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ianbeale

The Effect Of 0.25% Rate Hike Played Down

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I find this BBC article another classic case of spin that udersells the impact of a 0.25% rate hike

http://news.bbc.co.uk/1/hi/business/4775417.stm

"The bank's standard variable rate will rise from 6.5% to 6.75%, equivalent to a £15 a month increase on a £100,000 repayment mortgage."

whilst the above statement is true I find this £15 figure misleading

To my mind a 0.25 hike in SVR would make a mortgage with an outstnding capitol of 100k cost £250 a year more to service - fact (250/12 = £20.83 per month). The figure they give (£15), whilst for a repayment mortgae over 25 years is probably true, it is misleading as it factors in the repayment of the capitol over the 25 year period, thereby the effect of the hike becomes less as the capitol owed diminshes over time.

But make no mistake - if you owe £100k the bank will be taking £20.83 extra of you per month to service it for every 0.25 hike

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It should be hitting medium sized portfolio BTLers quite nicely, at say £100 per 0.25 hike in IRs...looks like Christmas might be cancelled for some.

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It should be hitting medium sized portfolio BTLers quite nicely, at say £100 per 0.25 hike in IRs...looks like Christmas might be cancelled for some.

I think the whole BTL business case gets a double hit on the IRs ging up

the yeild goes down because the less left after the bank has been paid

the alternative of putting your money in the bank pays a lot better

so every 0.25 hike is effectively a 0.5 hike to the BTL industry OUCH!!!!

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I think the whole BTL business case gets a double hit on the IRs ging up

the yeild goes down because the less left after the bank has been paid

the alternative of putting your money in the bank pays a lot better

so every 0.25 hike is effectively a 0.5 hike to the BTL industry OUCH!!!!

would I also be right in thinking that IO mortgagees will be disproportionately hit? This will also hasten the burgeoning crisis in that area then...

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  • 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%



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