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exiges

Get Ready For 7% Interest Rates

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http://www.dailymail.co.uk/property/article-1345753/Low-equity-Stand-seven-cent-rates.html#ixzz1AdRqGAfJ

Get ready for seven in 2011 - because experts say seven per cent interest rates could be a reality for thousands of borrowers this year, even if the Bank of England base rate barely changes.

Major lenders, including C&G, NatWest and Yorkshire Bank, are already charging almost seven per cent on some low-deposit and low-equity fixed-rate deals, while standard variable interest rates at building societies such as Newcastle and Nottingham are not far behind.

Banks are trying to keep these high-cost deals under the radar by focusing on the super-cheap rates they offer to borrowers with plenty of equity in their homes.

But if you bought with a low deposit in the past five years, withdrew equity from your home in the boom times, or if your home is worth less than it was then you could be in for an expensive shock when you remortgage.

Brokers say customers are stunned how quickly mortgage rates rise if you can’t tick all the right boxes on a bank’s application forms.

If you want to switch to a five year fix with NatWest, you will pay just 3.75 per cent until 2016 provided you have 50 per cent equity in your home.

The rate edges up to 4.19 per cent with 40 per cent, shoots up to 5.29 per cent for 25 per cent equity, hits 5.99 per cent at 20 per cent and reaches 6.89 per cent at ten per cent equity.

The best advice is to prepare for the worst now. The CBI predicts that the first rate rise in two years will come ‘earlier rather than later’ in 2011.

Brokers say that if the Bank of England raises rates by 0.5 per cent then many lenders may increase their standard variable rates by 0.75 per cent to help balance their books.

They will continue to be tough on people with low equity in their homes – so anything you can do to increase the value of your home or reduce the size of your mortgage will help keep you out of the dreaded seven per cent club.

Edited by exiges

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A classic Daily Mail type topic heading, but think you need to add in a " * " before anyone on here creams themselves. Your topic heading should read - Get Ready For 7% Interest Rates*

(*) Only if you are a complete muppet with feck all equity in your house. Otherwise you still be able to get an AMAZING 3.75% fixed mortgage for 5 years!

Money still continues to be cheap for those who have equity or big deposits and are brave enough to ride the housing rollercoaster. For many people buying will continue to be cheaper than renting.

Edited by SEW247

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Isn't that most people who bought since 2004 ?

Depends what your definition of most is I suppose, but I bought in 2006 and now have 50% equity in my place and I'm sure there are many more like me, perhaps not with 50%

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Blimey I have an anecdotal which perfectly matches this scenario. But I'll wait till next week when I get the full details but basically a friend has MEWed and has outstanding debts of £30k currently paying using an IVA (or something similar) 5 year tracker ending soon curretly paying F all on IO. Needs to remortgage to keep repayments low enough to afford...

Forced sales anyone? :D

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Depends what your definition of most is I suppose, but I bought in 2006 and now have 50% equity in my place and I'm sure there are many more like me, perhaps not with 50%

So actually, *not* many more like you then?

If not, in what way are they *like you*?

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http://www.dailymail...l#ixzz1AdRqGAfJ

Get ready for seven in 2011 -

They will continue to be tough on people with low equity in their homes – so anything you can do to increase the value of your home or reduce the size of your mortgage will help keep you out of the dreaded seven per cent club.

The people (Approx 1million Customers) having the piss taken out of them should form a self help group and force the banks to take a hit 50-50 on losses or threaten a mass withdrawl of mortgage payments.

They will eventually fall behind with payments and lose their houses anyway!

They have nothing else to lose except take the pEE out of the banksters/City in return for luring them in to pay over the ODDs for shelter!

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So actually, *not* many more like you then?

If not, in what way are they *like you*?

The point I'm trying to make is that there are people who do have decent equity and will therefore not be paying 7%. Unfortunately we can only but speculate in the absence of reliable data.

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The point I'm trying to make is that there are people who do have decent equity and will therefore not be paying 7%. Unfortunately we can only but speculate in the absence of reliable data.

