Interest Rates at 3%

Lightweight said:
Or less homes available for first time buyers as the people in starter homes will not think it is viable to move up the property ladder
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It’s not as if it’s the end of people needing houses and not as many houses are getting built than are needed.

At 3% we’re not exactly in crazy times here..

Highest on record17.00% on Nov 1979
Lowest on record0.10% on 19 Mar 2020

‘UK interest rates are expected to peak at 4.75% in late 2023, much milder than over 6.25% priced in after the mini-budget’

It just levelling out to some sort or normal level after being artificially low for such a long time. Same as it ever was getting on the proper ladder.. the sooner the better!

2003 - 2007

During these four years, the interest rates rose significantly to curb an over-inflating economy. In July 2003, the interest rates stood at 3.5%, up to 5.75% by July 2007.

2007 - 2018​

The global financial crisis of 2008 has kept rates consistently under 6%, with the base rate falling to the lowest level of 300 years. They sat at the earlier mentioned 5.75% in July 2007 before falling dramatically to just 0.5% by March 2009. This fell again in August 2016 to 0.25%, which was a benefit to all homebuyers. The interest rate rose just slightly back to 0.5% by November 2017 and then increased again to 0.75% in August 2018.

2020​

Following the global pandemic of the Coronavirus (COVID-19) the Bank of England have reduced the base rate to 0.10% a historic low.

New home buyers who have borrowed mortgages at a fixed-rate have enjoyed interest rates and mortgage payments at remarkable and historic lows.

2021​

Inflation and the cost of living surged by 5.1% in the 12 months to November, up from 4.2% the month before, and its highest level since September 2011. This pushed the policy makers at the Bank of England to raise rates for the first time in 3 years. The Monetary Policy Committee voted 8-1 in favour of the increase to 0.25%.. it just wasn’t enough.

Interest rates are Tory vote killers and in lots of cases their main body of voters will let them do what they want as long as interest rates keep coming down.

When they’re not doing that.. then what use are they to Tory voters?
 
Uwefuchs said:
I work between 40 and 60 hours most weeks, have a decent job and have always been fairly comfortable financially until about 18 months ago. Now I'm financially worse off every month.

Gas bills have gone through the roof, petrol is sky high, the food shopping is more expensive on every visit.

Forget about holidays and nights out, just covering the essentials is getting more and more difficult now. Its hard to rejoice at the death of the Tory party when you're lying in bed at night worrying about the bills.
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Apologies, I was not meaning to sound like I was rejoicing. In my line of work I am acutely aware of the severe difficulties that families up and down the country are facing. I sympathise with all of them and realise that me and my wife could be put in the same situation at the drop of a hat if things take a turn for the worst.
 
Currently it seems, according to radio news that the recession will be deep and last a minimum of 2 years ( make that 4 then)
There’s no way of knowinghow bad it could get.
There’s a GE due in 2024. Just in time for Labour to get into power and have to deal with a nightmare situation.
 
MolteniArcore said:
Apologies, I was not meaning to sound like I was rejoicing. In my line of work I am acutely aware of the severe difficulties that families up and down the country are facing. I sympathise with all of them and realise that me and my wife could be put in the same situation at the drop of a hat if things take a turn for the worst.
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It wasn't a dig at you mate, just a general comment 👍🏻
 
thewanderer said:
If houses prices are falling there will be less houses available to buy. I.e. who would put there house up for sale in a falling market?
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People who have died.
People who have had to go into a home or specialist accommodation
Some people who have divorced
People who are moving abroad
Brand new properties
Properties where the owners have handed the keys back i.e can't keep up the payments
People who have had to downsize to reduce payments
People who have found a job in another part of the UK.

In my experience there are more properties for sale when prices are falling.
 
We are in strange times - I have never known a recession where there are more vacancies than unemployed even at the beginning of the recession and a shortage of some materials etc. For example in late 1980 there were nearly 2 million unemployed and I would guess around 250k vacancies, the same in 1991 and 2008. The lastest job figures from the USA show jobs growth not decline.

Possibly now feels like 1974, with rising inflation, very low economic growth, low unemployment. The sharp increase in oil and commoditiy prices meant people had less to spend on most items as say fuel took a greater part of theor income. Interest rates were well below inflation then like now.
 
Johnnyweetabix said:
I thought more people had savings than loans?
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I agree - for example over 50% of UK properties are owned outright.

Some people have savings that they don't call savings e.g Money being saved for future pension income in money purchase schemes or SIPPs.

In the past it was said Building societies needed around 7 savers to fund one mortgage.
 
Redwurzel said:
We are in strange times - I have never known a recession where there are more vacancies than unemployed even at the beginning of the recession and a shortage of some materials etc. For example in late 1980 there were nearly 2 million unemployed and I would guess around 250k vacancies, the same in 1991 and 2008. The lastest job figures from the USA show jobs growth not decline.

Possibly now feels like 1974, with rising inflation, very low economic growth, low unemployment. The sharp increase in oil and commoditiy prices meant people had less to spend on most items as say fuel took a greater part of theor income. Interest rates were well below inflation then like now.
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Feels like we’re in a bit of a catch 22 situation and have been since brexit. I do thing Corbyn with a ‘soft brexit’ would have wiped the floor with Boris Johnson.. he like with his predecessor paying a billion pounds for support from the DUP. He signed a deal with the devil, the far right and disaster capitalists.

Those in power right now will be filling their pockets as fast as they can’t and milking what it left of the public money cash cow. It’s a fire sale.

