Mortgage Rate Rises

Kill_Phil said:
But isn't the issue that increasing rates will have little affect on the root cause of inflation at the moment i.e putins special obliteration
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Inflation is the expansion of the money supply, i.e the creation of new money.

The issue is the creation of new money, in 2008/9 and onwards, all of that went to pushing up asset prices.

However in covid and now, that money is given directly to the people in the form of furlough, and other such direct fiscal stimulus. Like funding the cap on gas prices for example, or that £400 applied to bills.
 
Kill_Phil said:
But isn't the issue that increasing rates will have little affect on the root cause of inflation at the moment i.e putins special obliteration
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I'm not entirely convinced. Increasing rates in theory should prop up sterling and in turn help to curb inflationary pressures from imported goods. It also helps to keep a lid on inflationary pressures caused by borrowing. In general I don't think traditional monetary policy goes completely out of the window due to external factors.

The way I look at it in general is that the economy is influenced by many factors, there might be additional factors we don't normally have to contend with like the war pushing up energy prices, grain prices etc, but all the usual factors haven't gone away. So it's about tackling inflation factors in aggregate not just throwing our hands up and saying "Putin innit, nothing we can do guv".
 
If inflation is 10% and the rates less then half of that we are still losing value in the currency, sterling wont recover substantially. Headline rate varies from the reality of money in circulation. It will take many factors to reverse, rates is one of the most visible factors. Also UK has the highest amount of debt linked to inflation so all round gov is being squashed on its budget.
 
Gents I can now switch to a new deal with my lender free of charge...

what would people do 2 or 5 year.. i know there are risks with both but do we really see rates falling in 2 years?

5 year fixed is chepaer.
 
enigma27 said:
Gents I can now switch to a new deal with my lender free of charge...

what would people do 2 or 5 year.. i know there are risks with both but do we really see rates falling in 2 years?

5 year fixed is chepaer.
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If you have anything left on your current deal I'd ride that out to the end.

Some analysts think the current fixes are pretty much the peak rate
 
Curlyriff said:
My house would loose more than I paid for it 7yrs ago and I would be £20k in the red then? Why would you want that much of a collapse to the current housing prices?
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Unfortunately, 30% might not be that far fetched, I'm expecting a minimum of 20% house price drop in 2 years. The coming recession is so obvious people believe it won't happen.
 
30pc would be significant.

It would leave so many on svr which would lead to even more repossessions which would lead to even bigger falls (I assume)

What might svr be next year? 8-9pc?
 
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Mercenary Keyboard Warrior said:
Personally I really don't want to see large falls, I want nigh on zero house price inflation for a couple of decades
Its somewhat of a pipedream but the impacts of large house price falls are wide and ripple round
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Yep, price stagnation, with significant wage growth would be better, as it wouldn't basically destroy loads of people.
 
Any drop in the house prices isn't going to have the impact that some people in this thread are expecting. All mortgages should have been stress tested for a rate rise to 4-5%, so the situation now is completely different that the scenario we saw in 2007.

For those people who do end up in negative equity, they will just sit on their property and not sell / move. I don't expect we'll see wide spread repossessions like we saw in 2007, the market will just "stop". Nothing new will come on the market, people won't move.

For anything that does come up, cash-rich investors will hoover them up and put them onto the rental market.
 
mcast123 said:
Unfortunately, 30% might not be that far fetched, I'm expecting a minimum of 20% house price drop in 2 years. The coming recession is so obvious people believe it won't happen.
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Honestly I would expect more like 10-15% over next two year. Next year is suggested 5-8% forecasting at moment from some to still showing an overall year 1% increase next year as per last week forecasting.

To note the house building companies we are working with are increase build stock to the majority of their developments, only a handful from two major developers are on hold and that is mostly to move their building stock to different areas.
 
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