if rates went up to 12%........

james3333

how many people here would be, er, well, in the proverbial? and reposessed?

Rikki

I would certainly struggle, but I've been at that rate before and managed to cope just.

I owe less now but there is just the one income to cover it since I divorced many years ago. It would cause real hardship!

james3333

Rikki wrote: »

I would certainly struggle, but I've been at that rate before and managed to cope just.

I owe less now but there is just the one income to cover it since I divorced many years ago. It would cause real hardship!

yeh, i would struggle too and i think the VAST majority of home owners would..... we have all got so used to these 'relativley' low rates, we'd all be 'up that creek without a paddle' i think........
i would proberbly have to drop onto a interest only until it backed down?

mr.broderick

james3333 wrote: »

how many people here would be, er, well, in the proverbial? and reposessed?

Half a million

m00m00

are you talking real mortgage rates or base rates ?

2 year fixes are already heading towards 8% for 2 year fixes.

james3333

SVR really, but, well, i suppose either , i just wanted to get the general feeling of wether i'm the only one that would struggle!!!!!

m00m00

there are many people struggling with SVR's now, so you can just extrapolate that there will be many people who struggle for every .25 rise in their mortgage rates.


it will be the people who've bought/remortgaged most recently on high multipliers who are most at risk.

james3333

m00m00 wrote: »

there are many people struggling with SVR's now, so you can just extrapolate that there will be many people who struggle for every .25 rise in their mortgage rates.

yeh, i suppose this counrty could simply go into melt-down if the SVR went up to 12% when you actually think about people struggling with .25% rises!

oldMcDonald

I am constantly amazed by this. The amount of people I know who are concerned about even .25% rises is really quite frightening. These are people who are really carefull financially normally, people who are not up to their ears in credit card type debt and loans, people who bought a couple of years ago (2004 - 6 ish). For all their carefull financial decisions normally, they just did not seem to give an ounce of thought when it came to taking on a mortgage. I remember saying to someone about 7-8% being an average rate and they really, honestly appeared to believe that 'we' would never hit that kind of rate again. These are people in their late 30's, people who may not have owned a house in the last crash, but certainly saw what was happening around them, yet they still took an enormous risk with 100% loans.

I don't know a lot about mortgages at this moment in time, as I haven't had one since 2001 - do interest only require a 5 - 10% deposit as the repayment ones do? If so, would a lot of people be able to move over to IO, as the OP suggests, if they have no savings / equity?

Generali

If mortgage rates were to rise to 12% over the course of the next few months (say between now and Xmas at 1% per month of increase) we can assume a base rate of 10-11% and similarly increased commercial lending rates. This would have the following impact, in approximately this order (all IMO of course):

• The pound would leap up in value and the price of bonds and shares would fall quickly.
• The price of imports would fall quickly leading to inflation falling and deflation by about Xmas
• People working in exporting industries would be laid off within weeks. Unemployment would have doubled by Xmas and then doubled again by Xmas 2009. Minimum.
• Business investment would all but cease as the economy ground to a halt.
• The tax take would drop rapidly. The cost of issuing new bonds would be too much for the nation’s finances to bear. Mass redundancies would have to take place in the public sector as the government would be effectively bankrupt.
• Repossessions would be widespread as people lost their jobs and couldn’t pay their mortgage or rent.

The above all assumes that the government doesn’t literally print pound notes (i.e. pay people in cash) to try to pay for this. If they that did then you’d still have the same problems as above in the end only coupled with hyper-inflation rather than deflation. It is hard to see how a British Government could pursue such a deliberately destructive policy without some sort of martial law in place.

The above is IMO. It won’t happen and never really has so it is very speculative. The closest I guess was in 1980 when Howe pushed through policies of restrictive fiscal and monetary policies at the same time during a recession.

PS No idea what's going on with the font thing.

neverdespairgirl

james3333 wrote: »

how many people here would be, er, well, in the proverbial? and reposessed?

Directly, with savings and no debt, we'd be in the clover.

But the economy would be stuffed, so we'd probably get stuffed with it.