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Bosh
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Following on from TMT`s thread on Interest rates.

How much of a raise would caused carnage? We all know TPTB will do everything possible to avert a HPC. It would be interesting to hear what my learned posters think would be the minimum raise to cause a UK wide HPC. I know Interest rates are not the only factor but it`s all I can see holding the shit back from the fan.

I have read before that some think that 1% would cause many to be unable to service repayments on mortgages etc. I currently rent in a bubble area and have seen Prices shoot well past the peak of late 2007. I fully recognise and appreciate falls in many/most parts of the country.

My guess is Interest rates at 2.5% would lock in a crash across the board and this would mean that some of the areas well documented to have already fallen would/could see falls in excess of 50% + from Peak quite quickly.

Bosh.

(To add, I was looking at a website last night that offered a Mortgage calculator but added a warning ater showing results that although re-payments are £x00 today, Imagine Interest rates at 10%. You would be paying £x0000.

Got me thinking :)

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I have read before that some think that 1% would cause many to be unable to service repayments on mortgages etc.

i think 1% increase in less than 3 months would do it, with 2.5% in the following 6 months.

its not just about the amount, but how quick. they could easily do 0.25% a quater, every quater for the next 2 years and not cause much of a crash. but 1% in 3 months would panic the market.

i do beleive what they will do, when they decide to do it there will be a 6 month announcement first, to warn people, then there will be 0.25%, then wait 6 months, see whats happened and then do another 0.25%, wait etc.

(To add, I was looking at a website last night that offered a Mortgage calculator but added a warning ater showing results that although re-payments are £x00 today, Imagine Interest rates at 10%. You would be paying £x0000.

Got me thinking :)

BBC's mortgage calculator has been saying 12% for the last 4 years lat least.

Edited by Monkey
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i think 1% increase in less than 3 months would do it, with 2.5% in the following 6 months.

its not just about the amount, but how quick. they could easily do 0.25% a quater, every quater for the next 2 years and not cause much of a crash. but 1% in 3 months would panic the market.

i do beleive what they will do, when they decide to do it there will be a 6 month announcement first, to warn people, then there will be 0.25%, then wait 6 months, see whats happened and then do another 0.25%, wait etc.

BBC's mortgage calculator has been saying 12% for the last 4 years lat least.

I agree with this. It`s about the speed. It would be interesting to see the initial reaction to any rise.

Edited by Bosh
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Interest rates in Ireland have started rising. The banks do not have the funds to lend and are rhourmerd to have requested another bailout.

http://www.thepropertypin.com/viewtopic.php?f=4&p=630346

AIB to raise SVR by 0.5%

If this is happening in Ireland then I suspect that the UK is not far behind.

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This does come up from time to time.

You have to look at the data of those who bought and when they bought and what vehicle they are using.

It's a bit misleading to say IR of X would do it, as you have to break down the percentage of mortgaged properties etc etc.

I thought someone posted data some years ago saying 50% of property in the UK had some kind of mortgage on it, meaning the other half is owned outright.

With that said though I would suggest IR's of 5% or more could turn the screw on people who have bought but aren't using the low IR to build up a buffer to help them out as and when rates start to climb in 2015 / 16..

Yep I agree. However I am actually interested in the general thinking of this Forum. I know family and friends that would not be able to service the mortgage if rates hit 2% or close to it.. One of these is a close member of family. They seem to have very similar friends and they all seem to be in a similar boat. They followed each other with car purchases, Disney Holidays, Plasmas (back in the day)...All with MEW. Now they will possibly follow each other to Shit street.. That`s why 2.5% is a tipping point in my small world.

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I think you have all been brainwashed.

Raising interest rates to 1% would not cause carnage, it's just what they want you to think as an excuse to steal from savers to fund mortgages, particularly on London property. Rates were much higher when most people took their mortgages out and if they rise now they will just have to stop paying down as much debt or spending the income that savers used to get.

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I think you have all been brainwashed.

Raising interest rates to 1% would not cause carnage, it's just what they want you to think as an excuse to steal from savers to fund mortgages, particularly on London property. Rates were much higher when most people took their mortgages out and if they rise now they will just have to stop paying down as much debt or spending the income that savers used to get.

Really?

if the BoE raised IR by 1% the banks would follow, they wouldnt asorb the rise. it would be passed directly onto the Morgage payers.

people on SVR/Varible mortgages would feel the rise instanly.

lets take some assumptions

a person who has outstanding mortgage of £160k

@3.79% IR

Repayment £834pcm

IO £505pcm

@4.79%

Repayment £926pcm

IO £638pcm

@5.79%

Repayment £1022pcm

IO £722

pcm

@6.79%

Repayment £1122pcm

IO £905pcm

thats a big jump of an additonal £100. now some people will have much more outstanding, some will have less. and when people are living hand to mouth as it is, with Fuel going up, food etc trying to find an aditional £100pcm wil lbe a struggle. especially if you cant drop down to IO as your already on IO.

