How much are interest rates going to go up by.

HangTime

Nobody knows but the general consensus is that they won't hit the levels you are talking about (10%) in the near future (5 years).

If it is a concern to you then consider a fixed product, personally I would only fix over the long term because I don't see large rises in the next year but obviously it depends on various factors like LTV, fees relative to mortgage size etc.

As you say you plan to stay in the property for at least 5 years I would consider the 10 year fix if you have a big enough deposit. Apart from anything else paying zero fees over 10 years is pretty good and you get peace of mind over what rates could be like in say 2025. Under 2.5% is extremely cheap by historical standards.

robatwork

z1a wrote: »

Rubbish, it'll be 1.15%.

See you here then to eat your humble pie!

Now... where's my gauntlet......?

sevenhills

Cornucopia wrote: »

As such, although it's inevitable that they will rise from their historic low today, it's inconceivable that we will see them above 5% for the foreseeable future.

That may be true, but the see-able future is only 2/3 years, no one can predict the interest rates in 5 years time.

Back in 2007 when the interest rates were 5% and going up, if someone told you that interest rates would be less than 1% in 2 years time you would think they were barking mad.

Cornucopia

sevenhills wrote: »

That may be true, but the see-able future is only 2/3 years, no one can predict the interest rates in 5 years time.

Back in 2007 when the interest rates were 5% and going up, if someone told you that interest rates would be less than 1% in 2 years time you would think they were barking mad.

True, and I suppose what we really mean is that in the absence of a relevant crisis, we cannot see rates above 5%.

HangTime

Looking at the current economic climate where we have relatively high inflation (compared to recent times - over the 2% target at least). a significantly devalued currency (compared to pre-Brexit vote) and low unemployment, it seems plausible that rates could start to creep up soon. However I can't see them rising rapidly, just small increments. So when factoring in to mortgage decisions, although say a 5% rise in rates would be quite scary for some, that wouldn't happen overnight, and is one reason why I am not altogether convinced by the value of short-term fixes that come with large fees attached.

sevenhills

Cornucopia wrote: »

True, and I suppose what we really mean is that in the absence of a relevant crisis, we cannot see rates above 5%.

Do rates at less than 1% mean we are still in crisis?

Or is 4%/5% normal?

In the 90s 6% was normal.

fewcloudy

sevenhills wrote: »

Do rates at less than 1% mean we are still in crisis?

Or is 4%/5% normal?

In the 90s 6% was normal.

I asked something similar earlier this year on a different thread.

https://forums.moneysavingexpert.com/discussion/5648135

Cornucopia

sevenhills wrote: »

Do rates at less than 1% mean we are still in crisis?

Yes, we are still seeing the effects of the financial crisis nearly 10 years ago.

Or is 4%/5% normal?

In the 90s 6% was normal.

Yes, in the long-term, 5-6% is more normal.

dunstonh

o rates at less than 1% mean we are still in crisis?

Yes. A lot of the bits of the financial crisis have been put on hold and kicked further down the road.

The long term average is around 7%. So, when we are +/- 2% of that figure, that is when things would be considered more normal.

However, what is normal? You can map interest rates back hundreds of years and you can look at GDP and in fact, the post war years are anything but normal and today's low growth is closer to normal.

Central banks are desperate to get the base rates back up so they can start offloading but they cant as the economy is so fragile.

SouthLondonUser

Cornucopia wrote: »

Yes, we are still seeing the effects of the financial crisis nearly 10 years ago.
Yes, in the long-term, 5-6% is more normal.

The long term is when we are all dead, right?