Wednesday, Apr 18, 2007
There's a storm acomin'
Daily Express: Big Mortgage Rises Coming
CRIPPLING rises in mortgage bills were forecast as “certain” last night after a shock leap in inflation.
Posted by nearly30 @ 09:44 AM (193 views) Add Comment
4 Comments
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1. nearly30 said...
Seems to be another major scare story - how realisitic this pans out is anyones guess - but looking more and more certain as the months go on.
This off the back of stupid multiples as seen in the news last week - based on 'affordability' says the banks.
1% jump in IRs is likely over the year IMHO.
25K income / 25 year mortgage.
3.5x = 87.5K loan / @5% IR = £517 p.m. / @6% IR = £570 p.m. (£53 more)
4.5x = 112.5K loan / @5% IR = £665 p.m. / @6% IR = £733 p.m. (£68 more)
5.5x = 137.5K / @5% IR = £813 p.m. / @6% IR = £896 p.m. (£83 more)
6.5 = 162.5K / @5% IR = £960 p.m. / @6% IR = £1,059 p.m. (£99 more)
FYI - to be paying £1,059 p.m. for a £87.5K mortgage would mean an IR of 14%
If you have borrowed the ave. house price of £180K (7.2X) @5% IR = £1,064 p.m / @6% IR £1,173 p.m. (£109 more)
That's equivalent of 16% IR for £87.5K mortgage.
oh - changing £180K to a 40 year mortgage will only make is @6% IR £997 p.m. (saving only £176)
Seems we now set our own interest rates through deciding how much we want to borrow and what we want to buy.
2. Shipbuilder said...
Isn't this the first time the big papers have mentioned 6%+ rates? That was being talked of as an impossibility 6 months ago. on the front page as well.
I'm sure as well that I heard the City are expecting a 0.5% rise, hence the strong pound.
3. dugmug said...
Knowing the background to all the figures quoted here, and having actually read the documents they refer to, it is obvious they have somewhat overstated things in the article in order to make it sensational.
But of course the average Daily Express reader (the average anyone actually) won't have made themselves aware of the background to this article, much less formulated their own opinion on the basis of the extra understanding this would give them - they will believe what this article tells them.
GOOD! The popular press have been feeding them a load of old cobblers about prices always going up for long enough, it's about time they started over egging the story back the other way to get us all snowballing back down the other side of the mountain!
4. holding out said...
It's typical Daily Express. They have to overplay a story whichever way they call it. Doubtless it will be replaced in a few days by a story suggesting prices set to double in the 6 months.