Interest rates

Green3

http://www.bbc.co.uk/news/business-28077154

So interest rates will rise to 2.5% in three years and 5% in 10 years. So do you think house prices in London will start coming down now? The prices are seriously inflated now.

mayonnaise

Green3 wrote: »

So interest rates will rise to 2.5% in three years and 5% in 10 years.

No, they could rise to 2.5% in three years and 5% in 10 years.

Next!

AndyGuil

No prices won't come down. It is better to create your own opportunity rather than waiting and missing it.

Thrugelmir

As long as there people who can afford to pay the prices they will remain high. Many purchases in London are made by cash buyers. So interest rates are of no consequence.

michaels

It seems to me the reason 2.5% now = 5% before is not only due to over indebtedness but because average mortgage rates are now base +3.5% rather than the base +1% that they were in the past. Thus any predicton of 5% seems to suggest that either those margins will also return to more traditional levels or we will be looking at inflation rates that would have needed 7-8% interest rates in the past.

HappyMJ

As wages and salaries increase thereby increasing the costs of goods and services making inflation higher then house prices will increase despite the attempts to reduce inflation by increasing interest rates.

CLAPTON

HappyMJ wrote: »

As wages and salaries increase thereby increasing the costs of goods and services making inflation higher then house prices will increase despite the attempts to reduce inflation by increasing interest rates.

sometimes yes and sometimes no

danothy

From the article:

"it will be back there in 10 years," he said.

Is what those with selective reading abilities see.

Thrugelmir

michaels wrote: »

rather than the base +1% that they were in the past.

In the distant past rates were base +2% as a minimum. Since the GFC regulatory fees have been increased and banks pay additional taxes.

So average raes will have a higher margin above BOE than in the past.

michaels

Thrugelmir wrote: »

In the distant past rates were base +2% as a minimum. Since the GFC regulatory fees have been increased and banks pay additional taxes.

So average raes will have a higher margin above BOE than in the past.

Funy - I remember (ie not that long ago) the market embracing the mortgage 'kite mark' standard, one of the rules being that the goto/svr was no more than 1% above the base rate..those were the days of innocence.

Thrugelmir

michaels wrote: »

Funy - I remember (ie not that long ago) the market embracing the mortgage 'kite mark' standard, one of the rules being that the goto/svr was no more than 1% above the base rate..those were the days of innocence.

Simply not enough margin at 1%. New regulatory fees cost lenders around a .25% alone. My 2% comment is before the days of cross selling. Lenders no longer have PPI income with which to subsidise lending rates. Now everything is getting stripped back. Products have to stand alone.

The only kite marking proposed was for RMBS and that was before the GFC. As we know now the quality of both NR's and HBOS's mortgage books weren't the best.