Rates up again

Zirax · 11-01-2007, 14:58

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.

Mark · 11-01-2007, 15:07

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??

Zirax · 12-01-2007, 12:32

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.

Mark · 12-01-2007, 12:35

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

Quote:

Originally Posted by Mark

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.

Nutcase · 12-01-2007, 13:31

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

11-01-2007, 14:58	#1
Zirax Goes up to 11! Join Date: Jul 2006 Posts: 4,577	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.

11-01-2007, 15:07	#2
Mark Screaming Orgasm Join Date: Jul 2006 Location: Newbury Posts: 15,194	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). Last edited by Mark; 11-01-2007 at 15:12.

11-01-2007, 15:12	#3
Matblack Baby Bore Join Date: Jun 2006 Location: Svalbard Posts: 9,770	Just means our overpayments have less impact MB __________________ "we had roots that grew towards each other underground, and when all the pretty blossom had fallen from our branches we found that we were one tree and not two"

12-01-2007, 10:18	#4
Admiral Huddy HOMO-Sapien Join Date: Jun 2006 Location: Chelmsford Posts: 6,692	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. __________________ I just got lost in thought.. It was very unfamiliar territory. Techie Talk \| My gaming Blog \| PC spec \| The Admirals log Last edited by Admiral Huddy; 12-01-2007 at 10:20.

12-01-2007, 11:02	#5
Admiral Huddy HOMO-Sapien Join Date: Jun 2006 Location: Chelmsford Posts: 6,692	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. __________________ I just got lost in thought.. It was very unfamiliar territory. Techie Talk \| My gaming Blog \| PC spec \| The Admirals log

12-01-2007, 11:35	#6
Admiral Huddy HOMO-Sapien Join Date: Jun 2006 Location: Chelmsford Posts: 6,692	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?? __________________ I just got lost in thought.. It was very unfamiliar territory. Techie Talk \| My gaming Blog \| PC spec \| The Admirals log

12-01-2007, 12:32	#7
Zirax Goes up to 11! Join Date: Jul 2006 Posts: 4,577	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.

12-01-2007, 12:35	#8
Mark Screaming Orgasm Join Date: Jul 2006 Location: Newbury Posts: 15,194	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.

12-01-2007, 13:31	#10
Nutcase Moonshine Join Date: Dec 2006 Location: Chelmsford, innit! Posts: 3,979	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