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Sell Your House Now Before Interest Rates Shoot Up

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http://www.mirror.co.uk/advice/money/2011/01/23/mortgage-special-get-a-fixed-rate-now-before-rates-shoot-up-115875-22868709/

Hoping to lock into a low-cost fixed-rate ­mortgage sell your house? You’d better get a move on...

The Bank of England base rate was held at 0.5 per cent this month but many experts think an increase could be just around the corner to help curb inflation.

And when rates go up, it will be bad news for the two-thirds of people on variable rate ­mortgages, whose payments will soar.

Moneysupermarket.com says someone with a 25-year, £150,000 repayment tracker ­mortgage ­currently at 2.17 per cent is paying £648 a month.

A 0.25 per cent increase in base rate would mean repayments would rise by £19 a month. But if the base rate climbs one per cent, they would pay £725 a month – a £77 rise.

But if you want to lock yourself into a low fixed-rate deal sell your house, time is running out. Lenders including First Direct, Halifax, Northern Rock and ­Skipton have pulled some of their fixed-rate deals in the past few days and many have replaced them with more expensive deals. David Hollingworth, of mortgage brokers London & Country, said: “Fixed rates have been rising as the money markets appear to feel that a rate rise could come sooner than previously ­anticipated.

Edited by fellow

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The market continues to turn. Once the general populace realise prices are going down it will become a self fulfilling prophecy.

The idea that rates willl "shoot up" is clearly ridiculous. The 1% rise quoted is not very likely in one go to say the least! More like 0.25% so the amount would be more like £20. Probably take a year maybe two at least before rates reach 1.5%.

Interesting how the benefits of higher rates never get mentioned? E.g Stronger £ v $ would bring the £ oil price down, along with all $ denominated commodities. People with savings etc, probable lower government borrowing costs. (Why is anyone buying long term gilts when they are getting a negative real interest rate. Does not make much sense to me.)

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150k mortgage @ 1% IR increase (which will probably take 18 months) = £77 monthly rise in mortgage payments.

Does anyone seriously think this is going to create panic and trigger our long awaited HPC?

IMO it's going to be a long slow grind unfortunately people...

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Must be scary being a mortgage debt slave right now with all this talk of rising rates, job cuts and falling house prices.

Although I don't particularly wish ill on anyone it would be good to see the smirk firmly knocked off some peoples faces - the ones who have been leaching off the prudent over the last few years and rubbing our noses in it to boot.

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150k mortgage @ 1% IR increase (which will probably take 18 months) = £77 monthly rise in mortgage payments.

Does anyone seriously think this is going to create panic and trigger our long awaited HPC?

IMO it's going to be a long slow grind unfortunately people...

Agree

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I was just waxing to my mate down the pub last night about that. He's a bright bloke but he had accepted the media position of 'our interest rates won't affect global commodities/global production' etc

There seems to be a collective loss of memory that the pound's level and therefore the prices we pay is directly linked to the Central Bank Rate.

If the pound's level is not affected by interest rates, why did they put them up so much to try and keep it in the ERM?

And the other thing he had swallowed was that 'prices of commodities are due to increased demand from India and China'. Nothing to do with the huge amounts of liquidity caused by ultra low interest rates then?

Of course everything that is said always has a kernel of truth in it - but never refelcts the totality of the story that should never be heard.

Now at last we get to where the politics are in all of this. If there is one lesson the Tories have learnt from their last term in office, it is the interest rate lesson. They well know that raising rates =hpc=massive wipeout at election. Better higher prices spread around commodities and the excuse of "rising demand from China and India"...as if that factor has somehow only come about in the past two years. Trashing the pound is a policy choice. The public do not notice it as directly as not being able to pay mortgage.

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I was just waxing to my mate down the pub last night about that. He's a bright bloke but he had accepted the media position of 'our interest rates won't affect global commodities/global production' etc

There seems to be a collective loss of memory that the pound's level and therefore the prices we pay is directly linked to the Central Bank Rate.

If the pound's level is not affected by interest rates, why did they put them up so much to try and keep it in the ERM?

And the other thing he had swallowed was that 'prices of commodities are due to increased demand from India and China'. Nothing to do with the huge amounts of liquidity caused by ultra low interest rates then?

Of course everything that is said always has a kernel of truth in it - but never refelcts the totality of the story that should never be heard.

That's only part of the story though. Fear of default will cause the currency to fall as well. So if interest rates are too high for the economy to handle, the currency can weaken.

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Now at last we get to where the politics are in all of this. If there is one lesson the Tories have learnt from their last term in office, it is the interest rate lesson. They well know that raising rates =hpc=massive wipeout at election. Better higher prices spread around commodities and the excuse of "rising demand from China and India"...as if that factor has somehow only come about in the past two years. Trashing the pound is a policy choice. The public do not notice it as directly as not being able to pay mortgage.

trashing the pound makes exports cheaper, the only way the economy can recover is through exports.

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Now at last we get to where the politics are in all of this. If there is one lesson the Tories have learnt from their last term in office, it is the interest rate lesson. They well know that raising rates =hpc=massive wipeout at election. Better higher prices spread around commodities and the excuse of "rising demand from China and India"...as if that factor has somehow only come about in the past two years. Trashing the pound is a policy choice. The public do not notice it as directly as not being able to pay mortgage.

