Interest rates increased

[Mahonyy]

Got the SMS from Nationwide seconds after the announcement, I'm sure they're not nearly as fast to increate their accounts interest rates.

 

[413x]

I hope I am right, the rates have been artificially low for a very long time. Damaging the balance of the economy and making having a job not worth the effort to work among other areas of impact.
Work does not pay anymore, then we have fiscal drag which has made things even worse, but nobody complains about it which is very important for the worker.

This is another mechanism they used for inflation control which is not obvious to people.

Workers are being shafted at both ends without even knowing it.

Inif rates go to 7 percent and people lose thier homes and that work you mention is going to feel meaningless. You've worked for 10 years to save, get your house, bang. You can't afford your mortgage.

High interest rates will do the average worker a lot of damage. And penalise work

 

[Alice In Wonderland]

That’s understood although inflation is increasing because of energy, fuel and food price rises. How are people supposed to reduce their spending on essentials?

But supermarket own brands according to a Conservative MP.

 

[Goodie]

As said it's used to increase cost of borrowing hence reducing spending thus bringing inflation down.

But as others have said with it being mainly energy and essential food prices its just going to run many into the ground

Rather than just screwing the poor it will be screwing the middle, especially those with hefty mortgages. Which are kind of unavoidable for most.

On the back of (further) overinflated house prices following the stamp duty holiday, it’s a recipe for disaster. Well played Rishi..

 

[Slam62]

I hope I am right, the rates have been artificially low for a very long time. Damaging the balance of the economy and making having a job not worth the effort to work among other areas of impact.
ork does not pay anymore, then we have fiscal drag which has made things even worse, but nobody complains about it which is very important for the worker.

This is another mechanism they used for inflation control which is not obvious to people.

While I agree in principle, it's all gone too far now, they've got at least 10 years of wreckless borrowing to give a soft landing to. If they don't get a soft landing it will be carnage.
They need sacrificial lambs they can throw under a bus, it may be that the majority of voters are also renters so may be the property investors are going to get it.

 

[Goodie]

Why on earth would you want to inflict that on people?

Smug way of bragging of course!

 

[413x]

On the back of (further) overinflated house prices following the stamp duty holiday, it’s a recipe for disaster. Well played Rishi..

Couldn't and still can't get my head around that ridiculous decision. It only benefits those not hurt by covid. Increases artificially household debt and increases the hurt for those caught by the trap.

 

[Fubsy]

Own home outright = bring on the high interest rates! Watch the world burn.

Mortgaged to the hilt after saving a deposit for 10 years while renting off the previous generation = cowering in fear they'll lose their home.

Renters = lol, property investors will have to pay, oh, **** our rent is going up and mortgages are even more out of reach.

 

[krooton]

BTL property magnates aren't really going to be hit though... oh, my mortgage interest rates are going up, I either charge renters more, or I just sell my excess properties.

For the rest of us normal homeowners, it can mean losing our homes and being forced back in to renting, or worse.

 

[Mrwong]

Inif rates go to 7 percent and people lose thier homes and that work you mention is going to feel meaningless. You've worked for 10 years to save, get your house, bang. You can't afford your mortgage.

High interest rates will do the average worker a lot of damage. And penalise work

They over extended, people will have to lose their homes. Rates need to go up it needs to be done to make that part of the economy unattractive to invest. Plus they will eventually lose their home, people don't understand that iht will force the property to be sold if they can't afford the tax bill.

The higher house prices go, the more property fail into iht, the more properties sold to cover iht. Making properties expensive for the workers, and allow institutional investors to take over.
So more renters, this leads to more mental health conditions because of stress levels.

This will push up the workers tax bill as more people will need government assistance for rents.

All because rates were set to low,. There are more implications but it makes it to depressing to read for the workers.

To compensate they have been reducing services eventually there will be no services.

Most of the pop will never see a pension eventually, increase age rate reduce the demand to pay out.

The tax money is going into the wallets of the rich and companies, I call this corporate welfare, via contracts by state institutions a great way to transfer wealth from the poor to the rich.

It is crazy when you start to think about it, and follow the trail, methods they have used to keep rates low.

 

[dlockers]

My broker is a bit simple so I'll avoid asking him, but he was meant to submit our paperwork yesterday to get our mortgage sorted.

Is the offer at the rate advertised or does it creep until actual money changes hands?

 

[Fubsy]

My broker is a bit simple so I'll avoid asking him, but he was meant to submit our paperwork yesterday to get our mortgage sorted.

Is the offer at the rate advertised or does it creep until actual money changes hands?

Should be as advertised. We did it recently and the last increase happened during the process and didn't impact.

 

[dlockers]

Should be as advertised. We did it recently and the last increase happened during the process and didn't impact.

I'll await the email from him that "he should have done it yesterday but forgot"

 

[Cleisthenes]

Anyone, regardless of "social position" who is running things to the edge and has floating rate borrowing and no floating rate savings is squeezed. The bigger the principle the bigger the issue in general.

