensate.

You and shorty have jumped on it to try and say "this will happen", whereas the BOE are saying "in a made up scenario, this might happen, but it's pretty unlikely".

Graham_Devon

wotsthat wrote: »

If a 2% rate rise would mean 20% of people struggling then rates won't rise by 2%.

And it's as simple as that is it?

Makes you wonder why rates ever rose throughout history really if that's the deciding factor.

The levels of discussion on this board just seem to get poorer. I'm getting far more from reading HPC. Yes, that's reading, haven't signed up yet - but they go a bit further into things than "rates won't rise because some might struggle, the world is just rosy".

Neither would they argue that someone isn't actually struggling, they just have to find other means of paying their bills....

That's struggling wotsthat. Regardless of how you want to portry it, if you are having to find more work to pay your outgoings, you are struggling to get by. You may want to redefine this, but seriously, think for one second about how you are truing to twist this.

wotsthat

Graham_Devon wrote: »

Which is fine. But the point of the article is to show the problems that would arise should rates rise.

You can dismiss them by saying they won't rise.... but that doesn't really dismiss the findings of the article. It just dismisses the whole point of the article based on the assumption or hope that everything carries on as it is and rates are not forced up.

Why worry about something which is unlikely to happen in the near future and which the BoE aren't themselves sure about the severity of the consequences.

The FSR is 88 pages long - the worriers have just been spoonfed a very small part of it by the BBC so they can keep hand wringing.

Graham_Devon

wotsthat wrote: »

Why worry about something which is unlikely to happen in the near future and which the BoE aren't themselves sure about the severity of the consequences.

Why?

Well it's not really worrying. That's a word you have attached to trivialise the issue.

It's looking at potential issues down the line and trying to prepare for them.

If you are suggesting we shouldn't look at, or even be concerned about risk, then that's another matter, but considering the very reason we have this problem is ignoring risk, I'd say that was a little idiotic.

I'm sure you protect yourself against risk.... why bother?

If your point is that everything will end up just peachy and it will be alright on the night, then just say so. Don't instead try to make out everyone else who doesn't share your view is some kind of pathological worrier in order to dilute their points.

wotsthat

Graham_Devon wrote: »

The levels of discussion on this board just seem to get poorer. I'm getting far more from reading HPC. Yes, that's reading, haven't signed up yet - but they go a bit further into things than "rates won't rise because some might struggle, the world is just rosy".

There's been a decent discussion of the issues. You don't like them so call it ignoring the issues.

HPC might be your kind of place. Guaranteed to find posts that agree this means a rate rise would lay waste to mortgage holders - they'll be wrong of course but if it's what you want to read knock yourself out.

wotsthat

Graham_Devon wrote: »

If you are suggesting we shouldn't look at, or even be concerned about risk, then that's another matter, but considering the very reason we have this problem is ignoring risk, I'd say that was a little idiotic.

I'm sure you protect yourself against risk.... why bother?

In this case the risk of a rate rise is small and the consequences IMO are overstated. That's not ignoring risk - it's trying to understand it.

I've just fixed for the next 5 years based on my view of risk. Have you?

ukcarper

I posted this before

A £150k mortgage at 3.99% is £799 a month with a 4x mortgage you would need to be earning £37.5k a year £2360 a month take home leaving £1561 to live on.

At 5.49% the mortgage increases to £930 leaving £1430 at 8% it increases to £1170 leaving £1190 which is £100 a month more than someone earning £15k a year takes home. So some scope to cope.

ruggedtoast

Above target inflation is nothing like the problem the mass defaults will be if they raise rates. Rates are low and they're staying low. The only people who believe otherwise are murderous bunnies.

ruggedtoast

Graham_Devon wrote: »

And it's as simple as that is it?

Makes you wonder why rates ever rose throughout history really if that's the deciding factor.

The levels of discussion on this board just seem to get poorer. I'm getting far more from reading HPC. Yes, that's reading, haven't signed up yet - but they go a bit further into things than "rates won't rise because some might struggle, the world is just rosy".

Neither would they argue that someone isn't actually struggling, they just have to find other means of paying their bills....

That's struggling wotsthat. Regardless of how you want to portry it, if you are having to find more work to pay your outgoings, you are struggling to get by. You may want to redefine this, but seriously, think for one second about how you are truing to twist this.[/QUOTE

Graham Devon, you are going wrong. First of all joining the right wing anti immigration party UKIP, then turning to the forum hpc.co.uk for advice. Like many, I once posted there but it is now a meeting place for nuts, tin foil hatters, the dispossessed and the delusional.

Say what you like about this forum but people aren't banned willy nilly by lunatic fantasists merely for suggesting that house prices aren't about to go into vertiginous decline.