Don't forget many people who bought pre 2007 did so with 90%+ LTVs. I very much doubt many people have enough equity to qualify for a cheap deal.

You must have been overpaying like a ******* to make your equity! Or is it that your house is different and has increased in value by 50% since 04?

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Depends what your definition of most is I suppose, but I bought in 2006 and now have 50% equity in my place and I'm sure there are many more like me, perhaps not with 50%

As of this morning, you have 48.7 % equity in your house.

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Isn't that most people who bought since 2004 ?

I think you mean most first time buyers who bought since 2004.

The big lenders Halifax and Nationwide offer SVRs at much lower rates than 7% at the moment, so i would guess the majority of mortgage holders are paying 4% or less at the moment.

Edited by MonkeyNuts

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I think you mean most first time buyers who bought since 2004.

The big lenders Halifax and Nationwide offer SVRs at much lower rates than 7% at the moment, so i would guess the majority of mortgage holders are paying 4% or less at the moment.

UNless they have MEW'ed

Or are living on borrowed time, having gone onto IO.

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Don't forget many people who bought pre 2007 did so with 90%+ LTVs. I very much doubt many people have enough equity to qualify for a cheap deal.

You must have been overpaying like a ******* to make your equity! Or is it that your house is different and has increased in value by 50% since 04?

I guess so, I'd love to get some data on equity - I think it would be fascinating to see what the true picture is, but then I don’t think the Government / Public could really handle the truth!

On a personal note, I live in Zone 2 very close to Kings Cross and prices went even more crazy (they already went crazy) just around the time I bought and I have also done a lot of renovation work myself. Fortunately I put down 25%, but to be honest I've not paid off a penny for the past 3 years as I have a tracker below BOE until 2013 and therefore I can make better use of my cash through investments rather than repaying capital.

It’s pretty insane to see what has happened in my area, the reality is high prices also hurt me as I love where I live and need more space, but don’t have a snowball in hells chance due to the crazy prices. I suppose that thinking rationally about it, a 50% drop would be good as I'd get exactly what I paid for it and those £1m houses would only cost £500k!!!

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...would only cost £500k..

Have you heard yourself? The world has gone insane when people talk about it being "only" £500,000 for a house/flat.

(Not a dig at you, btw - more how such figures can become so mundane)

£500,000 is still about 25x average wage.

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I guess so, I'd love to get some data on equity - I think it would be fascinating to see what the true picture is, but then I don’t think the Government / Public could really handle the truth!

On a personal note, I live in Zone 2 very close to Kings Cross and prices went even more crazy (they already went crazy) just around the time I bought and I have also done a lot of renovation work myself. Fortunately I put down 25%, but to be honest I've not paid off a penny for the past 3 years as I have a tracker below BOE until 2013 and therefore I can make better use of my cash through investments rather than repaying capital.

It’s pretty insane to see what has happened in my area, the reality is high prices also hurt me as I love where I live and need more space, but don’t have a snowball in hells chance due to the crazy prices. I suppose that thinking rationally about it, a 50% drop would be good as I'd get exactly what I paid for it and those £1m houses would only cost £500k!!!

I think that's the key. Buy with plenty of equity. That's why I'm still Living at home with parents at 28. Another year or two and some half decent price falls and I'll be buying near mortgage free.

I'm paying off my mortgage before I get it.

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I think what we are seeing is banks finally starting to price in risk properly, before they could sell the mortgage on like a hot potato, now they are forced to think " what if we are left with this cr@p on our books ? " , the banks in reality are funding mortgages at BOE + 1.5% , so they lose money on some of the worst trackers they sold before, they need to charge 2.5% over to be happy with very good customers , 3-4% over for not so good , if and when the boe rate goes back to 5% there will be a lot of 10% rates out there and even good borrowers paying 7.5% , it is not going to be pretty , however there will be massive political pressure always for rates to be low, so thats where they will probably be .......

