Major impact on houses

nelly_2

Does a 'correction' mean its 'incorrect' now?................. as in wrong

ECB raises eurozone rates to 4%

The ECB has signalled there may be more rate rises to come

The European Central Bank (ECB) has raised interest rates for the eurozone to 4% from 3.75%. The increase takes rates in the area to their highest level for six years and means they have doubled in 18 months.

Generali

pickles110564 wrote: »

I reckon he should whack it up to 8% why dilly dally, lets have loads of people in trouble, why should common people buy their own houses it should be only the gentry that buy houses and then rent out loads and make loads and loads of loverly cash.

Kiwi rates look set to go up to 8% tomorrow (day after that? don't remember).

The chancellor will change the rules before we see that over here though, I reckon.

Don't forget, recession = credit crunch (in all probability) so no borrowing to extend the BTL empire.

Also recession = more social tenants = downward pressure on rents.

Be careful what you wish for!

jamesd

If this does worry anyone:

• Check with your lender to see if your mortgage has a repayment holiday. Then take one and save the mortgage money so you have a cash reserve to cover the higher payments for a year or so. It'll add the length of the repayment holiday to the mortgage term but that is better than missing payments.
• Switch to interest only for a while.
• Extend the term, may cost a switching fee but its worth it to lower payments to those you can afford and you can overpay later when rates fall.
• If you're already at the limit and those are not possible, sell now. Beats waiting for lots of others selling and possibly driving prices down. The people who do it early suffer less.

Act early to try to make sure that you have options later - the higher rates aren't likely to last for more than a year or two so even a few months worth of savings can be enough for you to handle them.

devils_advocate

Without wishing to giveaway too much I can confirm that industry insiders are now preparing for a market correction,not a crash

And are these industry insiders estate agents?

Woby_Tide

manhattan wrote: »

Ahhhhh, a correction of 40% maybe?

a correction of 40% from prices now or 40% from when the crash started in 2004?;)

mr.broderick

lypsey wrote: »

the saint
I should explain , from a personal point of view which I understand is selfish , i want houses to crash , so I can buy

I appreciate a crash will cause a lot of pain for others but greed has driven this market and greed will drive it back. I hate to see families deep in the s&&t but this will be a consequence

Sorry

A crash will cause a lot of pain for everyone....
It wont be a case of crash..lypsey buys at last..everyone lives happily ever after...
If rates go high and property does crash..this country's banking system will collapse.

mystic_trev

jamesd wrote: »

the higher rates aren't likely to last for more than a year or two so even a few months worth of savings can be enough for you to handle them.

Not sure where you get that from, with Inflation sticky and heading to the upside next year, IR's look to remain high for the next few years. As I posted earlier today, swap rates are currently over 6% for the next 5 years.

Woby_Tide

mystic_trev wrote: »

Not sure where you get that from, with Inflation sticky and heading to the upside next year, IR's look to remain high for the next few years. As I posted earlier today, swap rates are currently over 6% for the next 5 years.

1 year swap rates were 4.75% 1 year ago, maybe they get it wrong sometimes as thats not teh correct figure for rates now is it? or maybe they just go with the flow? they 'shot up' in 2003/04 when the market started slowing back then, but reduced over time again to last years lows. As with all stats, past performance is no guarantee for the future.

jamesd

mystic_trev, Bank of England May Inflation Report, fan chart of inflation probabilities showing 2% inflation in 2009 as covering half of the probabilities and 90% chance of it being below 3%. That implies lower interest rates in that timeframe, perhaps to around 5% base rate. That's supported by "Short-term sterling rates suggested that market participants expected Bank Rate to rise towards 5.75% by the end of 2007, easing back a little subsequently" assuming that the easing continues per the inflation projection.

I'm not surprised that swap rates say one thing while BoE inflation projections suggest something else. Predicting the future is an uncertain business. Hence my suggestion that people act now if they anticipate problems.

epz_2

jamesd wrote: »

mystic_trev, Bank of England May Inflation Report, fan chart of inflation probabilities showing 2% inflation in 2009 as covering half of the probabilities and 90% chance of it being below 3%. That implies lower interest rates in that timeframe, perhaps to around 5% base rate. That's supported by "Short-term sterling rates suggested that market participants expected Bank Rate to rise towards 5.75% by the end of 2007, easing back a little subsequently" assuming that the easing continues per the inflation projection.

I'm not surprised that swap rates say one thing while BoE inflation projections suggest something else. Predicting the future is an uncertain business. Hence my suggestion that people act now if they anticipate problems.

my limited understanding is swap rates are people risking real money while the boe is just a bunch of mupets happy create the current mess we are in and likely subject to political interferance even if they say they aint, i know what one i would back