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Just picking something up from another thread. Would a base rate help or hurt you?
I'm a borrower rather than a saver, paying mortgages on two properties, so a base rate rise wouldn't be particularly helpful, but as rates are at historically low levels, I've been over paying and my safety margins include the possibility of a substantial increase.
I'm a borrower rather than a saver, paying mortgages on two properties, so a base rate rise wouldn't be particularly helpful, but as rates are at historically low levels, I've been over paying and my safety margins include the possibility of a substantial increase.
In reply to The New NickB:
In a similar position- we pay mortgages on two places but hopefully a rise won't affect us greatly- unless we return to the 15% rates of the 80s. Then we'd be in trouble.
In a similar position- we pay mortgages on two places but hopefully a rise won't affect us greatly- unless we return to the 15% rates of the 80s. Then we'd be in trouble.
In reply to The New NickB:
Could be a lot of pain for me - just re-mortgaged to build a garage, wife pregnant with twins.....
Could be a lot of pain for me - just re-mortgaged to build a garage, wife pregnant with twins.....
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In reply to The New NickB:
As many, I'm still a net borrower but we're not heavily mortgaged. Half my mortgage is fixed and half on an offset cash pool arrangement with most of that in fact offset so not overly concerned.
In fact, I think that for various reasons I'd marginally welcome a rate increase - partly as an excuse to put prices up in the business! Whilst salaries have been creeping up, people still don't appear to accept price increases in my line of work.
As many, I'm still a net borrower but we're not heavily mortgaged. Half my mortgage is fixed and half on an offset cash pool arrangement with most of that in fact offset so not overly concerned.
In fact, I think that for various reasons I'd marginally welcome a rate increase - partly as an excuse to put prices up in the business! Whilst salaries have been creeping up, people still don't appear to accept price increases in my line of work.
Post edited at 13:55
In reply to The New NickB:
I am trying to save for a mortgage, but house prices go up faster than I can save (hence so does a deposit) and I get no benefit from the banks having my money in their grubby hands. Oh and rent is going up too because greedy b@st@rd landlords overstretch themsleves buying properties and who pays?????? muggins here!
I am trying to save for a mortgage, but house prices go up faster than I can save (hence so does a deposit) and I get no benefit from the banks having my money in their grubby hands. Oh and rent is going up too because greedy b@st@rd landlords overstretch themsleves buying properties and who pays?????? muggins here!
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In reply to The New NickB:
It would help us (not that we really need 'help'). Our borrowings are very small, and if it came to anything serious we could pay the mortgage off in one go. Our savings, and company deposit account, aren't really earning anything useful, so an increase in base rates would give us a bit more money.
> Just picking something up from another thread. Would a base rate help or hurt you?
It would help us (not that we really need 'help'). Our borrowings are very small, and if it came to anything serious we could pay the mortgage off in one go. Our savings, and company deposit account, aren't really earning anything useful, so an increase in base rates would give us a bit more money.
In reply to The New NickB:
a rise would help me, finished paying my mortgage a few years ago & earning little on my savings
a rise would help me, finished paying my mortgage a few years ago & earning little on my savings
2
In reply to The New NickB:
It would be largely neutral, as I'm about to move up north and reduce my income. To cope with the income reduction we'll be reducing the size of our mortgage to quite small, which is possible because property is so much cheaper. Nevertheless, I'm a net borrower so lower rates are always preferable.
It would be largely neutral, as I'm about to move up north and reduce my income. To cope with the income reduction we'll be reducing the size of our mortgage to quite small, which is possible because property is so much cheaper. Nevertheless, I'm a net borrower so lower rates are always preferable.
In reply to The New NickB:
You might be able to survive a rate hike, but if others can't and become forced sellers there is risk your equity will diminish in your own properties as house prices fall.
You might be able to survive a rate hike, but if others can't and become forced sellers there is risk your equity will diminish in your own properties as house prices fall.
In reply to Bjartur i Sumarhus:
Only matters if you sell or remortgage.
We could survive either way, but it is currently nice over paying the mortgage.
> You might be able to survive a rate hike, but if others can't and become forced sellers there is risk your equity will diminish in your own properties as house prices fall.
Only matters if you sell or remortgage.
