Interest rate rises likely to start from Spring 2015

wotsthat

Thrugelmir wrote: »

People seem to believe that interest rates at these levels are normal!

So what do you do? Hunker down like a little mouse paying tuppence a week off the mortgage in anticipation of a rate that will be normal for only a short period of time?

I dug out some numbers from my own experience.

I've been mortgaged for just over 20 years spending the nineties on SVR's and the noughties on 2 year fixes (higher rate/ low fee) until 2009 when I reverted to Nationwide's BMR and, very recently, I've chosen a 5 year fix.

Average mortgage rate to date is 5.3% - is that normal? That's only c1.5% above the average mortgage rate now.

My mortgage rate has changed, on average, every 8 months during that period - whatever normal is it doesn't stay normal for long.

The highest rate I've ever paid is 8.95% (for 123 days) and the lowest 2.5% (for 1614 days).

As I've fixed for the next 5 years my average rate is dropping every day. I know now that my average rate over 25 years come 2018 will be 4.88%.

I have no idea what normal is or what it will be in the future. You don't either.

What I do know is that 25 years comes and goes in the blink of an eye. It seems long term at the start but it's not, it's just a step to financial independence.

The toughest time in that 25 years journey is the start but if you want to argue that, say, 5% or 8% is normal then you've also got to accept that normal is moving forward with life - pay rises, promotions, bonuses etc.

An irrational fear of taking out a mortgage because of 'bad things' happening in the first 2 -3 years is likely to be damaging to wealth over the long term. A few years of hardship to get to a breakeven vs spending the rest of a working life and a retirement paying rent. You'd think it was an easy choice.

Aberdeenangarse

MFW_ASAP wrote: »

Do you really care so much about a small, insignificant forum that you're willing to put that sort of effort in? Deary me.

We'll you obviously care so much Renoman otherwise you wouldn't keep returning here Perhaps you'd like to tell us how many times you've been 'removed'?I can think of at least six :rotfl:

Can I suggest you find a new hobby? :rotfl:

shortchanged_2

MrRee wrote: »

Watch my lips ..... current Interest Rates ARE, repeat ARE, the new normal ........... some people are struggling with this fact.

Long term average Interest Rates of 5% means absolutely nothing, nothing at all except in the history books.

Governments, the people, companies, cannot cope with higher interest rates anymore ............... we are in a new world, a new dawn - it's about time for a new reality across these forums.

Doesn't leave many weapons in the arsenal if we have another debt crisis though does it.

Any suggestions if we have any further problems?

shortchanged_2

MFW_ASAP wrote: »

Only to you, shortchanged, only to you. :rotfl:

By the way, why have you created yet another username? Don't you have enough with 'shortchanged', 'renovationwoman', 'aberdeenangarse' and let's not forget the saddest of them all, your thank buddy 're-wired'?

Do you really care so much about a small, insignificant forum that you're willing to put that sort of effort in? Deary me.

A little bored are we renoman?

Shame you are way off the mark.

Generali

If debts are high, as I believe they are in both the UK and Australia, then increasing rates will have a greater impact than in the past when debts were lower.

That implies that for any given rate of inflation, interest rates can be lower.

If inflation gets higher, interest rates will follow, just not by as much as in the past. Does that make sense? Hope so.

CLAPTON

in the past, interest rates were used to support the pound as well as to 'control' inflation.

the fashion for supporting the pound is largely over now so the past relationships aren't necessarily a guide to whats happening now


there is no reason to increase interest rate until home grown inflation (showing as wage rises) start to become significant.

presumably that will be good news for most people

prowla

Low interest rates cause the huge house price inflation we've seen.
If they go up significantly, there will be a lot of people in difficulty.

movilogo

Long term average Interest Rates of 5% means absolutely nothing, nothing at all except in the history books.

History teaches us that we don't learn from history

MFW_ASAP

Aberdeenangarse wrote: »

Renoman

shortchanged wrote: »

renoman

shortchanged wrote: »

Shame you are way off the mark.

Yeah, really wide of the mark. Jeeze, you really are dim. :rotfl:

wotsthat

prowla wrote: »

Low interest rates cause the huge house price inflation we've seen.

Interest rates fell in 2009. In real terms houses have fallen every year since apart from 2013.

prowla wrote: »

If they go up significantly, there will be a lot of people in difficulty.

What's a likely scenario therefore for rates rising significantly?