How high can the interest rates get?

torbrex

List of changes to BoE base rate going back to 1985 so you might get an idea of mortgage rates from that.

I was lucky enough that the rates made steady progress down after I stepped on the property ladder but a couple of years earlier the rates were jumping about all over the place.

getmore4less

If you can afford £1kpm now.

120k over 20 years

If rates stay relatively low for 5 the 1k will over the next 15 years cope with rates upto 13%

amnblog

torbrex wrote: »

List of changes to BoE base rate going back to 1985 so you might get an idea of mortgage rates from that.

I was lucky enough that the rates made steady progress down after I stepped on the property ladder but a couple of years earlier the rates were jumping about all over the place.

What years do we base our predictions on 1987 to 1992 or 2008 to 2013?

PasturesNew

Before all the recent hoo-hah, it was always said that the average was 8% over time.

amnblog

Making plans on statistics is fraught with problems.

Shoes are sold in pairs, yet average amount of legs per person in the UK is less than two.

ViolaLass

amnblog wrote: »

Making plans on statistics is fraught with problems.

Shoes are sold in pairs, yet [STRIKE]average[/STRIKE] mean amount of legs per person in the UK is less than two.

I'm being picky but it's an important point. The mode and median are, I imagine, two.

cns06

Some points (IMHO)


The country is still living off QE. I really doubt there will be any serious change to rates until we have cleared the debt.


Until we can float out of the £375Bn hole I don't think rates will climb too quickly.


Next, the EU is just starting to play the QE game - which to me shows things are not really getting better and stability is quite fragile but the UK is in a good position.


Are rates going to shoot up to 10% in the next 10 years. I doubt it. I would say 5% would be there or there abouts - probably just under as its a mental threshold of 5% and close to some stress test barriers.


Next, your own position is going to change. What seems expensive now wont be in 10+ years. Yes pushing yourself when rates are low is a mistake because they can only go one direction so if you can afford (for example) a £100k mortgage at 2% for example but not at 3% you are taking a massive risk.


I don't think you are pushing yourself with the figures you say. Just ensure you have good insurance in place should the worst happen like you lose your job.


Rates are not going to stay as low as they are now forever - so take advantage of this period of low rates. Make some overpayments where possible so when rates do start to creep up you will have reduced your exposure and could probably absorb the rises. On the figures you talk about with your savings each month you could probably have the mortgage paid off quite quickly, 15 years easily I would have thought - not a bad position to be in.

getmore4less

amnblog wrote: »

Making plans on statistics is fraught with problems.

Shoes are sold in pairs, yet average amount of legs per person in the UK is less than two.

Legs are not the relevant measure for shoes.

indianabones

Thanks for the info guys. Especially the link on how interest rates have been over the last decade or so. It hasn't gone close to 10% in a long long time, so as you say perhaps I should calculate for a increase to 8%.

On average I'm saving £1100 per month, that's not to say I save it every month. Some months that can be as high as £2k and others £0. I think on my salary I could afford a £115k mortgage if the rates went to as high as 6% comfortably, but 8% or 10% would be a struggle.

Someone has stated that calculating on stats is a risk, surely calculating on stats is anything but a risk. Surely we should be factoring in the worst case scenarios and not with as interest is now. I've seen too many examples on tv and internet of what life can become for those who can't afford.

ViolaLass

indianabones wrote: »

Someone has stated that calculating on stats is a risk, surely calculating on stats is anything but a risk. Surely we should be factoring in the worst case scenarios and not with as interest is now. I've seen too many examples on tv and internet of what life can become for those who can't afford.

I think amnblog's point - and certainly mine - was that you need to be careful about which stats you use and how you use them. Simply using 'some' stats doesn't make your decision foolproof.