We could survive either way, but it is currently nice over paying the mortgage.
In reply to The New NickB:
Not in the least. No debts. Think I'd benefit from an increase on the interest earned on my modest savings. Happy days.
Not in the least. No debts. Think I'd benefit from an increase on the interest earned on my modest savings. Happy days.
In reply to The New NickB:
If it went up today it would bugger us up. The wife was very ill last year and after coming home from a month in hospital she won't be working this year at all but we can keep on top of the mortgage and bills on my wage combined with her sickness benefit and assisted living payment and the rent coming I from our other property.
If the interest rate went up we would have to cut back but would be okay.
Where it will effect us is with the rental property. We have decided to sell it and use the money to become mortgage free and reduce my stress levels a bit.
It will be easier to sell with a low interest rate than a higher one.
I have my fingers crossed that the rate won't go up until I have sold that house then it goes up just as I am banking the 40k I hope to have left over after clearing our mortgage.
If it went up today it would bugger us up. The wife was very ill last year and after coming home from a month in hospital she won't be working this year at all but we can keep on top of the mortgage and bills on my wage combined with her sickness benefit and assisted living payment and the rent coming I from our other property.
If the interest rate went up we would have to cut back but would be okay.
Where it will effect us is with the rental property. We have decided to sell it and use the money to become mortgage free and reduce my stress levels a bit.
It will be easier to sell with a low interest rate than a higher one.
I have my fingers crossed that the rate won't go up until I have sold that house then it goes up just as I am banking the 40k I hope to have left over after clearing our mortgage.
In reply to Bjartur i Sumarhus:
I'm not overly obsessed with property values, need somewhere to live and the second property wasn't part of some get rich masterplan.
LTV rates are good on both and we are not dealing with the sort of inflated prices you might be dealing with in the London property market.
I'm not overly obsessed with property values, need somewhere to live and the second property wasn't part of some get rich masterplan.
LTV rates are good on both and we are not dealing with the sort of inflated prices you might be dealing with in the London property market.
Post edited at 17:15
In reply to The New NickB:
Speaking purely from a personal point of view, I'd love to see 1980's interest rates - the mortgage is paid off, car is paid for, no debts and cash in the bank; so 15% p.a. interest on my savings would suit me fine, instead of my mighty 1.4% ISA! Oddly enough, I guess I'm not going to get many "Likes" for this
JW
Speaking purely from a personal point of view, I'd love to see 1980's interest rates - the mortgage is paid off, car is paid for, no debts and cash in the bank; so 15% p.a. interest on my savings would suit me fine, instead of my mighty 1.4% ISA! Oddly enough, I guess I'm not going to get many "Likes" for this
JW
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In reply to John Ww: But 15% interest rates would be accompanied by massive inflation, wouldn't they? So the value of your savings would be being eroded anyway.
5
1
In reply to andy:
And we don't have massive house price inflation with these low interest rates?
> But 15% interest rates would be accompanied by massive inflation, wouldn't they? So the value of your savings would be being eroded anyway.
And we don't have massive house price inflation with these low interest rates?
1
In reply to The New NickB:
I guess I have some modest savings , mortgage free, so I might, on the face of it , be a beneficiary.
HOWEVER, I have 3 daughters, two with their own homes (Mortgages) and one at home saving to get her own home.
A rise in rates would inevitably mean the youngest will be with me longer ( living for free) , and the other two might need financial help to get by, so indirectly , bad news for me.
I guess I have some modest savings , mortgage free, so I might, on the face of it , be a beneficiary.
HOWEVER, I have 3 daughters, two with their own homes (Mortgages) and one at home saving to get her own home.
A rise in rates would inevitably mean the youngest will be with me longer ( living for free) , and the other two might need financial help to get by, so indirectly , bad news for me.
In reply to The New NickB:
In a similar position to you, but not a second home owner, you evil little capitalist you
Been paying a ton a month on top of the usual mortgage fee, hope to pay off the house this year (July.)
Wouldn't be greatly affected, after July a hike would be in my interest as all rents would become savings.
> Just picking something up from another thread. Would a base rate help or hurt you?
> I'm a borrower rather than a saver, paying mortgages on two properties, so a base rate rise wouldn't be particularly helpful, but as rates are at historically low levels, I've been over paying and my safety margins include the possibility of a substantial increase.
