'One million buyers have never seen a rate rise'

ess0two

movilogo wrote: »

The govt. always reward who spend recklessly and who don't think what would happen if IR goes up.

Show me proof that I'm wrong (anecdotal examples won't count).

I challenge you to show me proof as to why IR need to rise?

movilogo

House price is going up faster than inflation (fact). That means IR should go up to control inflation.

However, they took out the "house price rise" from the equation altogether so that IR doesn't need to rise.

Govt + bankers etc. will always manipulate rules in their favour.

House price will continue to rise until
1. Banks think too many people may default if IR is raised
2. Above event will cause too many repossessions and thus flooding the market and thus reducing prices (=crash) - which will affect banks' profit.

shortchanged_2

Percy1983 wrote: »

It is interesting, how many people see this as the norm, or is it infact the new norm?

The worrying fact is this could well be the case. The problem is the reasons behind a low interest rate economy is to build an economy based on debt.

This then has the added problem in that where do we go from this point if we have another credit crisis which is out of our hands? Yes some mentioned QE before but that still has unknown outcomes.

We all know how long it has taken to turn the UK economy around (although not really sure this has happened yet) even with interest rates at 0.5%. So how do you then stimulate an economy that already has ultra low interest rates? Bit of a concern I'm afraid.

CLAPTON

globetraveller wrote: »

A colleague of mine bought a house which was her dream one. When she was thinking abot buying it I did venture that it was a lot of money but she said they could easily afford the payments. I urged her to imagine the rates going up soon and could they afford it. She was just so in love with the place that she went ahead and bought it anyway. I know what they both earn so I worry about them. Trouble is that although they may get a few years of low rates, if they get to the stage where they can't afford it and need to downsize, it is likely that there will many others in the same boat. Of course many things can happen in the meantime- promotion etc, but it's just one example of potentially many thousands.

maybe it's already increased in price by 100,000 or more so if she sells she really laughing


maybe she is enjoying living there

maybe...........

purch

CLAPTON wrote: »

it's quite staggering (or maybe not) that a CEO of a lending institution thinks the sole determinant of the actual lending rate is BoE base rate.

And of course he doesn't think that Clappers, but I think it is quite a good idea for people in positions such as his to continue to prompt people to think about what could happen, and what it might mean for their lives.

dotdash79

globetraveller wrote: »

A colleague of mine bought a house which was her dream one. When she was thinking abot buying it I did venture that it was a lot of money but she said they could easily afford the payments. I urged her to imagine the rates going up soon and could they afford it. She was just so in love with the place that she went ahead and bought it anyway. I know what they both earn so I worry about them. Trouble is that although they may get a few years of low rates, if they get to the stage where they can't afford it and need to downsize, it is likely that there will many others in the same boat. Of course many things can happen in the meantime- promotion etc, but it's just one example of potentially many thousands.

Maybe they have a 5 year fix and by that stage will re-finance to a lower LTV deal, which will give them around the same price to pay.

It's a long term commitment to buy a house and any number of things can affect your ability to repay: Birth, death, septation, marriage, illness unemployment.

More than one of these is like to occur should you not buy because of that?

quantic

Not everyone who bought when interest rates were at their lowest is under some kind of delusion that this is normal. I bought in 2010 and took the opportunity that the interest rates provided to overpay on mortgage for the last 4 years and now have 35% equity (started with 10%).

I will personally be glad when the rates go up because I'm now on a fixed deal and have a load of savings I wouldn't mind getting a decent rate on!

Thrugelmir

I wonder how many of those that past the stringent affordability rules continue to do so x months down the line?

Going to hurt those that bought during the peak years of boom lending and lax underwriting. Current lending policies are allowing for the return of normality.

wotsthat

My average rate for the last 20 years is over 5% and during that time it has ranged between 8.95% and 2.5% (changing every 8 months on average). I started negotiating with the builder of my first house not long after Black Wednesday. I really can't imagine the horror of buying a house at low rates and then, to make it even worse, finding they stayed at those low rates.

This story highlights a 'problem' that only exists if it's assumed that a) every FTB since 2009 is mortgaged to the hilt and b) stupid.

CLAPTON

purch wrote: »

And of course he doesn't think that Clappers, but I think it is quite a good idea for people in positions such as his to continue to prompt people to think about what could happen, and what it might mean for their lives.

Of course I know he is a lying toad, but I would expect a CEO of a major lending institution to give a reasoned and balance view of the future when interest rates change, rather than a tabloid style scare story.