What is the highest interest rate?

Legacy_user

What is the highest interest rate I should expect to ever see on a mortgage? What’s the highest you have ever known interest rates to go to? Just want to do a few sums to see how much of my mortgage I would be paying off each month at the highest interest rate for a mortgage in my price range.

Merlin139

I prey for your sake you never see 15%!

pinklady21

I once took out a 10 year fix at 10%.......Fortunately it was a very small mortgage.
Not that long ago, savings rates of 7 - 8% were common. I well remember the day that lending rates went to 15% overnight.... mid 1980's, so not that long ago!
Rates are historically low now, whether they will ever reach the same levels again is debatable. Current received wisdom seems to be that they are finally on their way up, but are likely to rise only slowly.
The problem is that if rates rocket, then people will expect their incomes to also rise to keep up. If wages go up, it leads to inflation, if they don't, then we have austerity and a stalled economy.
So you are wise to do your sums and make sure you could cope if rates were to rise.
But - there is no certainty. Might as well base any interest rate predictions on tea leaves, a lucky charm or Mystic Meg!

Superscrooge

The below link shows historic BOE base rates. Highest is 17% in 1979. But there have been many occasions where the base rate is over 10%

http://www.bankofengland.co.uk/boeapps/iadb/Repo.asp

My maximum mortgage rate was 13% around 1989/90. Lowest was 6%

Lomcevak

My first mortgage, 20 years ago in March 1998, was 7.79% fixed for five years on a 90% LTV (it was with Barclays, who I had had my student account with. They were the only high street bank that would give me a mortgage as a new graduate, so probably not market leading but not wildly off). When I moved to a larger house in 2006 I then got 4.99% on around an 75% LTV, if I remember correctly on both occasions rates went up a little before dropping down again. I've just remortgaged for the last three years of my mortgage at 1.29% fixed, having been on 2.63% fixed for the past five years.

Personally I think a return to the 7 - 10% rates of the early-mid 90s would see such devastation in personal finances and the high-street banks that both main political parties would do whatever they could to keep rates down (i'm excluding some apocalyptic scenario here where they can't intervene) but I'd want to be sure my finances could cope with 4% or 5%.

Typhoon2000

Remember that base rates are not the same as mortgage interest rates. When I first start buy in the late 90s, I remember base rates were around 7.5% but the mortgage I got was for under 5%.
Things have reversed now that base rates are so low.

Thrugelmir

Typhoon2000 wrote: »

Remember that base rates are not the same as mortgage interest rates. When I first start buy in the late 90s, I remember base rates were around 7.5% but the mortgage I got was for under 5%.
Things have reversed now that base rates are so low.

Things started to reverse again after the 2006/2008 GFC. Unlikely that there'll be much appetite for lending at sub BOE base rate in the foreseeable future.

RedFraggle

My first mortgage was a special first time buyer rate of 10% in around 93.
I have never overstretched myself because of that.

Tom99

[FONT=Verdana, sans-serif]I was paying 15% in 1980 and had just started working for a bank who would give be a staff rate of 5% after a year.[/FONT]
[FONT=Verdana, sans-serif]That year sure did drag by.[/FONT]

DragonQ

This thread is scary. I can see why the BoE is hesitant to raise interest rates - the number of people who would be unable to afford their current homes with high interest rates could be catastrophic. I assume such a move would trigger a house price crash.

I've only had one mortgage and that was 1.99%, so talk of 7%, 10%, even 15% sounds crazy to me. Having said that, if houses were as affordable as they were in the 1980s maybe I wouldn't mind paying such high interest rates!

Brock_and_Roll

There was a big spike in interest rates as a result of the government's ill-advised attempts to stay in the ERM. Base rate went over 15% and overnight inter-bank lending rates went into the stratosphere.


However, this was only a short term effect and I would imagine that any of "black swan event" crisis would also be relatively short term.


The problem with crises is that by their nature everything seems to be going fine until one creeps up on you. So it is hard to see how the current benign and historically low rates might suddenly be reversed. Who knows, perhaps Russia invades Latvia or closer to home a very left win Labour government spooks the bond market?


The largest rate I ever paid was 7.99% on a £550k interest only bridging loan.........absolute ball buster, never to be repeated!!


If I were in the OP's position I would have a look to see if they could cover the interest only on a mortgage at an absolute push, cutting back everything else, should base rates be circa 7%.Then you could sleep comfortably in the knowledge that if they are ****** then at least so will most other people!