Quite ironic that the increased inflation will trigger the HPC instead, and that inflation is noticed by everybody in the country. Their core voters want higher interest rates anyway, and this IMO will cause a much bigger election defeat than raising IR.

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...base rate seems to have little relationship to interest paid on a mortgage.....I do not think there are many that are on low lifetime trackers base + < 2% and if there are they should be repaying the capital as well as the interest on their debt........savers in my mind have got the worst deal of all......banks will in future have to maintain higher capital reserves and that means requiring more cash deposits...that means paying a higher rate of interest on savings...that means charging a higher rate for lending...which means lower house prices. ;)

Edited by winkie

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trashing the pound makes exports cheaper, the only way the economy can recover is through exports.

How does it make exports cheaper if all of the raw materials which have to be imported are more expensive, along with the fuel used in every stage of the manufacturing process and transportation of the products?

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@mattyfc who thinks rates shooting up is ridiculous.

Rates shot down in hardly any time from around 5%.

They could easily shoot up again. All it would take is a change of heart from the MPC, a few inflation based wage settlements in the private sector etc.

To make the real base rate positive does require that kind of rise.

And 5% isn't high.

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How does it make exports cheaper if all of the raw materials which have to be imported are more expensive, along with the fuel used in every stage of the manufacturing process and transportation of the products?

Because it's a wage cut for everyone in the country, without breaking any contracts. The workers than have to fight to get their pay restored, and they normally don't manage it in full.

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Because it's a wage cut for everyone in the country, without breaking any contracts. The workers than have to fight to get their pay restored, and they normally don't manage it in full.

It's real wage cut which would have no impact on the price of your exports.

Edit: it will however destroy your domestic market as everybody has less money to spend.

Edited by fellow

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How many have got base rate +2%?

most businesses I would guess are on Base Rate + 5-10% probably fixed at inception though.

and £150K...thats about 15K above the new average mortgage.

In OZ the rates are what 4.75%...thats where we are heading...but it will be a slow grind...unless a swan of the black variety appears....and in this unstable QE'd world, that could happen very quickly.

Oh and look...the MARKET LEADING tracker is HSBC

https://mortgages.hsbc.co.uk/product/A001001483001001484001001485-lifetime-tracker-special

3.79% +base rate at the moment for your 10% deposit mortgage...nearly double the headline.

this is the best rate on moneysupermarket and it has strict income and record criteria...so they say...and I beleive them.

the next two finds on the search rise to 5.49% plus fees...£1500 in the case of C+G.

Edited by Bloo Loo

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150k mortgage @ 1% IR increase (which will probably take 18 months) = £77 monthly rise in mortgage payments.

Does anyone seriously think this is going to create panic and trigger our long awaited HPC?

IMO it's going to be a long slow grind unfortunately people...

Don't forget the increase in energy prices, VAT, tax, uncapped NI Contributions, public transport increases.

Every little helps

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trashing the pound makes exports cheaper, the only way the economy can recover is through exports.

Sterling was the world's reserve currency throughout our reign as the world's manufacturing powerhouse. The Japanese still export like crazy with the Yen at historic highs. Ze Germans do all right in this area too, and they would never countenance a weak currency.

But then again, maybe Robert Mugabe is presiding over a Zimbabwean manufacturing renaissance as we speak :)

Edited by 50sQuiff

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Don't forget the increase in energy prices, VAT, tax, uncapped NI Contributions, public transport increases.

Every little helps

Even the kids sweeties are up 20% "because of VAT".

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150k mortgage @ 1% IR increase (which will probably take 18 months) = £77 monthly rise in mortgage payments.

Does anyone seriously think this is going to create panic and trigger our long awaited HPC?

IMO it's going to be a long slow grind unfortunately people...

Who has only a 150k mortgage nowadays though? What about if they Mewed? Are rates going down on their other borrowing, probably not? Can they even keep their job? When it starts, things will collapse quickly IMO.

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Well, 2.1% actually.

Indeed.

Perhaps I should have been clearer. Prices for things like sweets generally went up another 20% at the same time as the recent VAT increase but when asked why the huge increase the reason given is "because of VAT" (ok not in every shop but they should know better :blink: ). That's why I put it in quotation marks.

VAT was used as an excuse to hike prices even by the largest retailers, perhaps especially by them.

I agree that the rate of VAT (where applicable) has only gone up by 2.5%.

But apart from the retailers greed the point is such huge increases in prices all takes money out of people's wallets and that won't be being spent elsewhere such as on housing.

Edited by billybong

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I fundamentally disagree with this view.

It is one of those long held popular beliefs that is drummed into us from birth in this country.

When the Chinese do it we accuse them of impoverishing/enslaving their own people and unfair currency manipulation.

When we do it everybody thinks it's fantastic. Except when oil/food/clothing goes up.. but then it's just because the oil cartels and supermarkets are unfairly ripping us off.. nothing to do with import prices and monetary policy :rolleyes:

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150k mortgage @ 1% IR increase (which will probably take 18 months) = £77 monthly rise in mortgage payments.

Does anyone seriously think this is going to create panic and trigger our long awaited HPC?

IMO it's going to be a long slow grind unfortunately people...

Whilst I tend to agree it wil be slow, 1% of £150K is £1500 per year, which is £125 per month ;)

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  • 294 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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