"Any sane person should worry about what will happen when IR's rise"

BillJones

Graham_Devon wrote: »

OK.

So once the IPAD and Iphone are sold, raising a one off £250, what happens the months after?

And do you seriously expect in today's age people to be without a mobile, car, broadband and computer and still take part in modern life?

I don't "expect", anything, I just listed a few of the many luxuries that people can get by without if they have to. I understand that you, like all too many nowadays view luxuries as some kind of birthright, but even people who have this strange outlook will tend to change it when needs must.

I don't know if you are being disingenuous, by the way, or genuinely don't understand this, but the suggestion is that they do not buy, or replace these items, not that they sell them at a car boot sale and then still keep spending as they did before.

You do seem to like to switch between personal anecdote and mean statistics when try to make a point, so why not use me as one example as to what "people" will do, if you don't believe that cutting g back on "gadgets" will do it?

If mortgage rates went to 20%, I'd just pay it, and put £4k per month less into savings...

Bantex_2

BillJones wrote: »

I don't "expect", anything, I just listed a few of the many luxuries that people can get by without if they have to. I understand that you, like all too many nowadays view luxuries as some kind of birthright, but even people who have this strange outlook will tend to change it when needs must.

I don't know if you are being disingenuous, by the way, or genuinely don't understand this, but the suggestion is that they do not buy, or replace these items, not that they sell them at a car boot sale and then still keep spending as they did before.

You do seem to like to switch between personal anecdote and mean statistics when try to make a point, so why not use me as one example as to what "people" will do, if you don't believe that cutting g back on "gadgets" will do it?

If mortgage rates went to 20%, I'd just pay it, and put £4k per month less into savings...

I would suspect that you are not the sort of buyer that any policy would be based around.

GeorgeHowell

The point is that they don't all adjust and cope when mortgage repayments rise. Whether they should be able to do is neither here nor there -- they don't. One interpretation of affordability is that as long as they can also afford food, basic clothing, heating and lighting, transport to work, and council tax, pretty much everything else can go. But how many people are willing or able to make that sort of adjustment ? Many would rather default and take their chances. When that happens by the nature of things in this country everyone else coughs up one way or another to cover at least some of it. So we do not want interest rates to rise to the point where there are mass defaults.

MFW_ASAP

GeorgeHowell wrote: »

The point is that they don't all adjust and cope when mortgage repayments rise. Whether they should be able to do is neither here nor there -- they don't. One interpretation of affordability is that as long as they can also afford food, basic clothing, heating and lighting, transport to work, and council tax, pretty much everything else can go. But how many people are willing or able to make that sort of adjustment ? Many would rather default and take their chances. When that happens by the nature of things in this country everyone else coughs up one way or another to cover at least some of it. So we do not want interest rates to rise to the point where there are mass defaults.

I'd imagine it's a very small minority who will have paid a mortgage for years and then decide to default and 'take their chances'. I can't imagine the BoE setting policy with these four people in mind, especially as they are probably currently living in a mortgage free secure unit...

Cyberman60

The major problem is National Debt (2 Trillion including Bank bailouts, PFI, PS pensions etc) and interest payments on that which is currently about a massive 58 Billion a year, doubled from over 5 years ago. Any increase in interest rates will mean that HMG has to find more money to finance that debt. HMG will thus hold off as long as possible to avoid raising interest rates IMO. Holding off should also help to inflate away at least some of the debt, and of course keep a boom going and consequently glean more revenue from taxes which will also help to reduce the annual deficit that GB bequeathed us.

BillJones

Bantex wrote: »

I would suspect that you are not the sort of buyer that any policy would be based around.

No, I was just making the point that personal anecdotes and specific examples are not much use, as a counterpoint to Graham's supposed person whose only luxury was the one iPad that they never planned to replace.

GeorgeHowell

MFW_ASAP wrote: »

I'd imagine it's a very small minority who will have paid a mortgage for years and then decide to default and 'take their chances'. I can't imagine the BoE setting policy with these four people in mind, especially as they are probably currently living in a mortgage free secure unit...

The fact that you would imagine it to be the case does not make it true. We know from past experience that people do default if they consider their payments to be unaffordable. The fact that some other people take steps, as suggested in a post above, doesn't mean that they all have the intelligence, werewithal, self-discipline, and responsibility to do whatever it takes to manage. The money comes in, too much of it goes on other things :- fags, booze, gambling, pets, little luxuries that they just "must have", everything that the kids want because "it's not fair" for them to suffer, etc. There isn't enough left to meet the mortgage payments, so eventually the sh*t hits the fan.

wotsthat

I've always wondered why homeless people living under bridges had iPhones, iPads, pet pugs and a Sky dish. They preferred to take their chances with mortgage default rather than live without this stuff.

MFW_ASAP

Hmnnn, to prove me wrong you have gone from:

GeorgeHowell wrote: »

Many would rather default and take their chances.

To:

GeorgeHowell wrote: »

We know from past experience that people do default if they consider their payments to be unaffordable.

I'm not sure how your doing a U-turn proves me wrong? I feel that it actually does the reverse and proves me right, though just because I feel this, it doesn't make it true....:rotfl:

GeorgeHowell

MFW_ASAP wrote: »

Hmnnn, to prove me wrong you have gone from:



To:



I'm not sure how your doing a U-turn proves me wrong? I feel that it actually does the reverse and proves me right, though just because I feel this, it doesn't make it true....:rotfl:

How on earth is that a U-turn ? It's two different ways of saying the same thing -- ie some people will default if interest rates go up substantially.

Whether you agree with that premise or not, which part of it is it difficult for you to understand ? We can try to help you through it, because we recognise that not everyone will possess the intellectual acuity to be able to keep up with the brightest.