Kier Starmer has to play his best John Major and will probably find some tories crossing the floor as they did with Tony Blair.

The Conservative Party have jumped the shark and should be no more, they’ve played every trick in the book to cling onto power.

Worse thing is., I think the American an system is fully with us now. The Light Blue Conservatives vs the looney head the ball New Fascists
 
BM - I acknowedge that the under 55s can't access pension money.

In general the over 50s are savers and the under 21s in a small way.

While the 22-50s are the borrowers.

Often our views represent our ages.
 
newyddion said:
It’s not as if it’s the end of people needing houses and not as many houses are getting built than are needed.

At 3% we’re not exactly in crazy times here..

Highest on record17.00% on Nov 1979
Lowest on record0.10% on 19 Mar 2020

‘UK interest rates are expected to peak at 4.75% in late 2023, much milder than over 6.25% priced in after the mini-budget’

It just levelling out to some sort or normal level after being artificially low for such a long time. Same as it ever was getting on the proper ladder.. the sooner the better!

2003 - 2007

During these four years, the interest rates rose significantly to curb an over-inflating economy. In July 2003, the interest rates stood at 3.5%, up to 5.75% by July 2007.

2007 - 2018​

The global financial crisis of 2008 has kept rates consistently under 6%, with the base rate falling to the lowest level of 300 years. They sat at the earlier mentioned 5.75% in July 2007 before falling dramatically to just 0.5% by March 2009. This fell again in August 2016 to 0.25%, which was a benefit to all homebuyers. The interest rate rose just slightly back to 0.5% by November 2017 and then increased again to 0.75% in August 2018.

2020​

Following the global pandemic of the Coronavirus (COVID-19) the Bank of England have reduced the base rate to 0.10% a historic low.

New home buyers who have borrowed mortgages at a fixed-rate have enjoyed interest rates and mortgage payments at remarkable and historic lows.

2021​

Inflation and the cost of living surged by 5.1% in the 12 months to November, up from 4.2% the month before, and its highest level since September 2011. This pushed the policy makers at the Bank of England to raise rates for the first time in 3 years. The Monetary Policy Committee voted 8-1 in favour of the increase to 0.25%.. it just wasn’t enough.

Interest rates are Tory vote killers and in lots of cases their main body of voters will let them do what they want as long as interest rates keep coming down.

When they’re not doing that.. then what use are they to Tory voters?
Click to expand...
The difference is that once you adjust the price of property, the income levels, and the interest rates of the 80s to now I believe the cost of owning a house takes up a larger proportion of income than it ever has. So although the actual number (17% vs 3%) seems massively different, the outcome is actually worse the other way!

I should say that I just read this the other day and haven't actually determined if it's true, but I can see how it would be!
 
Boro4life said:
It's good this for me people who live at home saving for a house. As interest rates on savings will rise and house prices will crash hoping to get a house on a bargain in the next year. Should help more people onto the housing market. It is sad though this crash will come about from people having their houses repossessed due to being unable to pay inflated mortgages
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Possibly for the middle class where it’s an option to live with parents and don’t need to contribute anything and save every penny you have. In the real world it’s not really good for anyone and just makes home ownership that little bit more impossible for younger people
 
Matt said:
The difference is that once you adjust the price of property, the income levels, and the interest rates of the 80s to now I believe the cost of owning a house takes up a larger proportion of income than it ever has. So although the actual number (17% vs 3%) seems massively different, the outcome is actually worse the other way!

I should say that I just read this the other day and haven't actually determined if it's true, but I can see how it would be!
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on average it will be harder to buy a house in now than what it was in the 80s.. but we’re only comparing in recent years here aren’t we?
 
Andy_W said:
Not when inflation is 10%, your money is being eroded (n)

Also, a 200k mortgage at 3% (plus the 3% lender margin) is basically 6% on the 200k. Loads of people might have what, 2-10k savings, earning 3% on that won't console them much :cry:
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One in four people have no savings at all. The average is £6k.

www.thisismoney.co.uk

One in four Britons have no savings to combat cost of living crisis

A huge number of Britons of all ages have no savings at a time when prices are rising by levels not seen in 40 years, new research shows.
www.thisismoney.co.uk www.thisismoney.co.uk
 
Pak_Doo_Ik said:
Savers need to make the most of the increasing interest rates as the BoE also said the country is about to enter is deepest and longest recession for a hundred years and guess what the BoE traditionally do when the country is in recession ;)
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Normally, the BoE would reduce the Base Rate in a recession. These are unusual times though, with very high inflation, but economies everywhere tanking (or stagflation as it is termed now). So far the BoE is more worried about inflation, so their monetary policy is to dampen demand by constricting money supply. When it seems that inflation is returning to acceptable levels, I guess then the BoE is going to turn its attention to mitigating the effects of the recession, and reducing the length of the recession. So Base Rates might increase steadily until autumn of 2023, then could come down quite quickly.
 
Nano said:
One in four people have no savings at all. The average is £6k.

www.thisismoney.co.uk

One in four Britons have no savings to combat cost of living crisis

A huge number of Britons of all ages have no savings at a time when prices are rising by levels not seen in 40 years, new research shows.
www.thisismoney.co.uk www.thisismoney.co.uk
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Aye, that was a daft stab in the dark.

The 6k is largely made up by one guy having 600k (and no mortgage) and 99 guys having zero and renting, or having a mortgage 5x their yearly wage, which they will be paying off for the next 25 years.
 
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