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Original poster

Uk interest rates expected to double by feb

249 replies

gracedentssketty · 18/08/2022 09:22

Read in telegraph and Bloomberg this morning that the markets are betting on this with one analyst saying they are likely to hit 4%

are we all screwed?

OP posts:
goshy · 18/08/2022 13:34

Not by Feb but agree the days of ultra low rates are behind us. However it's an issue as so much of our economy relies on house price growth.

goshy · 18/08/2022 13:35

I think for a lot of peopel it isn’t that they didn’t think interest rates would go up, rather than young people had no choice but to borrow more to buy a house

yes find the narrative that the young were stupid really odd. I'm sure most would have preferred lower prices & higher rates

ThroughThickAndThin01 · 18/08/2022 13:35

QforCucumber · 18/08/2022 13:22

@Hbh17 so surely people will have been budgeting for that

nope, because, buying our first house at 24 we had 0 experience of this - and for the last 10 years, nothing changed so why would we have thought they'd suddenly jump and that this wasn't a 'people talking about the past' thing?

What has changed for us in that 10 years, is 2 sets of £1100 a month nursery fees (still another year to go with that) moved house to another which was more suitable for our growing family and so now, with all of the increases - we are in a tighter, more precarious position, than we were when we bought our first house.

If many people really thought like this and a rise in interest rates wouldn’t happen because it was a “people talking about the past” thing, then a lot of people are going to be truly fucked. So very naive.

Blossomtoes · 18/08/2022 13:36

MyNameIsAngelicaSchuyler · 18/08/2022 13:16

I’m fed up of people quoting 15% rates, that’s when houses were affordable on one salary. Now they aren’t.

This might surprise you.

www.shreeni.info/2021/03/affordability-of-homes-in-uk-1990-vs.html

goshy · 18/08/2022 13:37

Some of us remember paying 15% or 16% for our mortgage, so it's all relative.

The impact on disposable incomes means rates need to only get to 6/7% so have the same impact as double figs in the past. All relative

goshy · 18/08/2022 13:37

This is why people get cross being told they had it easy buying a house in the 70s. If the rate multiplies by a factor of 7, that's why it was tough.

most people are referring to prices vs income though

goshy · 18/08/2022 13:38

It's highly unlikely that saving rates will reflect interest rates though

Overthebow · 18/08/2022 13:39

4% interest isn’t that high, they’ve been too low for too long. Getting pretty much no interest on savings for years also has an impact.

goshy · 18/08/2022 13:39

Previous period of high interest rates have had wage growth too.

yep huge wage growth in the past & wage stagnation since 08

Mumofnowgrownkids · 18/08/2022 13:44

gracedentssketty · 18/08/2022 09:22

Read in telegraph and Bloomberg this morning that the markets are betting on this with one analyst saying they are likely to hit 4%

are we all screwed?

After seeing rates of 15.5% when we were young, broke and on our first mortgage, we are now older, mortgage paid off and have some savings... I would love to see higher interest rates!

Blossomtoes · 18/08/2022 13:44

goshy · 18/08/2022 13:38

It's highly unlikely that saving rates will reflect interest rates though

Why?

MintJulia · 18/08/2022 13:46

Nw22 · 18/08/2022 13:21

@MyNameIsAngelicaSchuyler exactly. I am sick of the older generation going on about how they paid 15%. It was for a short time and in very small amounts. It’s comparable to paying 7% now.
Most people haven’t chosen to overstretch. They’ve had no choice. Previous period of high interest rates have had wage growth too.

But during that period, tens of thousands of people walked into their mortgage companies or building societies and just retuned the keys, so impossible were the payments.

So older people do at least understand that feeling of desperation.

LittleBearPad · 18/08/2022 13:46

goshy · 18/08/2022 13:38

It's highly unlikely that saving rates will reflect interest rates though

They won’t equal them, no. No one wasn’t another Icesave. But they are already going up.

LittleBearPad · 18/08/2022 13:47

Wants - not wasn’t

Runwalkskijump · 18/08/2022 13:49

MintJulia · 18/08/2022 13:46

But during that period, tens of thousands of people walked into their mortgage companies or building societies and just retuned the keys, so impossible were the payments.

So older people do at least understand that feeling of desperation.

Show quote history

Yep.

My parents also had no fridge at that time as the couldn't afford one and were sitting on orange boxes until they could afford a sofa.

They were in good paid jobs too.

Runwalkskijump · 18/08/2022 13:49

*couldn't

goshy · 18/08/2022 13:52

@Blossomtoes because the banks do what serves them, they don't have a desperate need to attract to savers money.

ShipwreckSunset · 18/08/2022 13:56

www.shreeni.info/2021/03/affordability-of-homes-in-uk-1990-vs.html

I’ve had a quick look at that, and it seems to imply that houses were more expensive to buy in 1990s relative to income. However, from what I can see, it assumes an average rate of 14% over 30 years for someone buying in the 90s which can’t be right; when I bought first property in 2000 I was on less than 5% and rates went down for at least the next 5 years from what I roughly remember. Standard mortgage term was 25 years back then, so I highly doubt anyone was paying 14% for 30 years. Likewise, someone borrowing today will likely be on a higher avaerage payment of 2.6% for 30 years unless high LTV. I haven’t looked at spreadsheet, but if the above is correct then those are wildly inaccurate assumptions skewed at making 90s affordability much easier.

Mydogfoundthechainsaw · 18/08/2022 14:02

Willyoujustbequiet · 18/08/2022 13:18

I don't get it - all it will do is take more money out of people's pockets and in turn knock on to less spending with small businesses etc...recession...

I know its vital to control inflation but if its outside forces causing it raising rates won't do anything.

I agree. This is the main issue and very scary.

Crazykatie · 18/08/2022 14:03

I was checking last weekend a new mortgage will cost 4 to 5% the prospect of another 2% will be scary for many on top of all the other price rises. How damaging long term, depends how long the high rates lasts, if the war in Ukraine gets settled that would help a lot

Blossomtoes · 18/08/2022 14:04

goshy · 18/08/2022 13:52

@Blossomtoes because the banks do what serves them, they don't have a desperate need to attract to savers money.

Banks and building societies are competitive like any other business. It’s pretty obvious that they’re going to be compelled to raise rates for savers, it’s just a question of how much. Savers will move their money to the institution offering the best rate. Where do you think they get the money to lend?

Sarahconnor1 · 18/08/2022 14:09

Crazykatie · 18/08/2022 14:03

I was checking last weekend a new mortgage will cost 4 to 5% the prospect of another 2% will be scary for many on top of all the other price rises. How damaging long term, depends how long the high rates lasts, if the war in Ukraine gets settled that would help a lot

These aren't high interest rates though, they are historically bang on average.

We do need to start viewing interest rates in a wider sense than just from 2008.

goshy · 18/08/2022 14:11

Yes completion is the thing that will drive them up but it's unlikely many of the big banks will do much.
Rates have an increased since Dec but there's a reason why interest rates are passed on straight away & savings rates aren't.

HannahSternDefoe · 18/08/2022 14:13

Interest rate below 2%
Inflation around 10%

rates could double, and double again, but it won't keep up...