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Interest Rates On The Rise..

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From this article: http://www.thisismoney.co.uk/mortgages-and-homes/mortgages-features/article.html?in_article_id=521120&in_page_id=58

Even though base rates haven't gone up, though they're under pressure to.. looks like mortgage rates are going up anyway.

"While the BoE has not given any indication that it will raise the base rate, commentators are suggesting it may have to raise rates sooner rather than later and accelerate the pace of rates returning to a more normal level.

That view appears to be shared by the money markets and this has pushed up swap rates, the funding that heavily influences fixed rate mortgages.

• Five-year swap rates have shifted up from a 2.41% average over the past six months to 2.77% - a chunky move.

• Two-year swaps are up to 1.66% from a 1.46% six-month average.

Best five-year fixes pulled

Worryingly for homeowners this move upwards has coincided with some of the best fixed deals about being pulled.

YBS' five-year fixes at 3.69% for those with a 40% deposit and 3.99% for those with a 25% deposit have gone, replaced by a 4.19% rate for those with a 25% deposit.

Likewise, ING has pulled its five-year deal, also at 3.69% for those with a 40% deposit and replaced it with a 4.09% rate (it comes with a hefty £1,495 fee.)

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YBS' five-year fixes at (...) 3.99% for those with a 25% deposit have gone, replaced by a 4.19% rate...

So, buyers will pay 5% more interest at a given price.

What remains to be seen is to what extent buyers will swallow this, and to what extent sellers will take the hit by a reduction in price.

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So, buyers will pay 5% more interest at a given price.

What remains to be seen is to what extent buyers will swallow this.....

...and face an expected fall in the value of the purchased asset possibly leading to negative equity ...why buy at this time...?..... :rolleyes:

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...and face an expected fall in the value of the purchased asset possibly leading to negative equity ...why buy at this time...?..... :rolleyes:

For right or for wrong: Because the cost per month of buying is really rather cheap compared to normal.

If you take real house prices and look at the credit / opportunity costs of buying them, they are well below average.

This implies two things: The cost of buying at a given price will rise, and the real price of a given property will fall.

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Worryingly for homeowners this move upwards has coincided with some of the best fixed deals about being pulled.

Why should a homeowner necessarily give two hoots about interest rates? Ah, I see. The author doesn't mean homeowners at all. He means folk who paying rent on the bank's money while they live in the bank's house.

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Why should a homeowner necessarily give two hoots about interest rates? Ah, I see. The author doesn't mean homeowners at all. He means folk who paying rent on the bank's money while they live in the bank's house.

He means homeowners with a mortgage. They still own the house, they just have a large debt as well.

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For right or for wrong: Because the cost per month of buying is really rather cheap compared to normal.

If you take real house prices and look at the credit / opportunity costs of buying them, they are well below average.

This implies two things: The cost of buying at a given price will rise, and the real price of a given property will fall.

I guess the question is, for how long if interest rates continue to rise?

Longer term, buying a house at these prices is going to end in debt misery. I take your point though.

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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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