In a similar position to you, but not a second home owner, you evil little capitalist you
Been paying a ton a month on top of the usual mortgage fee, hope to pay off the house this year (July.)
Wouldn't be greatly affected, after July a hike would be in my interest as all rents would become savings.
In reply to The New NickB:
A rise in UK rates would be great... move the exchange rate vs the AU$, then I can move assets out of the UK to where they can earn some value.
Cheers
LD
A rise in UK rates would be great... move the exchange rate vs the AU$, then I can move assets out of the UK to where they can earn some value.
Cheers
LD
In reply to The New NickB:
Fair enough. Negative equity is only really an issue if you a forced to or want to sell or like using your house as an ATM.
It's hard to see how Carney can raise rates much at all with the amount of personal debt swimming around. My personal view is there will be more "forward guidance" that is reviewed and kicked further down the road with more "forward guidance" for as long as they can
Fair enough. Negative equity is only really an issue if you a forced to or want to sell or like using your house as an ATM.
It's hard to see how Carney can raise rates much at all with the amount of personal debt swimming around. My personal view is there will be more "forward guidance" that is reviewed and kicked further down the road with more "forward guidance" for as long as they can
In reply to Bjartur i Sumarhus:
UK interest rates have now been at their lowest point in history for seven years or so. There is only one direction in which they are going to go from here, so anyone taking on too much debt in any form, whether mortgage or other, is going to have nasty shock at some point.
UK interest rates have now been at their lowest point in history for seven years or so. There is only one direction in which they are going to go from here, so anyone taking on too much debt in any form, whether mortgage or other, is going to have nasty shock at some point.
4
In reply to The New NickB:
From my business perspective it would not be good. An increase in the rate would mean the £ would increase in value which directly has an impact on my sales as we export 90% of our business.
Frm a mortage perspective - no difference.
From my business perspective it would not be good. An increase in the rate would mean the £ would increase in value which directly has an impact on my sales as we export 90% of our business.
Frm a mortage perspective - no difference.
In reply to stucknortherner:
Your problem is you're living in London. Could you not move somewhere else you can afford to buy or pay the rent? House prices & rents haven't gone up everywhere.
> I am trying to save for a mortgage, but house prices go up faster than I can save (hence so does a deposit) and I get no benefit from the banks having my money in their grubby hands. Oh and rent is going up too because greedy b@st@rd landlords overstretch themsleves buying properties and who pays?????? muggins here!
Your problem is you're living in London. Could you not move somewhere else you can afford to buy or pay the rent? House prices & rents haven't gone up everywhere.
In reply to The New NickB:
Net borrower. We're in the first few years of a 30 year mortgage with very low repayments that are pretty much interest only at the moment while we renovate. If we get the house habitable before our fix ends and rates go up then if needs must we will be able to take a lodger to offset the rise, if not a 5%point hike in base rate would leave us pretty short but with options (at least until my export driven job dried up). A sustained 10-15%point hike and we'd probably lose the house and my job. We'll see, but I'm not desperately concerned.
jk
Net borrower. We're in the first few years of a 30 year mortgage with very low repayments that are pretty much interest only at the moment while we renovate. If we get the house habitable before our fix ends and rates go up then if needs must we will be able to take a lodger to offset the rise, if not a 5%point hike in base rate would leave us pretty short but with options (at least until my export driven job dried up). A sustained 10-15%point hike and we'd probably lose the house and my job. We'll see, but I'm not desperately concerned.
jk
Post edited at 09:12
In reply to The New NickB:
Net borrower with mortgage but this is fixed for a couple of years so any hikes would impact until after that. In the meantime I would hope to have paid of a chunk of it so as to offset any (probably likely) increases over the next 18 months.
Net borrower with mortgage but this is fixed for a couple of years so any hikes would impact until after that. In the meantime I would hope to have paid of a chunk of it so as to offset any (probably likely) increases over the next 18 months.
In reply to The New NickB:
We are evil capitalist scum and mortgaged up to the hilt but on 5 year fixed rates (on 3 properties!).
We'd like to pay down all (or any of them) but any money we have is at the moment being spent making our current property habitable.
