2% isn’t that obscene especially for a long term loan fixed on an easily repossessed asset.
Mortgage Rate Rises
- Thread starter glenimp617
- Start date
2% isn’t that obscene especially for a long term loan fixed on an easily repossessed asset.
Out of curiosity, were you shocked once it was found out China told Putin to hold it back until the winter Olympics was over?
Caporegime
I've already said I don't have a crystal ball. I base my predictions on historical averages. Anyone can do that.
Can you point us to where you said rates will go 4x in 6 months mid-2022? Most people can afford - or make more sensible plans if over the space of a few years the rates adjust. I think it’s disingenuous to suggest people plan for £1000 a month uplift in borrowing cost.
Well people do think they are geniuses on the Internet with hindsight. It's not the case when you're talking to them in person on what is advisable trying to pick their brains. You know that thing when they have conversations face to face trying to brainstorm.
But it has been falling for the last 20 years so why were you not planning on further reductions? Why did you choose the dates for the average you did? Why an average and not trajectory?
It's funny that this statement is now seen as absolutely ridiculous, it's now the same for cars, everything is debt.
Of course I couldn't specifically predict that rates would go 4x in 6 months. What I could predict however, is that rates would eventually increase. When you take out a mortgage, you need to factor in rate increases. Sorry, but if you've stating someone now has a £1000 uplift in borrowing costs, then they've cleared loaded up to the point that they could never afford it in the first place.
Rates are only low because of the 2008 financial crisis and QE. Low rates were only supposed to be a temporary measure, aka EMERGENCY interest rates. It was always going to come apart at the seams the longer this position was maintained.
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Right cause people are going mad splashing out on mansions right? You realise a 90 ltv on the average house that the average worker will be living in means a 700 per month increase going from 2% to 7%
But yeah it's their fault for living the high life
A 2.98% 35 year mortgage against 285,000 is £1094 a month (our current 2 year fix) if interest rates hit 8% it will be £2000 a month.
285k is not an obscene house. It’s disgusting that the banks want an extra £1000 a month in profit.
The sickening part - we would have paid £850,000 for a 3 bed house at that rate.
We could have financed out to £480k but shunned that advice as we wanted security (which we have). We also used a 35year mortgage to give ourselves the option of one of us losing our job - the ability to still pay bills etc. and overpay where we can.
Can you weather an un-forcasted £1000 a month reduction in your money?
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Yeah nothing since 2008 has been normal. I'm not particularly financially savvy, but could tell there was trouble brewing with the amount of debt people were getting themselves in.
Rates may well hit 8%, but I believe it won't be sustained and they will fall back to around 5%. We had similar in the early 90s. Some people weathered the storm, mainly due to cash reserves which saw them through the short term very high rates, and bought them time to get another job after becoming unemployed.
You could say nothing was normal prior to 2008 - which led to the meltdown. And the interest rates were higher that time.
Why does interest have to be so high? Once you have mitigated your risks - it’s profit - against an asset the risks are tiny.
Caporegime
Weren't houses also expensive in 2008 before the crash?
In % terms house prices rose a lot faster pre 2008. Low interest rates don't explain everything but they certainly make it more tempting to pile up on extra debt which in times of tighter monetary policy is a complete disaster as people are finding out.
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Funny to think since then, every contestant that I remember that was on Deal or No Deal when Noel asks what you'd do with the money? What was the response from almost everyone... Holiday, Holiday, Holiday. Which was usually cruises or somewhere to America. Very few said which there were some, said to pay off their debt or loans.
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