On a macro level, if you are a government it can make your fixed debt easier to sell but of course more expensive to service (if it's floating rate that is not always more expensive i.e. LIBOR+0.05BPS where LIBOR is currently 1% it may of course drop later).

In the real world though, I do feel for those who have only ever known low interest rates, not for any other reason than unless you dilligently do your sums (which let's face it, is normally second to can I afford it now?) you are going to get cash shock as your borrowings get more expensive to service, and at this time, as the Tories (IIRC) said a while back is a "double whammy".

Banks etc. project interest rate risk with something called a BP01, which shows the impact of single basis point rises (that's 0.01%) in interest rate rises. They are able to hedge that (or alternatively) gamble on it with Interest Rate Swaps. As a punter though you can't do that.

Crickey you've teleported me straight back to my economics university days

 

[dlockers]

Anybody in the market for a Gucci belt?

 

[413x]

They over extended, people will have to lose their homes. Rates need to go up it needs to be done to make that part of the economy unattractive to invest. Plus they will eventually lose their home, people don't understand that iht will force the property to be sold if they can't afford the tax bill.

The higher house prices go, the more property fail into iht, the more properties sold to cover iht. Making properties expensive for the workers, and allow institutional investors to take over.
So more renters, this leads to more mental health conditions because of stress levels.

This will push up the workers tax bill as more people will need government assistance for rents.

All because rates were set to low,. There are more implications but it makes it to depressing to read for the workers.

I agree to a point. I think it's irresponsible for mortgage multipliers to be so high. I was shocked how much Lloyd's would lend me on my remortgage. Basically the max 4.5 multiplier.
If I had any difficulties or rate rises it would be too much pressure.

Everything like this has gotten us to here.


In an ideal world I'd be happy for house prices to stagnate. Or even slowly decline (compared to inflation).

It would slow down BTL and seeing property as an investment. It would help first time buyers and those moving up.

Majority of people seem to live thier house going up with all that wealth locked away.

Ideally I'd like to not get caught in the correction.
Fortunately I could afford and have the mindset to work the numbers to pay my ERC to fix long.

Most don't have the money. Less have the knowledge. Most people said I should wait as the ERC is so high. But it's already the right call. Scary times.

 

[robfosters]

I agree to a point. I think it's irresponsible for mortgage multipliers to be so high. I was shocked how much Lloyd's would lend me on my remortgage. Basically the max 4.5 multiplier.
If I had any difficulties or rate rises it would be too much pressure.

Everything like this has gotten us to here.


In an ideal world I'd be happy for house prices to stagnate. Or even slowly decline (compared to inflation).

It would slow down BTL and seeing property as an investment. It would help first time buyers and those moving up.

Majority of people seem to live thier house going up with all that wealth locked away.

Ideally I'd like to not get caught in the correction.
Fortunately I could afford and have the mindset to work the numbers to pay my ERC to fix long.

Most don't have the money. Less have the knowledge. Most people said I should wait as the ERC is so high. But it's already the right call. Scary times.

Kind of situation my mums in. she had to switch to an interest only mortgage due to a big change in her financial circumstances. The idea was to go to the end of the mortgage and hope her equity would rise enough for her to sell up and buy a house outright elsewhere.

So far her equity stands at £320k and she’s in an area where prices rise faster than 80% of the country. The last thing she wants to see are house prices stagnating and possibly receding.

Ive tried to tell her she’s better off just moving now. £320k is plenty for a house outside London and as she works from home, she can keep her job. All her wages with no mortgage. Win/win.

 

[Mrwong]

Kind of situation my mums in. she had to switch to an interest only mortgage due to a big change in her financial circumstances. The idea was to go to the end of the mortgage and hope her equity would rise enough for her to sell up and buy a house outright elsewhere.

So far her equity stands at £320k and she’s in an area where prices rise faster than 80% of the country. The last thing she wants to see are house prices stagnating and possibly receding.

Ive tried to tell her she’s better off just moving now. £320k is plenty for a house outside London and as she works from home, she can keep her job. All her wages with no mortgage. Win/win.

That is a win for her, no mortgage, keeps more money.

 

[rhobbyh]

Kind of situation my mums in. she had to switch to an interest only mortgage due to a big change in her financial circumstances. The idea was to go to the end of the mortgage and hope her equity would rise enough for her to sell up and buy a house outright elsewhere.

So far her equity stands at £320k and she’s in an area where prices rise faster than 80% of the country. The last thing she wants to see are house prices stagnating and possibly receding.

Ive tried to tell her she’s better off just moving now. £320k is plenty for a house outside London and as she works from home, she can keep her job. All her wages with no mortgage. Win/win.

She's in an enviable situation and she should definitely do it for the certainty, she could live out her years without having that sort of stuff on her mind. Marvellous.

 

[Freakbro]

The Fed in the US indicated they had 6 interest rate rises penciled in for this year to get to at least 1.9% , so I expect the BOE will continue raising them through the year as well.