To ask if you think interest rates will rise?

[caddywally]

Possibly not the best place to ask this, but I'm sure a lot of you have a better idea about this than I do! I'm considering buying my first house but interest rates concern me. What is affordable to me now would be completely unaffordable should interest rates rise to 15% or something ridiculous (though I imagine this is the case for a lot of people!)

Does anyone think a sizeable hike in interest rates is likely in the next 10 years or so?

Well, they can only go one way ATM. I don't think anyone can predict how much they will rise to. I remember my first mortgage, back in the very early '90s, when they rose above 10% for a short while. Who's to say that won't happen again? If I was budgeting, I'd make sure I could afford a mortgage at 5% interest.

I'm not an economist, but I believe at some point in the next 10 years, rates will rise - because there is much scope for them to fall!

Lenders are already legally required to "stress test" your application. That's +3% over your rate. Just this week that's been proposed to change to +3% over the rate at the end of your offer period. So if you look at a fix of 2% reverting to SVR of 4.5%, your affordability will be checked for 7.5%

I think any sudden move to 15% is beet unlikely! (despite having lived through that in the 90s - albeit not from such a low base!)

I say, buy - but future proof:

• think twice before buying new build, they tend to lose money instantly
• don't stretch yourself to the absolute limit in the first place
• over pay your mortgage as much as you can whilst the rates are low
• with every pay increase in the coming years, sink it into your mortgage at least until you reach a level of borrowing where you feel more comfortable weathering a storm
• consider an extra room so you have the emergency fallback option of a lodger
• consider anyway getting a lodger for the first year and banking the whole lot (it's tax free up to a bit over £7K!) as an emergency fund