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Friend asked me yesterday why higher rates would see people on their @rse... when a few years ago rates WERE higher than now and they got on well then. I gave him a few of my reasons but he never bought them saying unless people took on ridiculous debt in the last 2-3 years, it would just be back to a couple of years ago with few changes - what would you say?

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Friend asked me yesterday why higher rates would see people on their @rse... when a few years ago rates WERE higher than now and they got on well then. I gave him a few of my reasons but he never bought them saying unless people took on ridiculous debt in the last 2-3 years, it would just be back to a couple of years ago with few changes - what would you say?

Easy: some b*stard cut the magic money tree. How will people service their existing debt now they can't take on new ones: this was how the whole edifice was kept from collapsing a few years ago, now it's zero interest rates. Raise rates and they have a problem.

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Easy: some b*stard cut the magic money tree. How will people service their existing debt now they can't take on new ones: this was how the whole edifice was kept from collapsing a few years ago, now it's zero interest rates. Raise rates and they have a problem.

I think that's exactly right.

People kept borrowing money to fund their lifestyles (which were far too expensive in comparison to what they earned). Obviously that was never sustainable but the thinking at the time was that it would just go on for ever.

Even with the BOE rate at 0.5% the cheapest consumer loan rate is about 3 x higher than it was when interest rates were at their recent peak.

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Easy: some b*stard cut the magic money tree. How will people service their existing debt now they can't take on new ones: this was how the whole edifice was kept from collapsing a few years ago, now it's zero interest rates. Raise rates and they have a problem.

Precisely.

Capitalists have proved to be nothing better than schizophrenic self harmers. Self preservationists who don't know how to truly look after themselves - never mind anyone else.

People will stand in awe of magicians. But they will never forgive a conjurer once rumbled.

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Friend asked me yesterday why higher rates would see people on their @rse... when a few years ago rates WERE higher than now and they got on well then. I gave him a few of my reasons but he never bought them saying unless people took on ridiculous debt in the last 2-3 years, it would just be back to a couple of years ago with few changes - what would you say?

One word... unemployment :ph34r:

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Wasn't some survey released a few months back which claimed a few million (?) Would be fooked if base rates went up by something like 2%?

Didn't see that, but sure it's right.

What has to be remembered is that a rise from 0.5% (where we are now) to say 5% (an historically low rate to be fair) it is a 10-FOLD INCREASE IN INTEREST!!! If you're on a tracker, especially interest-only, you are going to be bent over and shafted hard!

This will be spectacular when it blows. Come on bond vigilantes, blow this mofo!!! Give us our HPC and make our government default on it's debt burden! It's time for pay day!!! :ph34r:

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In my anecdotal case, the total amount I save per month from rates dropping from 7.5% to 1.5% will have been taken from me 3 times over because of additional tax, NI, cost of petrol, food, etc, private sector wage freezes and loss of child benefit.

If rates stay where they are, when all those things filter through, it will be like a 7-8k cut in gross income

If rates go back up to 7.5% it'll be like a 10k cut in gross income

It's bad either way. I'm lucky in the sense that i'll just be cross about it (providing i keep my job)

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Which is why they'll keep negative interest rates till 3216. And rape everybody with high inflation kept JUST below the hyper threashold.

But it won't work.

Why would you keep rates low to stop people being pushed over the edge, and then go ahead and push them anyway with shitheaps of extra tax and inflation?

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But it won't work.

Why would you keep rates low to stop people being pushed over the edge, and then go ahead and push them anyway with shitheaps of extra tax and inflation?

Hey I never said it would work! But they'l try it and print to oblivion and beyond because it is the path of least resistance. A lot of people I know don't even notice the inflation other than petrol prices. Sandwiches get smaller, packaging gets smaller less product inferior ingredients etc. But how many people actively check packaging to notice this inflation? Not many thus itis the route of least resistance.

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Friend asked me yesterday why higher rates would see people on their @rse... when a few years ago rates WERE higher than now and they got on well then. I gave him a few of my reasons but he never bought them saying unless people took on ridiculous debt in the last 2-3 years, it would just be back to a couple of years ago with few changes - what would you say?

Banks have much higher margins than before the credit crunch.

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Prices of everyday things (like fuel, food) going up.

Wages not.

Yes very true , this is the big one wages have not kept pace with the true inflation rate for years but people could borrow money and felt well off due to their house going up in value.

Very low mortgage rates have given people the money to keep up with the everyday costs , but once the rates start to rise back towards what they were these people are not going to be able to cope.

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But it won't work.

Why would you keep rates low to stop people being pushed over the edge, and then go ahead and push them anyway with shitheaps of extra tax and inflation?

It's because you can't save the banks without printing money and creating inflation

They'll flip flop alternating between the two to shake out the weak hands - Dr Bubb told me so

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Didn't see that, but sure it's right.

What has to be remembered is that a rise from 0.5% (where we are now) to say 5% (an historically low rate to be fair) it is a 10-FOLD INCREASE IN INTEREST!!! If you're on a tracker, especially interest-only, you are going to be bent over and shafted hard!

This will be spectacular when it blows. Come on bond vigilantes, blow this mofo!!! Give us our HPC and make our government default on it's debt burden! It's time for pay day!!! :ph34r:

Found it - seems appropriate for this thread:

'Zombie households' face rate rise trap

Leading economist Danny Gabay warned that a full-scale recovery will not take place until banks tackle the problem of the families who took out loans far beyond their means.

The former Bank of England expert's warning about the 'zombie households' - which could be tipped into financial oblivion when interest rates rise - were echoed by a series of finance experts last night.

One said many people were 'living in a fool's paradise' because of low interest rates.

Mr Gabay did not estimate the number of households in peril. But recent figures from the Council of Mortgage Lenders found that almost three million borrowers could be plunged into difficulty if interest rates rise by 2%.

Even at the current rock-bottom rates, almost 1.3m families are already grappling with mortgage payments that eat up more than 35% of their after-tax income, the level at which the Financial Services Authority classes loans as 'unaffordable'.

FWIW, I think the longer rates are held artificially low, the more trouble we are storing up - more FTBs will take out mortgages they can just about afford and those whose repayments have been lowered will become more used to the situation and therefore more shocked when it changes - low rate fatigue if you like...

In the meantime, as others have pointed out, inflation without wage inflation is squeezing household budgets and making it increasingly more difficult to service mortgages. So damned if you do, damned if you don't basically, and either way pressure will be mounting on sellers. Which is all good by me ;)

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Is there going to be any general wage inflation?

It's obvious we are going to be ******ed without it (or without massive tax cuts and permanently low rates).

I suppose there are a million other reasons why wage inflation would make us ******ed too?

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  • 311 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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