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?

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

That’s illogical. If they bought another house they’re in exactly the same position. If they stepped out of the property market the money’s being eroded by inflation.

It's a tough one to call. Anyone with a modicum of intelligence would know that low interest rates were never going to stay that low and will have built in capacity in their budgeting to allow for the inevitable increase. Even at 4%, they're low.

But unfortunately not everyone has the intelligence to think like this - what will happen to them? Have lenders acted responsibly by only lending to those who can afford the inevitable increase? Probably not! Bit of a mess!

That’s illogical. If they bought another house they’re in exactly the same position. If they stepped out of the property market the money’s being eroded by inflation.

Not true. Plenty of MPs are also landlords, plenty of property investors have indeed exited the property market while prices have been boosted. Their money hasnt necessarily been eroded by inflation if they've moved it a different investment.

I don’t think that’s particularly fair. You have to be old enough to remember normal interest rates to know how abnormal the last 15 years have been.

@Whyareyouasking could you link to the article that states 3/4 will hit fuel poverty in 2023? I would like to read it fully. That's shocking.

Bankrolling refers to the negative interest subsidy, currently 8% to borrowers. It has nothing to do with sellers. If buyers didn't have to borrow, they wouldn't be bankrolled/subsidised. Those who borrow are benefiting from a hitherto unprecedented subsidy of 8% on top of the principal sum they borrowed.

Your point I believe is about whether it is fair? That's an entirely different kettle of fish. All parties are subject to state laws and their only influence is the ballot box, which last delivered a 80 seat majority, so people have got what they asked for, hard. And they got it at the expense of savers, which may have been unintended by the state, however them's the facts. You're right that a market correction would have avoided this, which is expected, and suppressing markets as has happened for 14 years tends to just build up pressures.

Anyone with a modicum of intelligence would know that low interest rates were never going to stay that low and will have built in capacity in their budgeting to allow for the inevitable increase. Even at 4%, they're low.

well that's a load of tosh.

I think that's unfair, my peers and I graduated into a recession and all through our working lives we've seen low interest rates - including over the last few years as we've bought property. I'm not sure any of us would have predicted the geopolitical environment which has contributed to the rising rates and we're pretty intelligent I'd like to think. Any financial advisor or mortgage broker I've spoken to over the last couple of years similarly hasn't predicted the rate of rise.

Anyway we're about to double our mortgage and I am absolutely terrified but can't really pull out now.

@BooksAndChooks, here's a link I found: amp.theguardian.com/society/2022/aug/17/two-thirds-of-uk-families-could-be-in-fuel-poverty-by-january-research-finds

@NoWordForFluffy thank you.

No, it isn't whether it's fair. It's who's being subsidised. You might be using bankrolling only to refer to the negative interest rates, but that's specific to you.

On the ballot box point, this isn't how it works in a first past the post system. The Tories got 44% of the votes cast and about 30% of the electorate. But our system creates artificial majorities where they don't exist amongst the voters. This was also true of previous Labour administrations of course, indeed 05 is one of the starkest examples.

Ahh yes, that’s the figures I saw thrown around this morning. That’s genuinely catastrophic and will push so many into homelessness and poverty especially with interest rate rises.

I don’t get all the patronising either, this is the norm for the new generation. It’s all they’ve known. Sitting pretty on loads of equity and savings crowing at how unintelligent people are is not helpful. Its just smug and arrogant. Equally these people are in the majority so there will be no crash as predicted. Just the haves getting more. I say that as a “have” equity, fixed mortgage and a very high income.

There is going to be really tough times for people but others will do well. It is imbalanced and the next generations will suffer.

I feel sorry for people who are coming out of a 5 year fix next Spring. I think in Sept and Oct they will rise 0.5 each time then maybe 0.25 in November then 0.5 again in December. That could be another 1.75 percent. Plus most mortgages are something above base rate. It would not be so bad if utilities were under control. I only have 18 months left only mortgage but I can see myself having to help out my dd with her's, as her fix is up next summer. Luckily my son has another 4 year fix.

WRT whether it was always obvious that rates couldn't stay that low forever, I doubt many of us expected the dozen years that we've had. I definitely did not see that coming in 2010. Perhaps I'd have bought a more expensive house if I had. So actually, maybe those of us who acted with an abundance of caution there are the daft ones.

But it did get increasingly clear towards the end of the 2010s that the Tories wouldn't allow a rise and thus a property price correction if they could possibly help it. That they would continue to enact policies to prop prices up, and to try and influence the B of E. If we hadn't experienced both a pandemic and the Russian invasion of Ukraine in quite a short period, I daresay we'd still be sitting below 1% base rate even now. I don't say that's a good thing, but it's clearly how they wanted things to go.

Christ, that prediction is really scary - 87% of pensioners and 90% of single parents in fuel poverty by January. There are no words for how dreadful this winter’s going to be for a lot of people. Please God it’s a mild one.

Growth in the UK never recovered after the 2008 crash, that's why interest rates have remained now. Raising them is going to be catastrophic for businesses.

Once the recession hits and large numbers of people who believe their jobs are very stable are made redundant any rise in mortgage rates could push them over the edge. The government want to get rid of 90,000 civil servants for starters. These jobs have traditionally been very secure. The government also want to reduce redundancy payments.

I'm not sure any of us would have predicted the geopolitical environment which has contributed to the rising rates and we're pretty intelligent I'd like to think. Any financial advisor or mortgage broker I've spoken to over the last couple of years similarly hasn't predicted the rate of rise.

I hate to be brutal but if a financial advisor didn't advise you to stress test to 7% then you have been mugged

Growth in the UK never recovered after the 2008 crash,

yep

And those crowing about wanting higher interest rates will soon change their minds when they start losing their jobs. The economy is not in the same state that it was pre-2008 and high interest rates will be very, very bad news for everyone.

This was such a spectacularly stupid comment that I'm impressed you bothered answering

TBF I don't know how much use the stress tests are when they were performed on the basis of massively different energy and food costs. We did a stress test when we bought, but the figures used will have borne no resemblance at all to the bills we'll actually be paying in the near future. It's as much luck as anything else that we happen to be able to easily afford our mortgage. I sorted our fix for 7 years a few months back primarily because I can't be arsed faffing around and there was virtually no difference between a 7 year and shorter term on our relatively small mortgage.

Exactly. Lots of people posting here from the position of being an oldie

Prices of everything have risen, so that 7% stress test bears no resemblance to the situation we're all now facing

@GreenLunchBox fair point