Wednesday, Feb 29, 2012
The only way interest rates are going is UP
Dailymail: Halifax delivers shock interest rate rise
reading this article simply shows what a basket case the whole mortgage lending market has become.what was ever wrong with 3 x income and repayment only mortgages!
Posted by taffee @ 07:53 PM (2259 views) Add Comment
13 Comments
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1. vinrouge said...
Not that it affects me at all...........but what was the point of a capped rate if they can vary it at one month's notice?
Unfair contract law springs to mind. Can they enforce any terms at all if the contract is unfair?
2. jack c said...
I see the Mail Online have now altered their totally misleading headline. The Joker from the comments section sums the situation up (as always) perfectly
If rates rise from 3.5% to 13.5% and people can't afford it then that's understandable. However if rates rise from 3.5% to 4% and people can't afford it then the fact is the fools borrowed too much in the first place.
- The Joker, Gotham City, 29/2/2012 17:01
3. alan said...
Three-month LIBOR has risen from about 0.8 per cent in August 2011 to 1.06 per cent currently and banks are also being forced to hold more capital reserves to safeguard against collapse.
Not totally unexpected, then.....
On Randall (Sky) tonight, Jeff said that house prices had been kept up by low interest rates. Pete Redfern, CEO, Taylor Wimpey: interest rates said that customers are paying are not abnormally low - around 4 to 4.5%, presently. I guess this is about to rise for those FTBs wanting 95% mortgages?
4. paul said...
I think this could be on legally shaky ground - they are contractually obliged to follow the bank rate regardless of what LIBOR does.
5. libertas said...
You think they are shocked now? Just wait till interest rates hit double figures. In the early 1990s crash they hit around 17%. They will need to rise yet higher and the market will eventually demand such rates.
6. sibley's b'stard child said...
'Blah blah blah based in an interest-only mortgage'
Ah, there it is; there's your problem right there.
7. jack c said...
Sib's - have just been to see someone today looking at borrowing 400k on a 550k property - Barclays turned them down flat - wouldnt take dividends into consideration - interest only very restricted and must be backed by either endowment or ISA - the squeeze is definitely on in the mortgage market - no more cheap talk and the end in sight for cheap money.
8. sibley's b'stard child said...
That's reassuring to hear Jack, I guess the question needs begging, why apply for an IO mortgage in the first place?
I'd be interested to hear if you've heard of any recent cases where lenders have forced borrowers onto repayment from IO - can they legally do this or is SVR the only other option?
9. peter_2008 said...
Actually you can have low interest rate and a crash like Japan.
Or high interest rate and a price boom like Zimbabwe (yes, Zimbabwe property price went UP in real term, when inflation was 251,000,000%).
BoE can simply print more money until all cash out there is destroyed one way or the other. Remember the later Kim jun il increased North Korea currency face value by 1000 times over night to destory personal wealth? We are looking at it in slow motion.
10. jack c said...
Sib's quick reply as I'm travelling today
(1) why apply for an IO mortgage in the first place? - affordability is generally questionable
(2) The FSA's treating customers fairly (TCF) initiative should prevent lenders forcing borrowers into a situation which is potentially damaging to their financial well being ie off Int only and onto repayment.
11. mark said...
they have certainly hiked overdraft and credit card rates
12. mark wadsworth said...
Jack C, ta for the quote from The Joker, sums it up, and from your anecdotal from the coal face, it appears that mortgage lending is ever so gently being reduced/tightened/reduced. Good stuff.
13. sibley's b'stard child said...
Thanks for elaborating Jack, that's truly incredible. So they've got a hefty chunk of deposit but in reality should only be looking at a repayment mortgage on a cheaper place (let's say for sake of argument 350k purchase price). I really can't get my head around that at all, isn't that like test driving a nice motor knowing you'll never be able to buy it or perhaps i'm the idiot for thinking otherwise.
With regards to this whole IO sh*t-storm, it really will take years for this mess to unwind won't it?