Interest rates may rise this year

[Deleted User]

Hi,

Albert_Tatlock wrote: »

Happy days for savers, bad news for the other 90% of the population

the people who have taken on a hefty mortgage at low interest rates, should have a 'what if' plan.

jozxyqk

2007: BoE base rate 5.75%. 2 year fixed rate mortgage, 90% LTV: 6.3%

2014: BoE base rate 0.5%. SVR of the above mortgage, ~90% LTV (see my location): 4.7%

When the base rate dropped, mortgage rates barely moved - we were told that the two rates are not related directly. Something tells me that the banks will raise their mortgage rates as soon as the base rate rises. This is bad news, particularly for those outside the SE.

Albert_Tatlock_2

Do savers really vastly outweigh borrowers?

I consider myself to be both, by the way, but as my debt (mortgage) outweighs any savings (and I do save a decent amount each month) I would put myself in the Net Borrower camp.

So I’d suggest interest rate climbs are bad news for people like me……….are we really a tiny minority?





Just realised I’m in the Savings and Investments board, if I’d posted my “bad news” comment in the Debt Free Wannabee forum I’d maybe have had a different reaction


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jimjames

standinman2009 wrote: »

This time next year the rates will back up to 5% ,once they climb ,they climb .
So its happy days for savers !

Highly unlikely in my view.

Maybe one or two 0.25% rises. That's hardly going to set the savings world on fire.

chucknorris

standinman2009 wrote: »

This time next year the rates will back up to 5% ,once they climb ,they climb .
So its happy days for savers !

I can't believe that someone would seriously believe that.

latecomer

Any rise in rates is very welcome here - provided it doesn't cause the economy to implode. Dont have that much sympathy for those who have over stretched themselves with mortgages although I appreciate there are lot of people who are in a bad financial state not necessarily of their own making etc.

ChopperST

There is no way they would lift rates to that level in 12 months. It would stifle the recovery and god knows what it would do to inflation. The sensible consensus appears to be slow and steady .25% rises to remind people that what goes down must come up.

I'm budgeting for a 3% base rate being the norm in the medium term.

jimjames

Albert_Tatlock wrote: »

Do savers really vastly outweigh borrowers?

So I’d suggest interest rate climbs are bad news for people like me……….are we really a tiny minority?

It's an interesting question.

If you are someone who has £250 in your saving account and no mortgage, you count as a saver in those stats. If you have £30,000 savings and a mortgage you are borrower.

Which is more significant in terms of their impact for a rate rise. £250 will barely register any difference in interest between 0.5% and 3%.

ChopperST

The interesting question will not be the base rate but where the banks set their rates above base rate? i.e. where will they set their profitability levels?

Froglet

I bet mortgage rates go up a hell of a lot quicker and higher than savings rates!!


When we took out a mortgage in 1990 the rate was 15.4% !! As soon as we paid it off and started saving the savings rates dropped. But I suppose it is swings and roundabouts as the house was a lot cheaper then .