View Full Version : Rates up again
The base rate has gone upto 5.25%. Whereas the move to 5% was heavily published this one slid out the back door. Its good news for me as a saver as i'll be getting 5.75% on my ISA.
http://news.bbc.co.uk/1/hi/business/6251963.stm
People are already moaning saying it will slow house prices. Personally I can't see that happening until the rate gets to 6-7%, then it will start biting. I can't see this increase having much of an effect really.
A few 25 basis point rises will probably make people think first more than anything else, which I'd argue (from experience) is a good thing. It'll have some impact, but it's not going to be the crash all the doom mongers have been wishing for.
As you say, if it hits 6% (which has been predicted), then that might start having an impact.
I've completed the move to a 5-year fixed rate, so that's now been justified. Didn't take long.
It does, however, seem that the market doesn't want me to sell my shares. Down again (only slightly though and let's hope it stays that way until tomorrow).
Matblack
11-01-2007, 15:12
Just means our overpayments have less impact :(
MB
Admiral Huddy
12-01-2007, 10:18
I can't see how they say this was a shock rise.
this won’t be enough and I would expect another rise by the end of March. Only when people are chocked will inflation begin to fall, along with house prices and credit card debt but this will take time.
Something needed to be done and as small a rise as it is, it will start to make people think a little before spending their cash or committing to a large mortgage.
I’m not sure if I agree with the governments inflation figures given the way that house prices and credit card debts have soared over the last 5 years. I blame the lenders for being to lenient and offering loans out of peoples depths and 0% credit, which is too tempting for some people.
Will be interesting to see how the housing market will react to this. There is definitely a slow down but maybe sellers will think about dropping their prices. I wouldn’t wish negative equity on anyone but if it means that everyone can enjoy cheaper housing, then that’s a benefit to use all.
Spare a thought for manufacturing. Such a blow will damage what is already a delicate industry in this country which needs to be as competitive as it can with overseas. With China churning out cheaper goods than ever, this is becoming increasingly difficult and a rise won’t be welcome. Loose of profits will mean profit loses and ultimately, job looses. Burberry was a classic example of this last week. The wheels of recession will start to turn.
Admiral Huddy
12-01-2007, 11:02
I really do feel for people who have been forced to take out massive mortgages just to buy a home but if something isn't done now then house prices will get to out of hand. If they haven't already that is.
However, you have to remember that all though the media paint "doom and gloom" by saying that it the most highest rates have been for 6 years, the rates where at the lowest ever post war. So buying a mortgage and thinking that rates wouldn't rise is a bit unrealistic (not you personally, in general).
It's shocking that the lenders would even consider lending more than 3x salary. Something I would have thought they wouldn't have done after the last housing boom in the 80s. How people forget.
Admiral Huddy
12-01-2007, 11:35
I agree.. Our mortage isn't our biggest outcome. Both our monthly shopping and amenity bills exceed our mortgage. In fact, shopping has been getting more noticeably more expensive as the weeks pass without actually buying anymore than what we normally buy.
I wonder everytime we go how every one else manages??
To reiterate the point on banks going nuts, I was offered 5.5X my salary by Lloyds TSB to get a house. My parents 3 bed terraced was valued at 220k!! Thats just insane! My dad couldn't believe it and now pretty much anything thats a reasonable size is currently >250k.
I'm backing off for a bit now on bothering to look for houses, I think i'm just going to save and enjoy myself more. To use the example of my parents place, it went from 180k to 220k in 6-8 months!!!
I'm now either in the situation of paying rent @ 700/m or getting a mortgage at similar amount.
I think while the rates are on the way up and there's prospect of some form of correction, in whatever form that takes, that's probably not a bad idea.
Feel a bit :/ for those who have just moved in to new places (or who are about to) though.
Admiral Huddy
12-01-2007, 13:26
I think while the rates are on the way up and there's prospect of some form of correction, in whatever form that takes, that's probably not a bad idea.
Feel a bit :/ for those who have just moved in to new places (or who are about to) though.
Glad i stayed put.
Zirax, I think you'd do well to hold off for a few years. Should property start to fall, only buy when the market bottoms out. You don't want to be stuck with a property that's devalued the day after you bought it. That's speaking from harsh experiance from the late 80s. Got caught with a £25k neg equity.
Problem is that this time around, negative equity would be a lot worse. :(
The tiny one bed flat I'm buying (should complete by the end of jan) was bought about 4 years ago for half what I'm paying for it :( Now that's a price increase :shocked:
Admiral Huddy
12-01-2007, 15:33
The tiny one bed flat I'm buying (should complete by the end of jan) was bought about 4 years ago for half what I'm paying for it :( Now that's a price increase :shocked:
THis is why i don't think house prices is included in the governments inflation figures. It doesn't add up.
Feel a bit :/ for those who have just moved in to new places (or who are about to) though.
I'm not even sure if it'll affect us at all yet. We decided on quite a long term fixed mortgage in anticipation of rates increasing so we're OK on that front plus we've bought our house as somewhere to live not as an investment so as long as we can still pay the mortgage i'm not going to worry about the absolute value of the place. My only worry is due to not being overly familiar with the mortgage process I don't know at which point the rate we were quoted becomes binding and whether we will still get the fixed rate we were quoted or is there potential for it to be increased before we complete on the purchase.
