Mortgage Rate Rises

[Mercenary Keyboard Warrior]

There’s no such thing as inflation falling “too steeply”. Oh no! Things are getting cheaper!!

Things are only getting cheaper when inflation is negative

Falling inflation abvoe zero means things are getting expensive more slowly

However that being said, negative inflation is actually very bad, it tends to act as a really nasty break on the economy as people start going, oh I could hold of buying X and it will be less in 6 months!

 

[neocon]

Do you think 48 Wheatabix will ever drop back from £4.50?

 

[Richie]

The inflation forecast is interesting. Suggests we’ll see the base rate falling again, quite possible it will be significantly lower by the end of next year.

Why would base rates necessarily come down significantly based on the chart above?

I genuinely don't see base rate going lower than it currently is and mortgages may reduce slightly especially if the lenders feel that the base rate is steady as they won't feel the need to price in any potential big increases.

 

[matt100]

Why would base rates necessarily come down significantly based on the chart above?

I genuinely don't see base rate going lower than it currently is and mortgages may reduce slightly especially if the lenders feel that the base rate is steady as they won't feel the need to price in any potential big increases.

Because regardless of where historic rates are for the last 10 years the whole economy (eg house prices) has become hooked on interest rates of basically nothing.

Incidentally I remember a time where the prevailing mortgage offer was the 2 year fix being the base rate MINUS something, not PLUS.

Not that that was a good idea... however, to facilitate good, normal, sensible people keeping their houses it's going to have to come down pretty dramatically or inflation will need to stay high to allow to wages to rise to match or incredible amounts of people will need to end up homeless or move up north.

There's no 4th option.

 

[Kill_Phil]

Do you think 48 Wheatabix will ever drop back from £4.50?

Who pays that? Wheatbisks ftw.

 

[neocon]

Who pays that? Wheatbisks ftw.

I don't, but the point is that, why would they lower the price once people are used to higher prices?

 

[delta0]

Why would base rates necessarily come down significantly based on the chart above?

I genuinely don't see base rate going lower than it currently is and mortgages may reduce slightly especially if the lenders feel that the base rate is steady as they won't feel the need to price in any potential big increases.

It would be unnecessary as inflation will be falling. The base rate will go up from here but once inflation starts to come under control it doesn’t need to be as high.

 

[Richie]

....however, to facilitate good, normal, sensible people keeping their houses it's going to have to come down pretty dramatically or inflation will need to stay high to allow to wages to rise to match or incredible amounts of people will need to end up homeless or move up north.

There's no 4th option.

The lenders should have stress tested the people they were lending to at around where deals currently are (5-6%).

If that has happened, then the mortgage payments, albeit not nice, should still be manageable.

Granted, the extra CoL increases don't help here.

It would be unnecessary as inflation will be falling. The base rate will go up from here but once inflation starts to come under control it doesn’t need to be as high.

Sure but inflation was under control in the early 2000s and, prior to the financial crisis, mortgages were at 5+%... 2% inflation does not require mortgage rates to be sub 2%

 

[LabR@t]

5% is here to stay, I don't think it will be going back to <4% again

 

[delta0]

The lenders should have stress tested the people they were lending to at around where deals currently are (5-6%).

If that has happened, then the mortgage payments, albeit not nice, should still be manageable.

Granted, the extra CoL increases don't help here.




Sure but inflation was under control in the early 2000s and, prior to the financial crisis, mortgages were at 5+%... 2% inflation does not require mortgage rates to be sub 2%

Sure. I’m not suggesting they will be back down to 0.X% values. I don’t know where they will end up yet just that they will be falling.

 

[LabR@t]

Who pays that? Wheatbisks ftw.

£5 the a box of Kellogg's crunchy nut!

 

[matt100]

The lenders should have stress tested the people they were lending to at around where deals currently are (5-6%).

If that has happened, then the mortgage payments, albeit not nice, should still be manageable.

