To be pissed off about mortgages rates being so low and down to 1%

[feellikeahugefailure]

All in the headlines today about the 1% mortgage to last 10 years.

Oh great so landlords and those lucky enough to own will be paying even less than the have nots that cant afford to buy.

I doubt my rent will be going down, but the tiny savings I have towards a deposit and emergencys will be earning less interest than inflation :(

We have a tracker mortgage and pay 1% as we changed our mortgage in 2007. If rates go up we will need to change to get a fixed rate. DP got his first mortgage in 2003 and we have worked hard for a deposit and to ensure we keep the roof over our heads. It does benefit some people.

Havnt most banks pushed up their svr up to 4% well over a year ago

Luck doesn't always have anything to play in owning a house. Dh and I bought our first house after we got married, we put off having a child till we got the house and saved half our annual wages while I worked two jobs and he did overtime for over a year, living on creative recipes for mince and potatoes. No going to the pictures or on holiday and rarely any new clothes. Oh and the interest rate then was 10%.
If you plan ahead and are determined you can do pretty much anything.
Ours is now paid off ahead of time

It wasn't the norm to have 10 times salary when I bought in:
1996
1998
2000
2002
2005
2009

But I'll shut up about it now since it isn't the point of the thread.

My mortgage is 0.5%!

When dh and I bought in 2000 you could only get up to 4x one salary (or 3/3.5 depending on lender) or 2.5x both. Interest rates were much higher though, we were paying 650 month on an 80k mortgage. The crazy multiples and 110% mortagages then came in during the 00s and helped to fuel the boom and led to reposessions in 08ish.

I think 5x is a hell of a lot, personally. It's not just interest rates it's if something goes wrong.

I know its hard to buy your first place but your 'poor me' attitude isn't gong to help that. And worse, why direct your anger at others? Why are your savings earning less than inflation? Shop around - I get 3% and 5% of my two current accounts. And help to buy ISAs are great.

And stop getting sucked into the media spin on evil landlords. I have a 1 bed flat I rent out. I wish I'd never bought the thing but it was my mistake so I deal with it. Initially I lived there but have rented it out for several years. By the time I've paid a letting agency fee, repairs, etc I make less money than I would if I'd just thrown the money I'd put into it in a bog standard bank account. I'd sell like a shot but am waiting, hoping the price to gets back to what I paid (pre-crash).

The grass isn't always greener and this country's economic policies aren't made to spite you.

So you want interest rates to shoot up in general, so that you're getting more money on your savings towards a deposit.

Presumably then you'd like the interest rates to drop back down once you've saved a deposit? Or would you be happy to pay the sky-high mortgage rates you're wishing on the rest of us?

YABU. And illogical.

Really interested to know who is still offering 5x salary...

According to websites they all are. We got 5x dh's salary when I was on mat leave at the height of the financial crisis. We had a massive deposit and no other debts, however.

I got 5x salary in 2013, from Halifax.

Ours was Barclays

Thanks, Halifax is offering me about 4.6 with big deposit and no debts. I will check out barclays though.

We have just got our first mortgage after fifteen years of living in military quarters. We have a healthy deposit etc. but our lender didn't look at things like presents etc. for outgoings; they didn't even ask what we spent monthly on food and so on. I was really surprised-they asked for one payslip from my husband and three from me because I have an element of performance related pay. Again, I was surprised they considered that. I'm not sure how much is down to credit rating etc but I was amazed at how little they looked at-in fact I posted a MN thread because I was worried! We don't quite have a 1% deal though-fair play to those who have! Relating to the original post though-you can't get 1% for buy to let, surely?

I'm willing to be corrected on the following.

My understanding is that low interest rates are set in an attempt to stimulate demand in the wider economy thus preventing recession.

If you got your wish and every homeowner had 200,300 or 500 hundred pounds less to spend a month are you sure you wouldn't lose your job? My business would fail within 6 months.