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I guess so, I'd love to get some data on equity - I think it would be fascinating to see what the true picture is, but then I don’t think the Government / Public could really handle the truth!

On a personal note, I live in Zone 2 very close to Kings Cross and prices went even more crazy (they already went crazy) just around the time I bought and I have also done a lot of renovation work myself. Fortunately I put down 25%, but to be honest I've not paid off a penny for the past 3 years as I have a tracker below BOE until 2013 and therefore I can make better use of my cash through investments rather than repaying capital.

It’s pretty insane to see what has happened in my area, the reality is high prices also hurt me as I love where I live and need more space, but don’t have a snowball in hells chance due to the crazy prices. I suppose that thinking rationally about it, a 50% drop would be good as I'd get exactly what I paid for it and those £1m houses would only cost £500k!!!

Sorry, but I'm not sure you are qualified to borrow large sums of money

You say: "I have 50% equity in my property"

You say: "I put down a 25% deposit"

You say "I never paid anything off"

Therefore your property has increased by 48% - congrats you are obviously a genius...

You then say: "If property prices halved then I would still sell my flat for what I paid for it"

Nope, you would have lost all your deposit unless you made repayments...

...a house that increases by 50% in value over a period and then halves in value is only worth 75% of what you paid for it

...I'd suggest you learn some basic maths before borrowing any more money

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I think what we are seeing is banks finally starting to price in risk properly

As someone who works in Risk Management, this is the key. Long live the return to underwriting borrowers based upon their individual circumstances, rather than some retard in a call centre / back office blindly crunching numbers into a computer which then says "yes" or "no".

I don't necessary believe that 5 / 6 / 7 % BOE rates will automatically mean 10% + mortgages; it really isn't that simple.

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I think what we are seeing is banks finally starting to price in risk properly, before they could sell the mortgage on like a hot potato, now they are forced to think " what if we are left with this cr@p on our books ? " , the banks in reality are funding mortgages at BOE + 1.5% , so they lose money on some of the worst trackers they sold before, they need to charge 2.5% over to be happy with very good customers , 3-4% over for not so good , if and when the boe rate goes back to 5% there will be a lot of 10% rates out there and even good borrowers paying 7.5% , it is not going to be pretty , however there will be massive political pressure always for rates to be low, so thats where they will probably be .......

Before there were lots of new entrants in the UK mortgage market and before the UK banks learnt of the marvels of secutisation these were exactly the same margins as you used to see in the market in the 80s and 90s

4-6% is the typical base rate we should be seeing for the current inflation level in normal circumstances too I'd agree

Eventually, probably slowly, this will unwind and house prices will fall in real terms

You can't escape Debt, Divorce and Debt for ever

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Sorry, but I'm not sure you are qualified to borrow large sums of money

You say: "I have 50% equity in my property"

You say: "I put down a 25% deposit"

You say "I never paid anything off"

Therefore your property has increased by 48% - congrats you are obviously a genius...

You then say: "If property prices halved then I would still sell my flat for what I paid for it"

Nope, you would have lost all your deposit unless you made repayments...

...a house that increases by 50% in value over a period and then halves in value is only worth 75% of what you paid for it

...I'd suggest you learn some basic maths before borrowing any more money

Good point :o , I suppose what I really meant was that I wouldn't be in NE!!

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Good point :o , I suppose what I really meant was that I wouldn't be in NE!!

Some friends of mine are Irish friends of mine who moved back home have seen the awfulness of this brutal maths up close

Its not actually something to wish for :(

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Some friends of mine are Irish friends of mine who moved back home have seen the awfulness of this brutal maths up close

Its not actually something to wish for :(

I know, it is sad what has happened over there. I guess I just struggle to understand where I personally go next; perhaps it's time for me to leave London!

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I know, it is sad what has happened over there. I guess I just struggle to understand where I personally go next; perhaps it's time for me to leave London!

Maybe dig a basement, add a loft conversion or extend? :/

Thats the way we are adressing a similar problem - obviously for a flat /maisonette you need a top or bottom floor to do that

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  • 312 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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