Mortgage Rate Rises

413x said:
Personally I see that the normal has moved and historic rates are not applicable.

Rates of 5-6 percent can now cripple the productive demographic of society.

Housing costs are massive. And companies are in debt significantly (more than historic? I don't know).

So small rate increases have a big impact on consumers. Costing jobs as companies fold, pushing up national debt so taxes increase, shooting up rent/mortgage costs, and forcing companies to raise prices of goods.

Job security is most important for me. We (me and partner) are not interested in expanding our debt (though CCs or mortgage or finance cars) due to these factors. And we obviously aren't the only ones.

I considered buying a pcp EV last year. And glad I didn't as I lost my job. Redundancies are rampant.
We want to move house but will not be increasing the mortgage. Our jobs are too volatile.


I get the feeling many people are hunkering down especially with this redundancy round and recession brewing.

I don't think we need higher rates towards 10pc to cause a downturn.

This is my noob view
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Spot on.

Higher interest rates benefit the already wealthy and cash hoarders. Not what an economy needs for growth. High rates accelerate the extraction of wealth from lower end of society to the rich.

Low rates have helped to enable high house prices and the affordability problem, but that is mainly a supply side problem, and we shouldn't be relying on high rates (crippling the economy in the process) to try and constrain house prices as the sole mechanism.
 
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danlightbulb said:
Spot on.

Higher interest rates benefit the already wealthy and cash hoarders. Not what an economy needs for growth. High rates accelerate the extraction of wealth from lower end of society to the rich.
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And these people rarely power the day to day economy. As said, they horde and use tax evasion to pass on wealth untouched even after death.

As home ownership dwindled and living with debt increases we simply don't need 10pc to cripple the majority of the under 50s.



I've not been though a time where I know so many people going through redundancy policies at work as last 6 months. And then another round a few months later.

I mentioned it in another thread. But I have no idea if my job will go after a year, 2 years etc etc to a massive salary cut etc.
When that hangs over you, you don't want to take out new credit.

Others thinking the same will stall the economy as we have been living on debt for a while. How many cars are owned outright now? From what I see on the road.. Not many.
 
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The theoretical 10% would be to get people to actually buy our debt. I.e big risk premium. Given the doom on this forum about the UK its.a wonder those foreign buyers who we are reliant on give us all this money for a mere 5%.
 
200sols said:
The theoretical 10% would be to get people to actually buy our debt. I.e big risk premium. Given the doom on this forum about the UK its.a wonder those foreign buyers who we are reliant on give us all this money for a mere 5%.
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Are others not seeing friends and relatives going through redundancy?

I've never seen anything like it. People in university education, marketing, bioscience, IT/data, procurement.
These are some of the sectors I have real world friends in going through it.
 
200sols said:
The theoretical 10% would be to get people to actually buy our debt. I.e big risk premium. Given the doom on this forum about the UK its.a wonder those foreign buyers who we are reliant on give us all this money for a mere 5%.
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Its another example of wealth extraction, but this time at the level of a whole country's government. Imagine having an economy/government considered so risky that markets will only buy bonds at 10% + interest rates, in turn that would cripple the country's investment levels, require higher taxes to service (or create new money completely, devaluing the currency). Either way money gets stripped from normal people, reducing disposable income, sending businesses under. A vicious circle from which there would be no recovery. We'll be sent hurtling into 3rd world like economic conditions.
 
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danlightbulb said:
Its another example of wealth extraction, but this time at the level of a whole country's government. Imagine having an economy/government considered so risky that markets will only buy bonds at 10% + interest rates, in turn that would cripple the country's investment levels, require higher taxes to service (or create new money completely, devaluing the currency). Either way money gets stripped from normal people, reducing disposable income, sending businesses under. A vicious circle from which there would be no recovery. We'll be sent hurtling into 3rd world like economic conditions.
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Low rates helped the already wealthy more than anyone. Its not true that low rates are better for inequality.
 
200sols said:
Low rates helped the already wealthy more than anyone. Its not true that low rates are better for inequality.
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In terms of property leveraging and pushing up property value?

I agree with you, but that wouldn't have happened so easily had there not been scarcity too. It was a combination of scarcity, low rates and a population focused on property ownership as an investment.

Unfortunately we're in a position now where mortgage debt is high. Any rises in rates therefore serve to extract that money away from people and out of the economy. As well as benefiting those with large savings exponentially more.


That's why I favour low rates. Yes property is a big problem (worldwide), and in an ideal world more supply would offset the potential for investment gains from it.

However high rates benefit those with savings and therefore incentivise wealth hoarding, whilst at the same time penalising normal mortgage debt and business investment.

I personally think low rates plus increasing supply is the way to go, plus controls to prevent rich people buying up multiple houses and starving the market.

It needs a combination of things to happen, but fundamentally we should not be relying only on interest base rates to control the economy.


Everyone talks about rates and the demand side of the equation - no one is willing to do what it takes on the supply side. Because its harder. Just let the BOE use their 'blunt tool' even though we know its ineffective.
 
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I knew the numbers but going from a 1.43% mortgage for past 5 years to a 4.3% sure was disappointing.

The upside is now any overpayment is a reasonable return....unless inflation blows up again and our house is the same price as a pint of milk.
 
Well seeing as I'm going to lose out on savings interest and I think I'm about 2.5 years Into a 5 year fix (I'd have to double check) am I stuck on the 3.95% rate that I signed up for ? Or if the lender has a lower rate would they do a product transfer ?
 
Just looked at my mortgage account. 3.95% until 30/06/2028

That's 2 years and 10 months left to go of this rate.

Unless I pay 1%erc I think that Is.


They should not be lowering the savings rates for what they done to us during that period a few years ago , and funneling money off us from every angle .
I got off lightly . Can't think of the people who are stuck on 4.5-5.5 % mortgage rates still for the next 3 years still
 
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Glad I paid of my mortgage 2 months ago was on 4.59% interest, although only had the mortgage for just over 2 years (paid 10% when first went life then 10% two more times each year within the allowance, before paying it off, so interest was relatively low. The fee for paying it off was less than the interest would have been for the left over. The mortgage payment now just goes into s&s ISA instead.
 
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