Interest Rates Down to 2%
- Thread starter Cosimo
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It still won't have reduced the monthly payments by half, unless it's over a ridiculously long period and it's an interest only mortgage.
eg. take a standard 150k mortgage, at 5.5% over 25 years the monthly payments are about £930 (give or take a few quid).
At 2.79% the monthly payments are £700 ish. OK, so it's a drop, but not by half.
Even at 1% over 25 years the payment is still over £500.
An interest-only mortgage would yield a 50% reduction though, which is why I asked...because interest only mortgages are pretty nasty to have right now...because any alternative investments you'll be making to make up the difference will be in danger of leaving you in trouble at the end of term...
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Save your breath mate, too many people here would rather bury their heads in the sand than except the truth. These are the same people who shouted me down early last autumn when I suggested this was coming.
I think you're original post was right, people are just too scared to believe you might be right. If it gives them a deluded reassurance to **** you off then that's their problem not yours.
What's the saying? Don't shoot the messenger?
~17k at a guesstimate (pre this cut)
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Interest Only mortgages are the spawn of the Devil. Anyone who has taken one out without an appropriate repayment vehicle should be shot in the face for being a retard.
I wish the Government would just make banks and building societies withdraw them OR make it a legal requirement that they cannot be sold without a vehicle which will repay the capital at the end of the term.
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Soldato
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They'd better shoot this one as well http://news.bbc.co.uk/1/hi/business/7766057.stm. He's hardly a financial guru, but he sometimes talks sense, and it's not as if most 'normal' financial gurus (apart from Roubini, obviously) have impressed anyone recently.
I think everyone should take this all very seriously though, and I'm not in the least bit afraid of looking foolish. If the worst that comes of all this is that I look like a melodramatic idiot I'll be very happy. Very happy indeed.
In the mean time I think everyone should look at their family circumstances and plan for at least one person close to them losing their job. Because a lot of jobs in the UK are based on a credit-fuelled house of cards system, selling each other unnecessary stuff and services.
As with home insurance, there is no shame in planning for the worst, especially at a unique time in economic history.
Andrew McP
Soldato
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Same flawed argument that says credit cards are evil - you assume the people taking them are stupid. If you know what your doing and why it can be a very effective way of buying a house.
If you go interest only and bury your head in the sand for 25 years, then lose your house that's your own fault, not the banks.
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With respect, I am not certain that you are comparing apples with apples. You know you must repay any credit balance on a card within a short time frame. IO mortgages rely completely on capital appreciation (assuming no repayment vehicle), which is flawed if you have capital depreciation which occurs in a HPC.
I agree with you guys, we are seriously ******
This is the Great Depression v2.0.Buy some gold, or some oil when it hits the magic $25 I say
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Headrat, what about the people who don't have a mortgage but do have savings, I'd imagine they outweigh those with mortgages + significant savings (if only due to the fact that if you've got a mortgage it's probably better to overpay than pay the minimum and save the rest, except offset mortgages I guess)
I believe there are around 25 million homes in the country, and a smidge under 70 million people, now obviously a chunk of the homes will house 2, 3, etc people, but on the other hand a chunk of those homes will be rentals, and some of them houseshares (I live in a house share, 4 people, all renting in the one house, none with mortgages, 2 out of the 4 have 'significant' (5k+) savings).
Add in the fact that 50% of mortgages are fixed and a rate cut probably benefits far fewer people than a rate increase would (note that I'm NOT saying they should increase the rates). But it does, or should eventually (if only due to the government sticking their oar in) help the 10% of mortgages that are on SVR fairly nicely, and those are likely to be almost all mortgages for people who are in no/negative equity otherwise they surely would've remortgaged.
I believe there are around 25 million homes in the country, and a smidge under 70 million people, now obviously a chunk of the homes will house 2, 3, etc people, but on the other hand a chunk of those homes will be rentals, and some of them houseshares (I live in a house share, 4 people, all renting in the one house, none with mortgages, 2 out of the 4 have 'significant' (5k+) savings).
Add in the fact that 50% of mortgages are fixed and a rate cut probably benefits far fewer people than a rate increase would (note that I'm NOT saying they should increase the rates). But it does, or should eventually (if only due to the government sticking their oar in) help the 10% of mortgages that are on SVR fairly nicely, and those are likely to be almost all mortgages for people who are in no/negative equity otherwise they surely would've remortgaged.
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Edit the bad language Ezyryder before you get nuked 
It is true, look at the price of pc components, massively increased in the past couple of months, and sales have dropped.
Interest only mortgages are great, put money in a savings account paying higher interest than the mortgage and you're much better off!
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Ah but not so long ago, cheap pc components were blamed on here for masking the true figure of inflation, now we have the reverse and suddenly the price of PC components become a lot more significant?
Sheesh, I swear that some people on here are never happy unless they're moaning at something.
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I think part of my point was that people haven't done this. People take out the IO mortgage but have nothing to back it up.
Oh, and show me any savings accounts that pay more interest then they charge for an IO mortgage!
Up until fairly recently there were accounts at 7.2%.
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So that would be almost parity then. That isn't the case now though.
Yeah but now the rates for the mortgages have dropped so your no worse off.