AIBU to think that people were daft if they thought intrest rates would stay low

[thekidsrule]

sorry if been done

intrest rates rising for some over the next few months and some people saying they may lose their homes/cant afford the hike

personally cant believe people thought they would stay so low forever

i took rises (took morgage out at approx 6-7%) into account was years ago though and realised that they may go up as well as down

at one point we were paying 14% that was a struggle

though thinking about it i suppose general cost of living added will have an added impact but so

so aibu to think people were daft to budget for only tiny rates

YABU - people budget for what they know and understand. You would have looked just as daft if interest rates had stayed at 15%.

It is easy to make luck look like judgement in hindsight if things have worked out for you.

so you expect your groceries to cost the same in 25yrs time then and your wages to stay the same,ummmmmmmmm dont think so

on top of budgeting for bigger fuel bills, petrol at record-prices, public transport at record prices and everything else, while people are either losing their jobs or 'enjoying' wage cuts/static pay?

Many people are struggling to survive. Telling them they are stupid really doesn't help. Especially when they are being battered by forces outside their control. I'd love to have remortgaged and fixed but dh lost his job, so no chance.

I can see your point OP - people should understand that interest rates can go up as well as down when they take out a mortgage. To be honest though, many many of us have no option but to close our eyes and hope for the best - there are no affordable options when it comes to housing.

I fixed! Ner Ner.

what quodlibet said

Well quite, edam. Still, nothing like a bit of schadenfreude to sprinkle on your latte is there?

But interest rates have been at their lowest since the 17th Century for 3 years, so making decisions on the basis that they would be low in the medium term was sensible.

The base rate is still .5% is it not?

We're pretty much at the zero bound.

The reason it's big news is that the base rate hasn't changed - this is banks themselves deciding to raise rates in order (probably) to make up for losses because of past mistakes - ppi insurance for example.

so does that mean that banks can do as they lease regarding rate rises

when i had my morgage a raise or decrease was on the back of the bank of england anouncment

Yes, they always do. Usually rate increases and decreases are announced after the bank of England announces a change, but there is no obligation (as far as I know) to do this.

thanks Sydsaid

As others have said, I think when the base rate is 0.5 then people could reasonably expect their mortgage rate to say low. Mine has just jumped by 0.25 for no reason whatsoever that I can see... except that just perhaps RBS needs to, I dunno, make some money?

I don't think its unreasonable to think that people should have considered the possibility if not the probability of interest rates rising, but it's not helpful to crow about it.

Has it occurred to you that for lots of people SVR interest rates going up is a problem, not so much because they've mortgaged themselves to the hilt, but because their outgoings have gone up (higher inflation, taxes etc) whilst their income has remained the same or has fallen. Low interest rates were the only thing that enabled them to make ends meet. Hardly makes them stupid, just scared and in a horrible position where they might lose their home.

Yanbu- some people are incredibly short sighted

thekidsrule

I think you have misunderstood the problem. Base rates are at 0.5%. If you are on a fixed rate, happy days. If you are on a tracker mortgage (which is always x % above base rate), then happy days until the Bank of England raise interest rates again (which they will do at some point).

But if you are on a variable rate, you are at the mercy of the banks and their whims. And if you were on a fixed rate which expired (many only valid for 5 years), most people will be transferred onto the variable rate. Many people weren't able to switch to another fixed or tracker as property prices had fallen (and had been bought on a 5 or 10% deposit) and people know longer had enough equity to meet the 25% equity many banks are now demanding for a remortgage.

So no, people haven't been daft, banks have got a bloody cheek though.

Ooh - does this mean interest rates on savings is likely to rise as well? Or is that too simplistic/optimistic?

Northey, now you are being daft

"So no, people haven't been daft, banks have got a bloody cheek though."

Absolutely.

Government policy has been to keep interest rates low (not that it's within their gift, but BoE has had precious little choice with them driving the economy into the ground) so the property-owning Tory voters could afford to make ends meet during their austerity drive.

If banks raise rates to increase profits and people start to lose their homes the Tories aren't going to be too happy.

Bah :o

sorry i dint mean to sound like im crowing but when you take on a morgage you cant honestly expect them to stay the same over approx 25yrs can you???

if you rent its not unusual for your rent to increase at some stage

just find it hard that people say they may loose their home if the rate increases by half a percent,could understand if it kept rising though

thekidsrule of course that is true - and people should always plan in some interest rises.

But mortgage payments don't exist in isolation. So, when you add in rocketing inflation, fuel prices, wage freezes, possible loss of tax credits etc to their monthly outgoings - I would imagine that half a percent could well be the final straw for many people.

Sorting out a new deal tomorrow as 2yr fixed rate is up.Going for a five year fixed since I heard the news !

Bastards! 5 years ago I took out a 5 year fixed rate as the economy was showing signs of going tits up. Historically during recessions interest rate rose up to 15% during hard times. Who knew we would get the lowest interest rates ever for the last 3 years!