INTEREST RATES!

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The papers and news have been full of inflation/interest rate stories this year and today a senior economist is asying that the only way to cool the ridiculous housing market is to make interest rates 8-10% again.If this did happen what effect would it have on you if any?

yes,heardthattoo! We'd be paying £2,500 per mth in interest if reaches 8%! dh swears won't happen but concerns me rather!

I think it is when not if!Unfortunately.8% was average it is G Brown who has duped us all with low rates and now many people are going to struggle

you really think so? Hard to predict, I@m sure there'll be a couple more rises this year but not sure whether it'd reach 8% any time soon.

We would starve as dh already paying hansomely for first family and gave his house away.

oh and noddy, pls don't tell me you're one of the cautious/lucky ones with a super-low mortgage?! If so am v ! !

If so, you can look on us risk-takers and cast a deep sigh of relief!

we have a fixed rate mortgage, have done for 2 + years for this reason....

house is our bloody pension fund! As look what happened to them?! Have £30k worth of sunk costs invested in it so will not let go of it lightly!

me again, sorry obbviousdly not sunk costs invested, morelike wasted never to be grappled back. Got some good equity in it (currently,anyway unless prices really plummet!)

I think we have all been told that we can live off our houses and it neevr used to be like that.A house was a home and savings were savings.I think there will be a swift correction in the market as if houses keep going up as they are no one will ever be able to buy one unless already an owner.If prices go down all the people who have repeatedly remortgaged to buy luxury things will be in negative equity.This govt have really messed up the economy

could be.OTOH there's a lack of supply overall due to shortage of housing, rising number of households, increased population etc etc so in the long-term house prices are bound to rise IMO.

is no-one else concernd or are you all safely on fixed rate deals, you buggers!

Although I wouldn't like it, it wouldn't really affect us drastically. We have a fixed rate deal for the next 2 years, and even after that we could afford a rise of up to about 12%.

That's only because we're ultra cautious and have always tried to keep our mortgage as low as possible. So while we 'could' afford a bigger, better house as far as income multiples etc go, we'd rather have more security and pay the thing off as quickly as possible. In fact we've been overpaying for the last 7 years, so if things got really tight, that would be a cushion, although I'd be loathe to do so.

When we bought our first house rates were 13%, so we've always kept that in mind!

I do think something needs to be done, the current situation just isn't sustainable.

I think a lot of what appears in the press is a bit of scaremongering, as most people remember the early nineties and re-possessions. A lot has changed since then, not least that the MPC of the BofE is now independent (a good thing), the government is keeping one eye on the Eurozone and Gordon Brown is assessing the UK against his 5 measures for Eurozone entry (Interest rates in the Eurozone are set by the ECB and are relatively low - 3.75%). Labour have been very lucky to preside over low inflation and it has risen sharply recently; hence the rises in interest rates to try and cool it off. In January inflation had receded somewhat to 2.75% due to falling energy costs after a 10 year high in December of 3% (It was 7.7% in 1990 CPI).

For those of you panicking remember you can always increase you term which would reduce your monthly payments. The downside is that you pay more in interest in the long run but it can be a good shorter term solution rather than selling/being repossessed.

We luckily remortgaged in Feb at 4.99% for two years. We're currently living in penury, trying to pay the remaining £270k off in those two years, so really hoping we manage to do that. If so, we won't have to worry when this deal comes to an end.

Fixed until 2010 here. 4.99%

LGJ legs it..........................

We're net savers so we'd be happy. But I really can't see interest rates that high too soon. and as someone said I think that the housing market is more concerned with basic supply and demand - prices will increase until more housing is built in the SE.

Our house is on the market atm but there are so many in Brighton not selling that we have decided to take it off for now and see what happens.A couple of agents have said they feel this is their last hurrah and prices have become ridiculous.We were considering buying acheaper house and being mortgage free.The typical house we were looking at in Dec was about 225 which would have left us mortgage free and with some money in the bank now 2 months on the same houses are 265!!!!!!

Wow mumblechum, how do you pay off 270k in 2 years?

Bubble, mainly with stock options which are exercisable over the next 18 months plus dh's bonuses.

Also we live on beans on toast and watch every penny.

Good luck, it'll be worth it! Did you watch pay off your mortgage in 2 years?

oh, well done you! We've got 24yrs to go and lumpsum of £390k to pay off (as things stand)at the end as it's currently interest only!
I try not to dwell onit.

sherlock, is that rate still available,if so which lender?

Tena Lady

It is over a year old, and we took it out with Leeds and Holbeck we have been with them for about 8 years. They are still mutual and it is reflected in their rates IMO.

Give them a try.

Thanks, will do.