Interest Rates up to 2.25% from 1.75%

Ebor

Well-known member
Good point, I was more English than Maths at school Probs 70% English, 40% Maths
Thanks 👍
I was purely Geography 😁 I didn't get my Maths and English O Levels. Yet I managed a multi million pound budget for an academic institution for twenty-five years. Life can take you to strange places 😁🤷‍♂️
 
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Ex Footy Legs

Well-known member
Tomorrow


They also have set out that they want interest rates above 3% by the end of the year.

Now I know this debate rages all the time that hiking interest rates is the only way to fight inflation, but what happens when we hit the inevitable recession as basic economics tells you the best way to tackle a recession is to cut interest rates???

You’ve got to love Stagflation and it’s timing, no wonder the tories decided to hold off with their economic forecast 🙈
The lack of an economic forecast by OBR is because truss has an authoritarian style of government and these types (like putin) really don’t want or think mirrors should be held up against them.
 

GazC_MFC

Well-known member
Yeah but might be worth paying to fix 👍
Agree you have to make that decision yourself. Is it more important to pay the charge in the hope that your protecting yourself or is more important to have the cash in your savings and have the cost monthly if rates go up

Ultimately a mortgage adviser will not advise you to pay a fee as increases are hypothetical until it happens
 

MolteniArcore

Well-known member
It will be interesting to see how the 2 year price cap effects inflation. If, as Truss states, it knocks 5% off then the interest rate increases might slow but with all these tax cuts I can't really see inflation dropping to such an extent.

The BoE are under great pressure to act. The only mechanism they have is increasing interest rates. Bad times.
 

Zoophonic

Well-known member
When we got our 1st mortgage rates were at 14.5%, things are a long long way away from those sorts of charges
Yes but when people took out their mortgages 10 years ago they rarely Budget for rates on the rise when there was no sign of rates going up. History tells you people make short term financial decisions when they bulk up on their mortgage. Housing recession on its way May be good for affordability of housing but defaults will rise exponentially. Hard times coming.
 

GazC_MFC

Well-known member
It will be interesting to see how the 2 year price cap effects inflation. If, as Truss states, it knocks 5% off then the interest rate increases might slow but with all these tax cuts I can't really see inflation dropping to such an extent.

The BoE are under great pressure to act. The only mechanism they have is increasing interest rates. Bad times.
You’d have to say that inflation effect will take 12 months as gas and electricity in 97% up on 12 months ago
 

MolteniArcore

Well-known member
Yes but when people took out their mortgages 10 years ago they rarely Budget for rates on the rise when there was no sign of rates going up. History tells you people make short term financial decisions when they bulk up on their mortgage. Housing recession on its way May be good for affordability of housing but defaults will rise exponentially. Hard times coming.

Even 2 years ago. I'm not sure the man on the street could have foresaw that Putin would invade Ukraine and the subsequent energy price increases.

I feel sorry for the first time buyers conned into buying expensive houses by the Government's various schemes. They have piled all their savings into their deposits and have purchased new builds in a market artificially inflated by stamp duty cuts and a housing shortage. Not only do some of these have mortgages to pay but a rent on top. With the energy price cap increasing again in October I can see lots of repossessions and bankruptcies around the corner.
 

gramercy

Member
Increase in rates on savings accounts will be minimal compared to the impact on those with 95%+ mortgages.
I really feel for the people who’ve borrowed that much to just get on the ladder in a cheap starter home. However if they’ve had to stretch themselves so much just to get on the ladder I suspect they’ll have been steered towards longer term fixes. Hopefully that’s the case for the majority in that position.

However there are a hell of lot of people with LTVs like that who simply didn’t need to borrow so much.

Rates have been at an all time low for years. They were only going to go one way. It was always a case when not if. The why was largely irrelevant from a financial standpoint.
Most mortgage illustrations now give an example of what an interest rate change will do to your monthly payment in pounds and pence.

If people chose to ignore that, or gamble on not fixing in a rate that they knew they could afford then more fool them.
 

