Interest Rates

Aegis

Sapphire wrote: »

People who have over-extended themselves through borrowing beyond their means are 'plonkers' (that is putting it mildly) who have not only put themselves at risks, but also helped to support the giant pack of cards that is about to fall – to the detriment of all.

I beg to differ. Many people over the last few years have bought into the market because of the huge rises in house prices simply because they want at some point to own their house rather than constantly having to pay rent to someone else. It's two factors there, the independence and the worrying thought that prices might continue to rise for longer than anticipated. Just look at the people who have been waiting since about 2003 for a house price crash, and who have lost out on huge possible gains in equity and who have also suffered with the rising interest rates because they have to cover their landlord's mortgage instead of one of their own. It's not exactly a better situation to be in for them.

Try to understand that many of these "plonkers" are just people with a dream of being able to eventually be in a situation where they don't have to pay someone else for their accommodation. Is that really such an unreasonable desire?

Just so you know, I have no real difficulty with my mortgage payments. Yes, I'm a homeowner, but I'm a homeowner who can afford his repayments even is rates go up somewhat further. However, to put my situation in perspective, I bought 2 years ago and got a 4-4.5% fixed rate (can't remember exactly) which expired towards the end of last year. The best rate I could realistically remortgage to at the time was over 5.7% because of the 5 interest rate increases between taking out my mortgage and the fixed rate expiring.

Now, if you think I'm a plonker because I didn't predict those 5 successive rises, go ahead. But I very much doubt you saw them coming either!

Not surprising, really, that someone like this now suggests 'investing' money in shares (i.e. gambling with your money), despite the increasingly pessimistic predictions about the economy. :cool:

Investing is not gambling. Gambling is betting an entire stake on the outcome of an event. Investing has an element of risk associated with it, but if the markets turn too sour for you you can withdraw from the "bet" with most of your capital still intact. Even in these market conditions, I'm still breaking even over the last 6 months, which includes 2 market crashes.

Through appropriate diversification, pound cost averaging and rebalancing, you can mitigate much of the risk associated with investing, so I think that calling it gambling is just plain wrong. In fact, in these troubled times, you're actually getting a very good price on equities compared to about 4-5 months ago. Someone drip-feeding into an investment portfolio is currently laughing at the bargains they're getting.

Bismarck

Do I detect a correlation between age and attitude towards interest rate changes?

Maybe it's time to reflect a little on the current generation who are getting whacked by all sides for trying to get on the ladder while the previous generation had the comparative luxury of final salary pensions and a seemingly endless surge of house price inflation that made it so difficult for the younger end to get on the ladder.

A little respect for those trying to better themselves wouldn't cost, would it? Who's actually paying the money into the state coffers for the state pension of the retired generation? And who's raising the next generation of workers...if they can't afford to house and feed the future workforce, what then?

I take the point that the media really do talk tripe though...

Lokolo

Bismarck wrote: »

Do I detect a correlation between age and attitude towards interest rate changes?

Maybe it's time to reflect a little on the current generation who are getting whacked by all sides for trying to get on the ladder while the previous generation had the comparative luxury of final salary pensions and a seemingly endless surge of house price inflation that made it so difficult for the younger end to get on the ladder.

A little respect for those trying to better themselves wouldn't cost, would it? Who's actually paying the money into the state coffers for the state pension of the retired generation? And who's raising the next generation of workers...if they can't afford to house and feed the future workforce, what then?

I take the point that the media really do talk tripe though...

I would say I agree with you but I want IRs to stay as they are at the moment and I am a youngun! But to be fair... I don't have a mortgage yet....

aardvaak

shandypants5 wrote: »

I am a "plonker" mortgage payer that HAD to slightly over extend myself a few years back, just to be able to get myself on the property ladder.
Things are a little better for me now and I am not struggling quite so much, but still I could do without my monthly payments rising suddenly.

I am Terribly sorry that my lending at a decent rate is causing you "hardship" ,and I wish I could find a way to help you sit at home and earn more for being fortunate enough have savings.

If interest is your ONLY form of income maybee you should find another?
why not become a loan shark?
Then you could really reap the rewards from all us Plonkers...

