Jump to content
House Price Crash Forum
Sign in to follow this  
Rachel

Interest Rates

Recommended Posts

if/when house prices go down, won't interest have gone up anyway? so even if you can just about afford £100k now, if interest rates go up £100k would cost alot more in mortgage interest anyway? is that right?

Share this post


Link to post
Share on other sites

if/when house prices go down, won't interest have gone up anyway? so even if you can just about afford £100k now, if interest rates go up £100k would cost alot more in mortgage interest anyway? is that right?

If house prices drop a further 30% from where they are today (10% down from top) the 400k house will cost you 240,000. I would rather take a mortagage on 240k at 6% than a mortagage on 400k at 4%. It gets even better if rates move up dramatically as 10% on a 400k house will probably bankrupt most buyers who had to stretch to afford that much house.

Better yet, sell your 400k house (probably too late now in the down cycle to get top of market prices), STR, and buy a similar house for 240k after the crash and have a zero mortgage.

Share this post


Link to post
Share on other sites

if rates go up, there is more room for cuts later on. A cut on a lower mortgage is always better than a rise on a higher mortgage!

Share this post


Link to post
Share on other sites

if/when house prices go down, won't interest have gone up anyway? so even if you can just about afford £100k now, if interest rates go up £100k would cost alot more in mortgage interest anyway? is that right?

If intrest rates are higher, wage inflation is probably also higher... So even though you are paying the same as you would for a more expensive house now, in three or four years its alot less in relation to your wages. Low interest rates are bad in the long term as your going to be paying through the nose for many years to come, and when intrest rates do rise your risking repossession when you cant afford the repayments....

Give me a cheaper house and higher interest rates any day, low interest rates and high house prices is one reason why i havent bought, its just too risky and ties you to debt for too long, the debt is too big and too real, even if it is cheap....

Edited by moosetea

Share this post


Link to post
Share on other sites
if/when house prices go down, won't interest have gone up anyway?

If house prices go down, or even remain static, economic growth slows ( as we are seeing now ), which means less demand and hence less inflationary pressure in the economy. So why would they (the BOE) raise interest rates? :rolleyes:

so even if you can just about afford £100k now, if interest rates go up £100k would cost alot more in mortgage interest anyway? is that right?

I think you really need to sit down and do the sums on various scenarios before jumping to conclusions like this.

Edited by IPOD

Share this post


Link to post
Share on other sites

If house prices go down, or even remain static, economic growth slows ( as we are seeing now ), which will means less demand and hence less inflationary pressure in the economy. So why would they (the BOE) raise interest rates? :rolleyes:

I think you really need to sit down and do the sums on various scenarios before jumping to conclusions like this.

I think the US is beginning to realise that their money printing is having the effect of destroying their future - economicially, sociailly and militarily. Pin the tail on the hurricane donkey and blame inflation on that and not incessant money printing, get bankruptcy laws in place to protect the banks and then whack up rates. BOE would have to jack up rates to protect the £ and prevent imported inflation - a situation even more likely than before as we produce so little of our own goods.

Share this post


Link to post
Share on other sites

I think you really need to sit down and do the sums on various scenarios before jumping to conclusions like this.

i was asking because i don't know, i wasn't jumping to conclusions.

Share this post


Link to post
Share on other sites

Rachel,

You are on the face of it correct. But, what happened previously is that house prices are related to interest rates. People basically only have so much income. If IR's go up then the amount they can offord on a mortgage stays static, they can therefore borrow less. As this runs through the whole economy prices come down.

House prices are therefore proportional indirectly to interest rates.

If IR's go up, prices come down, you pay the same.

As the post above pointed out, high IR's are found in times of inflation. If inflation is 10% in real terms the £100k you borrowed this year is the equivalent of £90k next year and £81k the year after etc.

If inflation is low the size of your debt is maintained and given a crash, negative equity etc, the debt is still the same size.

Does that make any sense.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.