The irony is that despite having three properties we live in a caravan (which is pretty chilly this time of year I can tell you).
We never planned to be evil capitalist scum but my partner and I were both were paying mortgages on properties before we got together. As it turned out it was easier to get the money together for a joint property by remortgaging rather than by selling.
We are evil capitalist scum and mortgaged up to the hilt but on 5 year fixed rates (on 3 properties!).
We'd like to pay down all (or any of them) but any money we have is at the moment being spent making our current property habitable.
The irony is that despite having three properties we live in a caravan (which is pretty chilly this time of year I can tell you).
We never planned to be evil capitalist scum but my partner and I were both were paying mortgages on properties before we got together. As it turned out it was easier to get the money together for a joint property by remortgaging rather than by selling.
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In reply to John2:
"UK interest rates have now been at their lowest point in history for seven years or so. There is only one direction in which they are going to go from here"
Not necessarily, they can go down from here. Negative interest rate policy has appeared in Japan and in some European countries (although retail deposits and mortgage rates have been insulated so far). There is also the possibility as I mentioned in my other post that low interest rates remain for another 10 years or more (again, see Japan - https://en.wikipedia.org/wiki/Lost_Decade_(Japan) . We might see the odd 0.25% hike as a token but not a lot more.
Of course, there are other possibilities.
"UK interest rates have now been at their lowest point in history for seven years or so. There is only one direction in which they are going to go from here"
Not necessarily, they can go down from here. Negative interest rate policy has appeared in Japan and in some European countries (although retail deposits and mortgage rates have been insulated so far). There is also the possibility as I mentioned in my other post that low interest rates remain for another 10 years or more (again, see Japan - https://en.wikipedia.org/wiki/Lost_Decade_(Japan) . We might see the odd 0.25% hike as a token but not a lot more.
Of course, there are other possibilities.
In reply to Fraser:
I work in the public sector. I could transfer but it is difficult. I could also change careers to the cost of a £10K+ pay cut...
I work in the public sector. I could transfer but it is difficult. I could also change careers to the cost of a £10K+ pay cut...
In reply to Bjartur i Sumarhus:
Do you know what happens to mortgage rates with negative interest rates? Not that I think they are likely to appear in the UK.
Do you know what happens to mortgage rates with negative interest rates? Not that I think they are likely to appear in the UK.
In reply to John2:
Technically you would assume that they should come down if you were on a tracker, but I am not sure of any examples exist. In reality it is unlikely that any mortgage would pay the home owner to take out the loan (base rates are at 0.5% and I think a good tracker deal is around 1.25%...so you could extrapolate that they should come down to close to zero if base rate went to -0.5%)
Having said all of that, it appears the opposite is true and mortgage rates have gone up (charging mortgage holders the cost of protecting retail deposits)
http://ftalphaville.ft.com/2016/03/07/2155458/the-swiss-banking-response-to...
Technically you would assume that they should come down if you were on a tracker, but I am not sure of any examples exist. In reality it is unlikely that any mortgage would pay the home owner to take out the loan (base rates are at 0.5% and I think a good tracker deal is around 1.25%...so you could extrapolate that they should come down to close to zero if base rate went to -0.5%)
Having said all of that, it appears the opposite is true and mortgage rates have gone up (charging mortgage holders the cost of protecting retail deposits)
http://ftalphaville.ft.com/2016/03/07/2155458/the-swiss-banking-response-to...
In reply to stucknortherner:
I don't know your circumstances and I am not having a go here but if a career change would include a 10k pay cut you must be on a decent crack in the first place.
Also again without knowing your circumstances how far would your wage go if you came back up north and took the cut?
I suspect living in London that extra 10k is probably swallowed up by putting money in your landlords pocket where up north you can buy a perfectly serviceable 2 bed back to back for £400 ish a month or a wreck for much less and do it up over the next 10 years whilst living in it like we and lots of other people do.
> I work in the public sector. I could transfer but it is difficult. I could also change careers to the cost of a £10K+ pay cut...
I don't know your circumstances and I am not having a go here but if a career change would include a 10k pay cut you must be on a decent crack in the first place.
Also again without knowing your circumstances how far would your wage go if you came back up north and took the cut?
