Intrest rates

Toptom1

With the intrest rates at an all time low, when the rates to start to rise what do you think the norm will be? If intrest rates went to 15% everyone would go bankrupt. Even at 7% everyone will have no money left.

Better_Days

Your 'everyone' is rather sweeping.

What about savers?

They have been subject to low interest rates on their capital for a number of years now, a combination of low interest rates and inflation means that savers are effectively losing money unless they lock it away for a fixed term.

Toptom1

I am a ftb tring to get on the proberty ladder and the house I'm currently bidding for has gone up more in value then I currently have saved in the same period. Just asking what you think the intrest rates would be in 5 years time at a guess. I think 3%.

ognum

If interst rates rise I and many others wouldn't be bankrupt, maybe the assets we fully own would be worth less but the money we have in the bank would make more.

Simplistic view I know but it is swings and roundabouts for many.

Better_Days

OK, I would budget to be able to pay interest rates of at least 5%. We paid 6% for a number of years, and I can recall when rates went up to a ruinous (for some) 15% - showing my age now.

Impossible to say what rates will be in 5 years time there are so many variables, not the least the uncertainty over the result of the next election.

There are some very good fixed rates atm. I think it is well worth considering the certainty of a fixed rate over 5 or even 10 years even if it is a bit above the current variable.

It is as well to be realistic about the possiblility or even likelyhood of interest rates going up. Sadly house prices have gone up and many have stretched themselves based on what they can afford on the current low rates. Repossessions are not good for anyone. GL with finding a property OP.

BeansOnToast_2

Toptom1 wrote: »

With the intrest rates at an all time low, when the rates to start to rise what do you think the norm will be? If intrest rates went to 15% everyone would go bankrupt. Even at 7% everyone will have no money left.

Not everyone. As far as I'm concerned, with the house fully paid for and money in the bank, the sooner rates go up, the better.

Running_Horse

Going on this chart and adjusting to 1971, not only are the current rates unusual, but even 5% has been low. Anybody not overpaying old mortgages, or not taking potential rises into account is extremely unwise.

http://www.tradingeconomics.com/united-kingdom/interest-rate

Thrugelmir

Toptom1 wrote: »

Even at 7% everyone will have no money left.

Hence why lenders assess affordability at 7% irrespective of the product applied for. So there's already a brake being applied to stop house prices running away in a time of what appears to be cheap credit.

gazter

I just checked what my repayment would be, instead of the 2.89% im currently on to a 7% rate. It would cost me about £300 a month. It wouldnt break me, but i could certainly make better use of £300 than pay it for nothing in return.
Im currently paying the 10% over payment my mortgage deal allows, with the intention of completing a 25yr mortgage by 8 yrs, knocking off 17 yrs!!

pinkshoes

We have fixed our (large 4x joint salary) mortgage for 5 years, and will be overpaying.

We know what rate we can afford up to, then our next option would be to get a lodger if rates had risen dramatically in 5 years!

Saying that, our monthly repayment for a 4 bed detached is less than renting a 3 bed semi!