Uk interest rates expected to double by feb

[gracedentssketty]

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?

Really? Who’s got all this money? And please don’t say boomers because most of that generation’s wealth is tied up in its homes. Like I said, no investor puts money in a falling asset

She is quite right but nobody can give you a list of who has all this extra dosh and who does not.

Look at the price of used cars, houses or try getting a quote for some building work or a new kitchen. If there was not money floating arount all this would be a lot cheaper.

I ever an eye roll was required...

Look at the price of used cars, houses or try getting a quote for some building work or a new kitchen. If there was not money floating arount all this would be a lot cheaper.

You’re making the classic mistake of predicting the future by looking in the rear view mirror. There may be money sloshing around now - particularly with people still spending their furlough premium - there won’t be in a year’s time with interest rate rises, energy price increases and general inflation in double figures. We’re in for a very grim time.

I'm trying to buy a house after months and months of being outbid. Finally got an offer accepted but we won't be able to complete by the expiry date of our mortgage offer and we will be looking at £200 a month more. We were going to buy a house and then get married. Looks like it will be a much longer engagement than planned.

That sort of statement has a habit of coming back to bite you.

what does this even mean? Bite who?

Of course inequality matters, most young people today who buy are the lucky ones and very often have access to the bank of mum & dad.

Lucky for you with savings that are looking forward to this. I don't have savings and I don't have any spare money left over from my wages each month or anyone to share the burden with. It's very very likely I will be one of those having their homes repossessed. What do I do then? I have no family to stay with. Rents are higher than my mortgage payments so if I can't afford my mortgage I won't be able to afford rent. I'm absolutely fucked.

Too much money floating around

there's plenty of money

because most of that generation’s wealth is tied up in its homes.

which one can access

But people are so much more wasteful these days. That is why they have less disposable income.

🙄

@Whyareyouasking that poster is pretty prolific (too much time on their hands perhaps). I think they see a difference of opinion as a personal attack, it's really weird.

There may be money sloshing around now - particularly with people still spending their furlough premium

say what now?

@RosalindsAFuckingNightmare sorry to hear that. Rents are outrageous at the moment.

You do realise that there are other investment options than Cash don't you? You must be losing money hand over fist if you stick to cash!

No, we ‘re not all screwed. 4% in the grand scheme of things is really not that high at all.

Whenever we have got financial advice they always warned and said to plan for interest rates going up.

I don’t get it. I thought it was a bit personal as it’s been two days running. Thanks.

I know it’s going to be hard and unfortunately it will be hard for the working family for the most part. There is no flex there, there is no help coming with the relentless rises in costs. They will lose homes.

In the meantime we have people sat on billions of equity and plenty of money in many jobs (with shortages). It just means that the first time buyer and younger family will get pushed out even more. A crash is not going to happen. I am not quite sure what I said is “so wrong.”

The MO seems to be challenge peoples posts but then ignore any evidence/data etc that backs up ones opinions 😆. Very odd but best to ignore.

Most people won't be screwed because they are on fixed rate deals. For many, the LTV will change in their favour when they comes to remortgage. Also money is losing value, so your mortgage debt would be worth 10% less by the end of the year, even if you only pay the interest. Minimum wage will be hiked in April and so wages will also go up over the next few years.

People will only be screwed if they lose their jobs and can't get another.

Inflation is now 10%. Mortgage rates at 4% means banks are paying borrowers 6% real return for the money they've given to you. Banks themselves have no money so it's savers that are paying people to borrow. Seems it's not enough to be given 6%, borrowers are demanding they be given 8% real return as well as a home.

If these more "normal" rates (even if substantially negative in real terms) bring prices down, people will find it easier to move. Those who overpaid can port their negative equity and still get the home they need It may not look great on paper, however you're still getting paid in real terms at a very high interest rate, one not seen even before the 2008 crash to borrow the largest sum of money you're ever likely to borrow in your lifetime. And have a stable roof over your head. Unless borrowing rates exceed inflation (which is what a normal world looks like), you're being lent a lot of money at negative rates. So there's no change from the last 14 years of unsustainable economics. Just a little more exposed by war and zoonotic transfers as a result of our thrashing the planet.

There was a reason for the artificially low interest rates but this is the point I’m trying to make. We didn’t KNOW they were artificially low. I came from a household with 0 financial upbringing, dh too - as far as we’d been aware the last 10 years have been our normal.

plus - as I said; where’s the provision to save for increasing interest rates with 5 years of 1k a month nursery fees 🤦🏽‍♀️

Agreed. These were supposed to be emergency interest rates, and we had about 13 years of them. So of course it's been normalised. And now there's going to be a lot of suffering because of it.

We won't be screwed. We checked our affordability based on much longer term average rates and really did not stretch ourselves, we'll manage even if rates rise quite a bit.

Well borrowers are still being bankrolled at very high rates, so even if they didn't put their affairs in order in the 14 years, the sooner they do now, while being subsidised at over 8% real, the more secure their future will be.

The primary cohort of people getting bankrolled are those who sold houses to people who purchased while the government kept prices artificially inflated...

How so?

Caveat emptor, and sellers are not transacting with the lender. It is the buyer that is being bankrolled. This is fact, even if the emotional cost may be high.

Because the primary beneficiaries of the deliberately inflated house prices we have seen in the last dozen years or so have been the people who owned them in the first place. Had we been allowed a correction, rather than the state enacting multiple policies to keep prices inflated, houses would've been cheaper.

The people who weren't of an age to buy before then haven't benefitted from only being able to access artificially expensive housing at artificially low interest rates instead of housing and interest rates at more historically normal figures. It's nothing to do with emotion, simply numbers.