Granted, the extra CoL increases don't help here.




Sure but inflation was under control in the early 2000s and, prior to the financial crisis, mortgages were at 5+%... 2% inflation does not require mortgage rates to be sub 2%

Shouldawouldacoulda... and?

I mean, I bought a house in a place where I sort of needed to live and could afford and to be blunt I could still afford at 6% but if/when that happens that's £1k a month gone out of the economy. I also can't ever move because the realistic outcome of that is my house ceases to be "worth" what it was "worth" and while I'm broadly supportive of a drop in house prices to do it short and sharp means SO MANY people are screwed then the economy is utterly screwed.

At that point it doesn't matter what you think should happen, it doesn't matter if you're debt free or even retired.. it's still going to turn up on your doorstep.

Sadly the UK economy has become hooked on this. If it tanks overnight then we're all in a mess.

 

[LabR@t]

It's all happened before, it's nothing new. The early 90's were quite a bleak time economically but at least we had raves

 

[flea.rider]

It's all happened before, it's nothing new. The early 90's were quite a bleak time economically but at least we had raves

yeah good quality biscuits at an affordable price

 

[LabR@t]

yeah good quality biscuits at an affordable price

1991 I was earning £130 a week my rent was £275 a month and you could buy 10 b&h for 80p, a pint was a £1 .50 and a tab of xtc was £15.

Rented a TV for £10 a month and pubs shut from 3pm to 7pm on a su day.


Bloody great time to be alive

 

[inogen]

I remember the early 90s. Was a great time to be a teenager or early 20s. Zero expectations because the economy was absolutely ****ed, again thanks to a decade or so of Tory govt. At least things were cheap though and we were over the inflation hill. Interest rates were falling. Cheap credit and abundant resources.

This is not the same. Even once we get though it. This is going to get very nasty. Liverpool 1980 welcomes the rest of the UK to a revisit of history.

 

[div0]

I don't, but the point is that, why would they lower the price once people are used to higher prices?

I think the answer given also covered that.

Not everyone will "get used to it", they will turn to cheaper alternatives.

 

[delta0]

I remember the early 90s. Was a great time to be a teenager or early 20s. Zero expectations because the economy was absolutely ****ed, again thanks to a decade or so of Tory govt. At least things were cheap though and we were over the inflation hill. Interest rates were falling. Cheap credit and abundant resources.

This is not the same. Even once we get though it. This is going to get very nasty.

Whilst not out of the realms of possibility we are only similar on the inflation front. We don’t have the 7 through to nearly 15% rate rise or the job losses that went with it. This one is looking 90s style aside from those. The 90s one had rate rises over 18 months approx before falling whereas the markets are forecasting summer next year for the peak below 5%. The one thing that has always got me about this recession is it has been very obviously coming whereas they usually come out of the blue.

 

[Uther]

1991 I was earning £130 a week my rent was £275 a month and you could buy 10 b&h for 80p, a pint was a £1 .50 and a tab of xtc was £15.

Rented a TV for £10 a month and pubs shut from 3pm to 7pm on a su day.


Bloody great time to be alive

It was, although I worked nights, took home £200 a week and paid £195 a month rent on my flat back then! Didn't smoke either.
It was great, but times have changed, and everything is just far too expensive now.

 

[LabR@t]

I remember the early 90s. Was a great time to be a teenager or early 20s. Zero expectations because the economy was absolutely ****ed, again thanks to a decade or so of Tory govt. At least things were cheap though and we were over the inflation hill. Interest rates were falling. Cheap credit and abundant resources.

This is not the same. Even once we get though it. This is going to get very nasty. Liverpool 1980 welcomes the rest of the UK to a revisit of history.

The inflation rate in 1990 was 9.46%. The inflation rate in 1991 was 5.87%.
Credit was not cheap that's for sure
It took Maggie a decade to fix the horror that socialism foisted into society in the 70's.