I'm not even sure if it'll affect us at all yet. We decided on quite a long term fixed mortgage in anticipation of rates increasing so we're OK on that front plus we've bought our house as somewhere to live not as an investment so as long as we can still pay the mortgage i'm not going to worry about the absolute value of the place. My only worry is due to not being overly familiar with the mortgage process I don't know at which point the rate we were quoted becomes binding and whether we will still get the fixed rate we were quoted or is there potential for it to be increased before we complete on the purchase.
Nothern Rock held ours after their offer. Lucky really because interest rates increased whilst the house sale was going through (and our mortgage stayed put) and then they increased again just before completion.
The only thing is that because we had to take out a 100% mortgage (or spend another 5-10 years saving up a £15k deposit and living apart), our choice of lender was limited. Northern Rock are one of the more expensive mortgage companies, so we were advised to go for 2 yr fixed to allow us to get rid of them ASAP. I just hope things haven't gone silly by the time we come to renew or we'll be in the sh**. Oh well, no use worrying about it until it happens. Thankfully we didn't borrow our max amount, and it was all calculated using my wages alone, so we're not being stretched TOO much at the moment.
Admiral Huddy
16-01-2007, 11:02
The purpose of fixed rate is that you are buying a rate agreement. A bank will buy an amount of rate agreements to sell. These are non-negotiable rates and therefore can't change. If they all of sudden change the rate, then they are selling you a new rate agreement and not the one one you originally intended to buy.
Having just seen that we are at 3% growth, it looks as if there is gonna be a lot more rises.
http://news.bbc.co.uk/1/hi/business/6266263.stm
The aim for a while has been 2.5% in the FT, however with us hitting 3% growth thats wayyyy too quick. Again its no real surprise, after their increase the other day it was obvious a figure like this was coming.
I can see the rates going up again in Feb, probably by 0.5% rather than another token .25% rise.
Look at me here, I'm becoming mr doom and gloom :( Just stating the facts of the economy though
Dunno about the 50 basis points (.5%) - look at me all 'official' sounding. :)
The rest is probably true though. :(
Dunno about the 50 basis points (.5%) - look at me all 'official' sounding. :)
The rest is probably true though. :(
Yes that was my personal opinion, it depends how quickly they want to nip it in the bud.
The purpose of fixed rate is that you are buying a rate agreement. A bank will buy an amount of rate agreements to sell. These are non-negotiable rates and therefore can't change. If they all of sudden change the rate, then they are selling you a new rate agreement and not the one one you originally intended to buy.
So it should be fixed from the moment they send you the mortgage offer? I think that's what happened with us. If they want to change it, I guess they have to send a new offer?
So it should be fixed from the moment they send you the mortgage offer? I think that's what happened with us. If they want to change it, I guess they have to send a new offer?
I hope so, else I'm screwed!
Less than 2 weeks till my flat, yay!
You'll be fine Nutcase. They'll not be changing it now :)
Our problem is that we've not actually had the mortgage offer yet. We got an agreement in principle, then we found the house. After that we chose exactly how much we wanted to borrow, how long wanted to be fixed for, got quoted a rate based on that and signed some forms. At this point the mortgage advisor was presumably supposed to make the actual application. As it was nothing happened on the mortgage front for a good few weeks (the money for the survey wasn't even taken out of my account) then our solicitors started asking where our mortgage offer was so we chased it up. We were told that "It usually takes this long things should happen soon" then coincidently everything started moving again the next day.
Obviously our suspicion is that the mortgage advisor was being incompetent and had not actually made the application. Being put back a few weeks by this isn't such a big problem but with us not having actually received an offer yet i'm worried that her crapness will mean that we end up with a higher rate.
Admiral Huddy
17-01-2007, 12:55
So it should be fixed from the moment they send you the mortgage offer? I think that's what happened with us. If they want to change it, I guess they have to send a new offer?
Yes, you are buying a product. In this case a rate. If it is a different rate, then it's a different product.
However, they can sell out of these rates and buy in new new rates, which may differ.
We're just re-mortgaging right now to free up some cash to finish off renovating downstairs. Sorted it last night and just managed to get in on an "about to finish" deal. 5.29% fixed for 2 years.
Admiral Huddy
22-01-2007, 11:28
We're just re-mortgaging right now to free up some cash to finish off renovating downstairs. Sorted it last night and just managed to get in on an "about to finish" deal. 5.29% fixed for 2 years.
Can you overpay on the capital? Without any fee or charge?
Yep, overpayments aren't a problem although I think they're limited to a certain amount but that won't be an issue for us.
Admiral Huddy
22-01-2007, 12:21
Yep, overpayments aren't a problem although I think they're limited to a certain amount but that won't be an issue for us.
Who is that with if you don't mind me asking?
It's with Halifax. Sorted by my FA, not by me. I also go self-cert at the moment too so you could probably get a slightly better rate.
Woo hoo! Contracts exchanged today, completion Friday :D :) :cool:
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