Jonny Ingbar

Well-known member
The Bank of England have literally one tool at their disposal and that is the control of interest rates.

So, in theory, raising the rate of inflation will stem consumer spending and prices will fall as a consequence.

That's the theory, but inflation is being driven by supply chain issues, worker shortages and the war in Ukraine.

I'm not an expert, not by any measure, but surely if a record number of people are living in poverty - and those figures rising daily - this BofE move will only compound the problem?

I can only conclude that the first world is now a slave to unregulated, open market capitalism.

It's a dystopian financial nightmare.
 

GazC_MFC

Well-known member
The Bank of England have literally one tool at their disposal and that is the control of interest rates.

So, in theory, raising the rate of inflation will stem consumer spending and prices will fall as a consequence.

That's the theory, but inflation is being driven by supply chain issues, worker shortages and the war in Ukraine.

I'm not an expert, not by any measure, but surely if a record number of people are living in poverty - and those figures rising daily - this BofE move will only compound the problem?

I can only conclude that the first world is now a slave to unregulated, open market capitalism.

It's a dystopian financial nightmare.
The Bank of England or using historic methods for a historical event that hasn’t happened. This isn’t a demand issue. If fuel and supply issues are increasing things, increasing interest rates won’t resolve.
 

Jonny Ingbar

Well-known member
The Bank of England or using historic methods for a historical event that hasn’t happened. This isn’t a demand issue. If fuel and supply issues are increasing things, increasing interest rates won’t resolve.
I agree, that's my point, it won't effect inflation one bit, just push more people into deeper poverty.
 

B_G

Active member
Increasing rates will crash the housing market. A lot of people have took mortgages out beyond their means over the last 5 years. Once fixed terms lapse they will find themselves in difficulty. I would suspect we are 3 years away from a major crash in the housing market.
 

gramercy

Member
Increasing rates will crash the housing market. A lot of people have took mortgages out beyond their means over the last 5 years. Once fixed terms lapse they will find themselves in difficulty. I would suspect we are 3 years away from a major crash in the housing market.
I’d say the last 15 would be more accurate.
50k lifestyle on a 25k income seems to be the norm these days. YOLO and all that!

With over borrowing ultimately the responsibility lies with the borrower.
However I would say that when I last moved house I was shocked with the amount that We could have borrowed if we’d have wanted to.
Had we gone up to the max available to us we’d be sweating a bit now. Luckily we went in at about half the figure available.
Lots of people set their budget around the absolute max possible when it comes to houses. I don’t really get why you would do it once you get beyond the people I already mentioned who are doing it just to get on the ladder.

For comparison I’m pretty sure I could have walk into Teesside Porsche today, and come out financed up to the eyeballs on some car that was way beyond my means. I don’t think I’d get much sympathy if I then started worrying about how I was going to live.
 

r00fie1

Well-known member
At least its not the 15.85% it reached under Maggie.
That was a torrid time if you had a mortgage
(n)
 

ThatFragranceGuy

Well-known member
I really feel for the people who’ve borrowed that much to just get on the ladder in a cheap starter home. However if they’ve had to stretch themselves so much just to get on the ladder I suspect they’ll have been steered towards longer term fixes. Hopefully that’s the case for the majority in that position.

However there are a hell of lot of people with LTVs like that who simply didn’t need to borrow so much.

Rates have been at an all time low for years. They were only going to go one way. It was always a case when not if. The why was largely irrelevant from a financial standpoint.
Most mortgage illustrations now give an example of what an interest rate change will do to your monthly payment in pounds and pence.

If people chose to ignore that, or gamble on not fixing in a rate that they knew they could afford then more fool them.
Trouble with a long fix is you have no opportunity to get some paid off / benefit from increase in value and hit 90% or 85% ltv bands which would then reduce their monthly costs. We lost 20k on our old house so we had to stretch ourselves a bit, taking a 2 year fix initially meant that by the time we remortgaged onto a 5 year, we were at 85% LTV and our payments dropped a lot and that now goes into extra overpayments as we do about £600 a month over
 
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