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Really?

if the BoE raised IR by 1% the banks would follow, they wouldnt asorb the rise. it would be passed directly onto the Morgage payers.

people on SVR/Varible mortgages would feel the rise instanly.

lets take some assumptions

a person who has outstanding mortgage of £160k

@3.79% IR

Repayment £834pcm

IO £505pcm

@4.79%

Repayment £926pcm

IO £638pcm

@5.79%

Repayment £1022pcm

IO £722

pcm

@6.79%

Repayment £1122pcm

IO £905pcm

thats a big jump of an additonal £100. now some people will have much more outstanding, some will have less. and when people are living hand to mouth as it is, with Fuel going up, food etc trying to find an aditional £100pcm wil lbe a struggle. especially if you cant drop down to IO as your already on IO.

You are missing the point.

So the mortgage payment goes up a little - what was it in 2008 before rates were trashed? People will have to cut back just as savers have done. The UK did not implode when rates were at 15% in the 90's and it won't if rates rise now.

At the moment London prices are rising partly because they gain the most from low interest rates so they are piling in while rates are low. They have the highest house prices so also the largest mortgages. Low interest rates are a massive transfer of wealth from savers all over the UK to Londoners.

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You are missing the point.

So the mortgage payment goes up a little - what was it in 2008 before rates were trashed? People will have to cut back just as savers have done. The UK did not implode when rates were at 15% in the 90's and it won't if rates rise now.

hahahhahaha

Really?!?

goes up a little? to you maybe, but not for millions of mortgagers.

not one person in my generation that i personally know (25-35) who took out mortgage in the last 10 years, and benifitted from the IR's going down, thought and actually did save the "extra". they saw it as a payrise and spent accordingly.

the people who have taken a mortgage out since 2008 went upto and over their afordability limit based on the lowest IR in history. this is being replicated across the country day after day.

no the UK didnt explode at 15%, as that was the reaction to the last bubble.

people have massivly overleveraged themselves this time, and more so than any other time. self cert I/O's were the norm upto last year.

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hahahhahaha

Really?!?

goes up a little? to you maybe, but not for millions of mortgagers.

not one person in my generation that i personally know (25-35) who took out mortgage in the last 10 years, and benifitted from the IR's going down, thought and actually did save the "extra". they saw it as a payrise and spent accordingly.

the people who have taken a mortgage out since 2008 went upto and over their afordability limit based on the lowest IR in history. this is being replicated across the country day after day.

no the UK didnt explode at 15%, as that was the reaction to the last bubble.

people have massivly overleveraged themselves this time, and more so than any other time. self cert I/O's were the norm upto last year.

More fool them, then. I would have no sympathy for them if they were repossessed and forced to spend the rest of their lives in poverty with every penny above basic living expenses being taken to pay back the shortfall. I would have expected nothing less had I been unable to pay my mortgage and I had one when rates were going up every other month, peaking at 16% odd. As it happened, I responded every time the bank sent me a letter asking me to increase my standing order and ignored any request to reduce it, thus paying off the debt ten years early.

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hahahhahaha

Really?!?

goes up a little? to you maybe, but not for millions of mortgagers.

not one person in my generation that i personally know (25-35) who took out mortgage in the last 10 years, and benifitted from the IR's going down, thought and actually did save the "extra". they saw it as a payrise and spent accordingly.

the people who have taken a mortgage out since 2008 went upto and over their afordability limit based on the lowest IR in history. this is being replicated across the country day after day.

no the UK didnt explode at 15%, as that was the reaction to the last bubble.

people have massivly overleveraged themselves this time, and more so than any other time. self cert I/O's were the norm upto last year.

There are several posters on here who have tracker mortgages at very low rates. Not everyone who has a mortgage now took it out in the boom.

Some people will struggle if rates rise but to suggest it will cause total carnage is propaganda.

What about people who rely on income from savings who got 6% in 2008 but struggle to get 3% now? Do you think inflation in living costs only apply to debtors? Savers have had to reduce their spending as those with mortgages would if rates rise.

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The fragility of the housing market means that trends and sentiment, I think, are more important than absolute finance although there are many people who are on the edge now who would be in trouble.

As soon as the mainstream media were reporting the fact that interest rates were rising I think this would bring the widespread panic that would mean that many would immediately be despreate to unload property so that carnage would eb the result.

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You are missing the point.

So the mortgage payment goes up a little - what was it in 2008 before rates were trashed? People will have to cut back just as savers have done. The UK did not implode when rates were at 15% in the 90's and it won't if rates rise now.

At the moment London prices are rising partly because they gain the most from low interest rates so they are piling in while rates are low. They have the highest house prices so also the largest mortgages. Low interest rates are a massive transfer of wealth from savers all over the UK to Londoners.

pre-2008 they still had MEW.

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I think you have all been brainwashed.