You sound a little jealous of me with savings and a mortgage free house but what else could I do at 50!

Lokolo

aardvaak wrote: »

I am not a loan shark - you sound a little jealous of me with savings and a mortgage free house but what else could I do at 50!

Not complain that IR's are falling?

aardvaak

Lokolo wrote: »

Not complain that IR's are falling? [/quote

They are even now very,very low compared with the good days of 15%.

Bismarck

"The good days of 15%"...I had to allow myself a wry smile at that one....we had a great economy then, didn't we? I do wonder how many people remember the days of high mortgage rates and savings rates of over 10%...even I had one of those! Don't remember them as happy times though...

nilrem_2

Seems like you'd be quite happy to receive a little more return on your capital and watch people really struggle to keep up their mortgage payments because of the, what, 5 interest rate increases over the last couple of years? With only 2 decreases following that so far, you're still much better off than you were a couple of years back.

In fairness Savers have not done too well over the last few years, just because The BOE put rates up it did not mean that savers automatically received the same increase, in many cases the increase given was a lot less than the BOE rate increase and in some cases the rates were not increased at all, ING for example ignored 3 BOE rates rises!

OTOH people with mortgages have not done that bad in the last few years (IMHO) the rates are one hell of a lot less than when I last had a mortgage and at that time you had to go on a waiting list to even be offered a mortgage, we had no chance of getting 125% either I thought I was lucky with a 90% one!

Let's not forget though that it is the savers and their cash that make it possible for most people to get a mortgage!

shandypants5

aardvaak wrote: »

You sound a little jealous of me with savings and a mortgage free house but what else could I do at 50!

Your right, I DO wish I was in your position (who wouldnt); but I think calling lenders plonkers shows your attitude in a bad light.

So have you NEVER been in a position where you NEEDED to lend money?

Most mortgage payers are not plonkers they are hard working people who are struggling to make a nice home for themselves.

The economy needs to run in a balanced way so that lenders and savers alike can all survive comfortably, you sound like you would happily see plonkers out on the streets so you can sit home and count your money.

At 50 you could still get a job, lots of folks(myself included) have to work way past 50 to pay off the mortgage we need for the house we live in.

What a PLONKER I am, I should have never studied, I should have stayed on benifits and I should have rented a home "free" from the council, and never ever gone to work.
Then I would have never needed borrow money.

I imagine most of the folks on this site are here to help get themselves out of dept. If you think they are all "plonkers" then I hope you never need help from them.
Perhaps you could start a new site, "moneygrabbingexpert".

Rant over... (have to go to work now, I just realised that the light at the end of the tunnel is shining out of the back of Aardvaark! and hes running away from me!).
Its a 2 way street. savers NEED lenders too you know.

Aegis

nilrem wrote: »

In fairness Savers have not done too well over the last few years, just because The BOE put rates up it did not mean that savers automatically received the same increase, in many cases the increase given was a lot less than the BOE rate increase and in some cases the rates were not increased at all, ING for example ignored 3 BOE rates rises!

OTOH people with mortgages have not done that bad in the last few years (IMHO) the rates are one hell of a lot less than when I last had a mortgage and at that time you had to go on a waiting list to even be offered a mortgage, we had no chance of getting 125% either I thought I was lucky with a 90% one!

Let's not forget though that it is the savers and their cash that make it possible for most people to get a mortgage!

No question. I have nothing against savers or savings. I just think it's totally uncalled for someone to call people with mortgages "plonkers" and incredibly shallow to do so solely because it means that he'll be earning marginally less on some of his savings accounts.

I even offered a strategy that would help that saver take advantage of lower interest rates. Personally I'd be less than happy living off just savings because inflation erodes away at the capital in the long run. An investment spread across a few sectors with large holdings in fixed interest assets and a bit more in good equities has the potential to grow and provide a rising income as time passes, and would allow the investor to do pretty well in both high and low interest periods.

Of course, the suggestion was dismissed off hand by one of the OP's sympathisers, which just makes me wonder if people would rather complain about a problem or find a solution...