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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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Original poster

To think we may be heading for the old days of massive interest rates?

75 replies

icarriedawatermelon2 · 20/01/2011 19:15

15% Were they really that high?!

Is it time to fix our motgage rates?

OP posts:

kingprawntikka · 21/01/2011 13:44

Every 1/4 % interest rate increase add some thing like £25 to the repayments on a £100,000 motgage.

kingprawntikka · 21/01/2011 13:45

Mortgage- sorry!

mamatomany · 21/01/2011 13:46

I am too young to remember these but wasn't it 15% for one day ? Dh seems to remember every shitting themselves and then it being over in a flash.

kingprawntikka · 21/01/2011 13:48

It was only for a very short period yes but rates of 8-9% were very common for several years

mamatomany · 21/01/2011 13:51

Well i'd rather 8/9% of three times an average wage than 5% of over inflated house prices, so maybe the first time buyers will be saved the crap our generation 30-40 year olds have been through with the average priced house costing 8 times the average wage.

not1not2 · 21/01/2011 13:52

historically isn't the average over 5? they are currently over 5 in NZ and Oz I think does anyone know about the States? (too lazy to look it up!)

UndercoverAbs · 21/01/2011 13:59

Despite still paying off stupid amounts of money to a retail bank in relation to a training loan, I am actually glad that this is likely to happen.

The rates are artificially low at the moment, and way below what they should be at market rate.

But - I doubt they'll go up as high as 15%. On the other hand - was idly thinking of applying for one of those BA Airmiles Credit Card things (earn miles while spending! Yay!) and was put off it (severely) because the APR was .................... 50.6%
And this is not one of those sell-your-granny-to-pay-back type loan companies - it's Amex. The days of al cheapo credit are well and truly dying.

States is about 1/2% (like the UK, last time I looked)

not1not2 · 21/01/2011 14:12

I did the maths once and I'm sure it cost less for a small sum at large rates than a large sum at low rates (but I can't remember the figures I used sorry they were sensible ones though.

Ormirian · 21/01/2011 14:15

Because businesses borrow money.

kepler10b · 21/01/2011 14:19

they won't get anywhere near that high. i'm sticking to my nice tracker thankyou very much. we might see a rise to 2 percent or something but not going to be 15 percent! if the banks thought that there is no way they would be offering the fixes at the levels they currently are.

Ormirian · 21/01/2011 14:22

Right - worked it out. We could cope with up to about 6.5% before things started getting uncomfortable.

Ormirian · 21/01/2011 14:23

Assuming my employer doesn't go bust of course And the local gov cuts don't mean DH's job goes.

SexyDomesticatedDab · 21/01/2011 14:35

Had a fixed rate mortgage of 12% late 80s - so rates were much higher for a while!

Think they will rise and around 5% could be seen - I doubt they'd hit such dizzy heights again but you can't say never.

Depends where you are in life - right now starting tohave some savings that need to go and earn their keep - a rate of return of 5% is hardly worth it. Investigating managed funds that give beter returns - possibly .

It was not the banks per se setting the rates the Bank Of England under the gov't control put up rates to bring inflation under control - basic Keynsian Economics.

Undercover - personally always pay off all cards every month so never pay interest and so look for a card that gives us most back.

larrygrylls · 21/01/2011 14:38

""They're predicted to go to about 5% over the next 18 months apparently" Yes that's what I have heard."

The professional market is expecting a base rate of about 2-2.5% by the end of 2012, gradually going to 3.5% by the end of 2014. However, there is huge uncertainty around it. Another crash and rates won't go up at all but, if we continue to recover and the inflation genie is out of the bottle, 5% is conceivable in the next couple of years.

gandtplease · 21/01/2011 14:50

We took out a 10 year fixed at 5.99 just before "credit crunch" I have been really tempted to come out and pay penalties by dh thinks otherwise. He is probably right. Sure the only way is up!

happystressedmum · 21/01/2011 14:53

We are going back to the good old tory days of high interest rates as the Tories do not know anything different! Yes I remember 15% interest rates and people losing their homes - decent hardworking people.

Tories want to keep rich richer and poor poorer - yes back to the old days which were very bad indeed unless you are very rich!

UndercoverAbs · 21/01/2011 14:55

The one brilliant moment in my life is that, when I was applying for massivo professional training loan, the person asked me "do you want 7% fixed rate, or 1% above base rate?" (which was 4% at the time) and I went for option 2. GENIUS

not1not2 · 21/01/2011 14:56

aren't we facing a crash and inflation?

who is richer happy someone with a 500k house mortgage free or someone with 100k savings?

cat64 · 21/01/2011 15:06

This reply has been deleted

Message withdrawn

larrygrylls · 21/01/2011 15:38

"We are going back to the good old tory days of high interest rates as the Tories do not know anything different! Yes I remember 15% interest rates and people losing their homes - decent hardworking people."

Rich people can manage the high inflation, which is an inevitable consequence of keeping interest rates too low for too long. They can buy index linked gilts, equities or even invest abroad. Inflation is a tax on the poor, not the rich. The labour policy was allowing uncontrolled asset bubbles with stupidly low interest rates.

"Thing is, I started when they were 15%, so I think 5% or even 8% is low"

I think you are looking at too shorter period of history. The average in the long cycle is around 3% I think, certainly somewhere between 2 and 5. For the BOE to hit its inflation target of 2%, the average interest rate should be (something like) inflation plus long term growth, or close to 4%.

The scandal for most solid mortgage payers with decent equity in their property is not the base rate, it is the current spread between the base and mortgage rate in a supposedly competitive market.

noddyholder · 21/01/2011 15:43

I think we will see 5-6% within 3 years

nickelbabysnatcher · 21/01/2011 15:53

I want them to be higher, too.

DH has got 5 years left on his mortgage, and it's fixed, and I have a little bit in savings (not as much as i did before this bloody shop drained it all, thouhg ) , and I want to earn money!

mamatomany · 21/01/2011 16:33

who is richer happy someone with a 500k house mortgage free or someone with 100k savings?

Depends if you want to sell that £500k house (and in who's opinion it's worth £500k).

mamatomany · 21/01/2011 16:35

2 points though, when they raise interest rates they don't always pass those increases onto the savers anyway and yet mortgages seem to go up the same day.
All those calling for the rate rises, you might need that interest to live on if your job disappears along with the company that couldn't absorb the rate increase, careful what you wish for.

Ormirian · 21/01/2011 16:43

Exactly mama - it's not just feckless homeowners who will suffer from rate rises.

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