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BoE warns of risks of rate rises.
Comments
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Good chance but what % of people will really struggle and will interest rates increase if economy still in downturn.
I don't know but I am sure there will a be a fair few and I don't know depends what the markets decide."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
grizzly1911 wrote: »I don't know but I am sure there will a be a fair few and I don't know depends what the markets decide.
That makes two of us but at least I'm not hoping for a rise in rates and wanting that to make people default and prices fall as some people seem to.0 -
That makes two of us but at least I'm not hoping for a rise in rates and wanting that to make people default and prices fall as some people seem to.
I believe a rise in rates is necessary to restore one of the control levers. At the moment it is acting like a broken rudder.
I don't wish to see people default but if they have over committed then that isn't really my look out. I don't think it is healthy to encourage, and heavily commit new people on the expectation of continuing low rates. I also think prudent people with savings have paid a fairly high price already and many will be consigned to a poor future with weak annuity returns."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
grizzly1911 wrote: »I don't know but I am sure there will a be a fair few and I don't know depends what the markets decide.
Take a punt - when the BoE rate is 1.5% or 2.5% will the rate of arrears or default be higher or lower and by how much?
I've been berated by Graham for not being worried enough but I bet we're not a million miles apart in thinking the impact will be muted especially if they coincide with an improved economy and improved lender competitiveness.
Not great for those affected but they've had years to get sorted - might be time to put them out of their misery. It'll get Graham and his HPC crew something to get excited about.0 -
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.
Are there many people taking out large mortgages since rates fell to 0.5%? I thought lending had been made much tighter since the credit crunch?
Certainly, the lowest interest rate deals seem to be offered to those with high (upto 60%) LTV levels, generally not the sort of people who get into difficulties with their mortgage repayments due to rate rises.
As I said on an earlier discussion on this topic, looking at the demographics I don't see significant numbers losing their houses just because rates rise. The vast majority of mortgage holders will have bought pre-credit crunch when rates were much higher, they are now enjoying a period of low rates and some will pay down their mortgages, some will pay down their other debts and some will enhance their lifestyles.
To have a serious discussion about this, I think the chaps who think there will be a problem need to qualify their argument by giving an example demographic. Just saying that something will happen just doesn't cut it.0 -
grizzly1911 wrote: »I believe a rise in rates is necessary to restore one of the control levers. At the moment it is acting like a broken rudder.
Surely the 'rudder/control lever' is currently set at a low rate to help the economy and is therefore working exactly as designed?
I guess this takes us back to the argument of whether you believe rates were lowered globally in order to 'prop up' the UK housing market, or lowered for some other reason. If you believe the latter then are you saying that the economic problem has passed sufficiently for a rate rise?0 -
OffGridLiving wrote: »Surely the 'rudder/control lever' is currently set at a low rate to help the economy and is therefore working exactly as designed?
I guess this takes us back to the argument of whether you believe rates were lowered globally in order to 'prop up' the UK housing market, or lowered for some other reason. If you believe the latter then are you saying that the economic problem has passed sufficiently for a rate rise?
The rudder is bust in as much as we are stuck hard and fast against the bank with the inability to manoeuvre. I believe it is possible to use a rudder to propel; a vessel forward.
I am do wonder whether low interest rates are actually helping any more it doesn't appear to have attracted swathes of borrowers personal or business. Actually signalling/starting increases may in fact incourage personal and business borrowers to to make the move and lock into low rates while they can rather than waiting.
Interest rates weren't introduced solely to prop up house values but it was certainly a key part of the reason for forcing them down. If they had been left at previous rates I am sure problems in housing would have occurred in the residential market a which would have had a domino effect. Who knows how big that affect would have been?
Have the benefits of weak sterling had positive impact to the UK or has the imported inflation simply offset any improvement?
Perhaps the economic problems will not pass and we just need to adjust to this as normality. Apparently the excesses of the past were the problem."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
grizzly1911 wrote: »I believe a rise in rates is necessary to restore one of the control levers. At the moment it is acting like a broken rudder.
I don't wish to see people default but if they have over committed then that isn't really my look out. I don't think it is healthy to encourage, and heavily commit new people on the expectation of continuing low rates. I also think prudent people with savings have paid a fairly high price already and many will be consigned to a poor future with weak annuity returns.
Are people over committing I though lending criteria was stricter now that it was during the boom.
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grizzly1911 wrote: »The rudder is bust in as much as we are stuck hard and fast against the bank with the inability to manoeuvre. I believe it is possible to use a rudder to propel; a vessel forward.
In a storm, all a rudder can do is help you face into the wind and maintain your station until it passes. If the rudder breaks in a storm then the ship can turn sideways into the waves and founder. In this particular storm, the rudder (low interest rates) is helping us face into the waves and maintain position until the storm dies down.
Though perhaps you believe that we should not have lowered rates in the first place?0 -
grizzly1911 wrote: »[Low]Interest rates weren't introduced solely to prop up house values but it was certainly a key part of the reason for forcing them down.
Do you believe that interest rates in the Eurozone, US, Canada and other developed countries were lowered to prop up UK house values?0
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