We got 5 times salary its not an issue if you have equity and means , or your willing to pay higher interest rates!

Good dist like a others I am a bit sick of being told how easy it was for those of us who own a property.

My story not dissimilar to others'. Working two jobs, taking the bus that took two hours to work because at that time the tube would have been more than double the cost, having to get a lodger when the rates went up, taking a job abroad that included accommodation and renting out my flat as I couldn't cover the mortgage.

The other stupid calculation is the "She paid £150k 10 years ago- it is now worth £350k - therefore she has made £200k profit!"

The interest on the mortgage will be - at 3% - £50,000k - anyone who has owned for a while will have paid much more than that as interest rates were higher. - And you still don't own any of it! You have to pay the £150K the property costs.
Add fees, solicitor's costs, repairs, ( a new roof, a new boiler,), buildings insurance, regular maintenance and it is not looking as simple as it was.

Then, if you are flooded, have neighbours from hell, find they are building a motorway, runway or housing estate down the road - nothing you can do - you lose.

It isn't just easy money.

Oh please at some of the rude comments about my economics!

It's well known that near zero IR P (NZIRP and ZIRP) benefits the indebted and asset rich and screws others over. It's a system, you cant tinker with parts of it without having the affects ripple throughout.

Feelike..

Without the low interest rate aggregate demand would be a lot lower, consumption (65% of AD) would fall and therefore so would investment and as an end result there would be higher unemployment and a larger government fiscal deficit would increase.

Been discussing this on another thread, all those who want a house price crash or higher interest rates assume ceretus paribus, but that isn't the case, a change would have a massive economic effect and not just on current

Also banks are lending based on your credit rating and how you keep your account these days, not just multiples of salaries, you can have a high income but they won't lend to you if you are going to your overdraft limit every month.

Low interest rates are in almost everyone's interest apart from pensioners and those that rely on savings, if you need to save for a mortgage, do it properly and plan over time.

Lurked..well yours is a view.

I couldn't disagree more. It means the economy is on life support and instead of making changes for long term prosperity they are just kicking the can down the road to keep the current system afloat for a bit longer and making the inevitable crash bigger. Same as keep giving a drug addict more drugs rather than addressing the reason they are addicted.

What is the other thread?

Its the London thread on here.

The problem with increasing the interest rate is that it would cause a drop in the level of discretionary income for millions. Not just homeowners, those who rent would find the increases passed on in rent increases. Drops in consumer spending follow, and a downward cycle begins as firms lay people off, consumer confidence falls and people stop spending. It's fairly logical.

Even with a scenario where interest rates rise and house prices fall you would find more and more people in negative equity, more repossessions and with banks unable to cover the amount they have loaned they would become more reluctant to lend unless buyers have larger deposits and lower multiples of salary. Even a big drop in house prices would keep waiting entrants out of the market in this scenario because the goal posts have changed.

Also you the get the paradox of thrift scenario where people save money in a recession and therefore consumption falls, again causing more and more jobs to be at risk.

I think we are in for a long period of low interest rates, if the government were really about realigning our economy they would be investing far more than they are in infrastructure and research and development.

I bought mine in on my own in my mid twenties Alasalas, but had a little bit of inheritance from my DF still had to scrimp and save for a big chunk of the deposit, whilst living in a really dingy shared house in Clerkenwell/Kings Cross ( and if you remember what that are was like in the 80s..) it took a good while and even then we had to rent out rooms in order to be able to afford the mortgage and the extortionate interest, you couldn't rent rooms for nearly as much then but every little helped.

Again lurked, that one view - and a very one sided view.

Looking on the other side, if houses were more affordable people would have more disposable income, more money would be invested in something productive rather than basing the UK economy on getting people into more and more debt and keep selling houses to each other for ever higher amounts.

But how do you propose that to happen feeling? That wouldn't occur with an increase in the interest rate would it? My scenario is pretty much what would occur, can you explain how yours would work?