Raising interest rates to 1% would not cause carnage, it's just what they want you to think as an excuse to steal from savers to fund mortgages, particularly on London property. Rates were much higher when most people took their mortgages out and if they rise now they will just have to stop paying down as much debt or spending the income that savers used to get.

And how much was a liter of petrol and a loaf of bread five years ago and how much have wages gone up?

Inflation on the necessities in life have made up for the difference in IR`s ,most of the people I know who have mortgages and are in the same job as they were in 07 are only getting by when in 07 they had far more disposable income

IMO 0.5% IR`s is the only thing keeping there heads above water

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And how much was a liter of petrol and a loaf of bread five years ago and how much have wages gone up?

Inflation on the necessities in life have made up for the difference in IR`s ,most of the people I know who have mortgages and are in the same job as they were in 07 are only getting by when in 07 they had far more disposable income

IMO 0.5% IR`s is the only thing keeping there heads above water

Or not, as the case may be.... http://www.housepricecrash.co.uk/forum/index.php?showtopic=182724&view=findpost&p=909135962

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I think rates need to rise a fair bit before any real pain is felt. The low rates are intended to appease voters and maintain prices at just below peak.

I see no real evidence of a real recession type economy for most people . I recall the 80's and 90's and the spendthrift nature of today is off the scales compared to even recovery and boom in those decades.

Try booking a holiday , getting decent service , articulating a specific bespoke delivery of common goods and services and you are still struggling as a customer.

That's not what a recession feels like at all.

The issue is that if rates remain at zero then prices rises will do the trick slowly instead of a quick rate hike.

It will be inflation that causes the crash . It always does .

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i think 1% increase in less than 3 months would do it, with 2.5% in the following 6 months.

its not just about the amount, but how quick. they could easily do 0.25% a quater, every quater for the next 2 years and not cause much of a crash. but 1% in 3 months would panic the market.

i do beleive what they will do, when they decide to do it there will be a 6 month announcement first, to warn people, then there will be 0.25%, then wait 6 months, see whats happened and then do another 0.25%, wait etc.

BBC's mortgage calculator has been saying 12% for the last 4 years lat least.

I don`t think they will have the luxury of putting them up in a controlled manner

I think they will QE till they can`t and they will suppress IR`s until they can`t then they will have to react to external pressures

Edited by long time lurking
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Following on from TMT`s thread on Interest rates.

How much of a raise would caused carnage? We all know TPTB will do everything possible to avert a HPC. It would be interesting to hear what my learned posters think would be the minimum raise to cause a UK wide HPC. I know Interest rates are not the only factor but it`s all I can see holding the shit back from the fan.

I have read before that some think that 1% would cause many to be unable to service repayments on mortgages etc. I currently rent in a bubble area and have seen Prices shoot well past the peak of late 2007. I fully recognise and appreciate falls in many/most parts of the country.

My guess is Interest rates at 2.5% would lock in a crash across the board and this would mean that some of the areas well documented to have already fallen would/could see falls in excess of 50% + from Peak quite quickly.

Bosh.

(To add, I was looking at a website last night that offered a Mortgage calculator but added a warning ater showing results that although re-payments are £x00 today, Imagine Interest rates at 10%. You would be paying £x0000.

Got me thinking :)

Don't think about interest rates in isolation. Think about the circumstances that might cause interest rates to rise, and then ask yourself what other effects (on house prices, jobs, inflation, wages) these might have.

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You are missing the point.

So the mortgage payment goes up a little - what was it in 2008 before rates were trashed? People will have to cut back just as savers have done. The UK did not implode when rates were at 15% in the 90's and it won't if rates rise now.

Yeah, it did implode and it will again if rates rise a few percent. Why do you think the BoE is pushing on string? Or do you think they fiddle the inflation figures like the numpties on the gold thread?

At the moment London prices are rising partly because they gain the most from low interest rates so they are piling in while rates are low. They have the highest house prices so also the largest mortgages. Low interest rates are a massive transfer of wealth from savers all over the UK to Londoners.

This is complete b****cks - and if you want to walk through the numbers, I would be happy to hold your hand (after you have carried out your initial analysis - start by obtaining numbers for cash on deposit and mortgages outstanding and go from there.)

Also, are we really expected to have sympathy for the creditor class? That usurious bunch of scumbags who expect to receive money for just having money in the bank? Savers are worse than BTLers IMHO - at least BTLers provide accomodation services. Same too with people who buy shares or other assets - at least they are taking a risk. What do savers provide? Nothing. They just leech off of working people all the while having their precious money insured for free by the government. Bunch of Saga-holidaying, telegraph-reading misers!

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Also, are we really expected to have sympathy for the creditor class? That usurious bunch of scumbags who expect to receive money for just having money in the bank? Savers are worse than BTLers IMHO - at least BTLers provide accomodation services. Same too with people who buy shares or other assets - at least they are taking a risk. What do savers provide? Nothing. They just leech off of working people all the while having their precious money insured for free by the government. Bunch of Saga-holidaying, telegraph-reading misers!

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