Bank of England raises interest rate to 5.75%

Gorgeous_George

Another small rise in interest rates and the rises are getting smaller. Raising rates from 4% to 4.25% was a rise of 6.25%. The latest rise (5.5% to 5.75%) is only a rise of 4.55%. Further 0.25% rises will be even less .

More seriously, higher IRs = higher mortgages = lower house prices.

For those waiting to buy, lower house prices is a good thing. While their new mortgage payment may be unaffected (IR vs house price balance), their debt will be smaller. These people will benefit when IRs fall back. Sadly, they will be hated by the next generation of wannabe houseowners who will see them as profitting from the next round of HPI (which they have no control over).

Anyone who is comfortable with their mortgage repayments will feel a little tightening of the money belt and perhaps will forego a meal out each month to fund the extra mortgage burden.

The biggest hit will be felt by those who were struggling to pay their mortgage before the latest rise in IRs. Maybe overtime or a second job will be an option to help fund the latest rise. Perhaps the kids will have to go without shoes. Some will fall by the wayside and have their homes repossessed.

If only Gordon could find a way to help the FTBer. MIRAS (tax relief on the interest element of the mortgage) for FTBers and lasting maybe 5 years before falling to nothing over a further 5 years would seem an obvious suggestion.

Let's hope the pain is not too great for fellow MSEers.



GG

Generali

6% looking like a dead cert by year end now. Maybe 6.25%. This bad weather is going to bump up food prices as is the Americans turning large amounts of food into ethanol.

[Deleted User]

So much for the "house prices can only go up brigade".

I am one of those that has bought during the peak, at least I have a home, hopefully will cash in by getting a few BTLs at the next trough. Happy merry-go-round.

If the pain of 6-8% or even higher interest rates is too much for some people then well, what you gonna do, thats the standard cycle. People seem happy enough to enjoy 15-20% interest rates on credit cards and loans so its nothing new.

Romani_Ite_Domum

Gorgeous_George wrote: »

If only Gordon could find a way to help the FTBer. MIRAS (tax relief on the interest element of the mortgage) for FTBers and lasting maybe 5 years before falling to nothing over a further 5 years would seem an obvious suggestion.

Great idea GG. I would be more than happy to pay extra tax to help FTBs to get a foot on the property "ladder". We could even run some fund raising events to make donations to a FTB fund.

If FTBs can't afford a house when the base rate is still below its long term average then House prices are too high.

GB/BOE are trying to control inflation but must bear in mind the effect a house market crash will have on our economy.

[Deleted User]

I agree any assistance to FTBs only creates further house price inflation and thus is illogical.

talksalot81

Yant1 wrote: »

I agree any assistance to FTBs only creates further house price inflation and thus is illogical.

That is assuming that HPI is something those in charge wish to halt - personally I think they would be happy to keep it up as long as possible because the general public believes that high housing prices makes them wealthy.

mystic_trev

Romani_Ite_Domum wrote: »

Great idea GG. I would be more than happy to pay extra tax to help FTBs to get a foot on the property "ladder". We could even run some fund raising events to make donations to a FTB fund.

Let's dust down Geldof and Bono for FTB Aid [EMAIL="Bugg@r"]Bugg@r[/EMAIL] the starving in Africa, let's help people get on 'the ladder'

talksalot81

mystic_trev wrote: »

Let's dust down Geldof and Bono for FTB Aid Bugg@r the starving in Africa, let's help people get on 'the ladder'

Comments like that tend to come from those already on the ladder and benefitting from the HPI - strangely enough, those people are very happy to keep the money they make - their own case being more important than your cited africans.

[Deleted User]

He has a point though, no one has a right to posh pad, ive been in several rich countrys were some people live in breeze block tin roofed housing. The fact is rent in shared housing is dirt cheap thus everyone who earns a wage can have a roof over there head, do they have a right to own a place though? Well not unless they do a task useful enough for people to barter them enough money to buy a place. Places in the world have limited supply to food and water and surely they are the only real human needs, and they dont have them from time to time.

I am a young FTB all my friends are young FTBs we all could afford houses but before we could we paid rent which was equivilent to less then 2.5 times the dead money associated with interest payments.

Pobby

talksalot81 wrote: »

Comments like that tend to come from those already on the ladder and benefitting from the HPI - strangely enough, those people are very happy to keep the money they make - their own case being more important than your cited africans.

Excuse me.Don`t get your drift.I am mortgage free.How the heck do I make money out of the fact that my house has gone up by around 400% in the last 9 years.What benefit is that to me.If I sell it I have to live somewhere else.To me the capital gain in my house is at best mild amusement,at worse it points out that houses are so overpriced and in the fullness of time will do more harm than good!