I suspect living in London that extra 10k is probably swallowed up by putting money in your landlords pocket where up north you can buy a perfectly serviceable 2 bed back to back for £400 ish a month or a wreck for much less and do it up over the next 10 years whilst living in it like we and lots of other people do.
I'm looking to buy my first house in the next few months and rising interest rates worry me. However the 'latest predicitions' suggest it won't rise until 2019, which is good news for me if I can get a fixed 2 year mortgage and then remortgage for another fixed rate before 2019.
How do 'they' predict changes in interest level? If it's the Bank that sets the rate, how do they decide what to do?
How do 'they' predict changes in interest level? If it's the Bank that sets the rate, how do they decide what to do?
In reply to NottsRich:
I have 2 theories on this.
Either very clever people look at the current and past economy's of our country and other countries and using all that data they produce a mathematical formula that tells them what to set the interest rate to.
The other possibility is that someone sacrifices a chicken and dumps all the entrails on to a tale and our economic future depends on what shape splat they make when they land.
Going on no one forseeing the 2008 crash my guess would be the latter of the 2 scenarios.
> How do 'they' predict changes in interest level? If it's the Bank that sets the rate, how do they decide what to do?
I have 2 theories on this.
Either very clever people look at the current and past economy's of our country and other countries and using all that data they produce a mathematical formula that tells them what to set the interest rate to.
The other possibility is that someone sacrifices a chicken and dumps all the entrails on to a tale and our economic future depends on what shape splat they make when they land.
Going on no one forseeing the 2008 crash my guess would be the latter of the 2 scenarios.
1
In reply to The New NickB:
It would hurt rather than help, but I could take it. Last year I went from two mortgages to one, when the 'marital home' was finally sold. I'm now over paying on my own home. The mortgage is offset, and I have some 'savings'.
It would hurt rather than help, but I could take it. Last year I went from two mortgages to one, when the 'marital home' was finally sold. I'm now over paying on my own home. The mortgage is offset, and I have some 'savings'.
In reply to The New NickB:
Help. The higher the better. Mortgage paid off. Just want savings and pension to grow as quickly as possible so that I can retire asap and go climbing!
Help. The higher the better. Mortgage paid off. Just want savings and pension to grow as quickly as possible so that I can retire asap and go climbing!
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In reply to The New NickB:
A hike would help me (marginally).
Single mortgage with not a great deal left on it in comparison to property value. Massively overpaying at present so could cope with a hike. Got one or two mates who would be royally screwed if a hike was to happen so hoping it stays as it is for a while.
A hike would help me (marginally).
Single mortgage with not a great deal left on it in comparison to property value. Massively overpaying at present so could cope with a hike. Got one or two mates who would be royally screwed if a hike was to happen so hoping it stays as it is for a while.
In reply to The New NickB:
I'd be stuffed. Mortgaged to the hilt as a previous partner screwed me out of 10's of £1,000's. It's only the low interest rate over the last seven years that has saved me. That and my folks bailing me out from time to time on abnormal expenditure as I have had no disposable income. And as I work in the public sector and am therefore completely responsible for the parlous financial state of the country, I haven't had an above inflation pay rise for those seven years either.
Aye,
Davie
I'd be stuffed. Mortgaged to the hilt as a previous partner screwed me out of 10's of £1,000's. It's only the low interest rate over the last seven years that has saved me. That and my folks bailing me out from time to time on abnormal expenditure as I have had no disposable income. And as I work in the public sector and am therefore completely responsible for the parlous financial state of the country, I haven't had an above inflation pay rise for those seven years either.
Aye,
Davie
In reply to The New NickB:
For the immediate future it would help me a bit as I've only got a small amount of borrowing which is fixed and I have a small amount of savings which are currently earning nothing.
In the future it could change as my job is uncertain and I may have to move and sell the house which would probably be harder to sell if borrowing was more expensive and then although I'd have cash earning something I'd likely be borrowing to buy somewhere else.
For the immediate future it would help me a bit as I've only got a small amount of borrowing which is fixed and I have a small amount of savings which are currently earning nothing.
In the future it could change as my job is uncertain and I may have to move and sell the house which would probably be harder to sell if borrowing was more expensive and then although I'd have cash earning something I'd likely be borrowing to buy somewhere else.
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