Interest rate hike ??

[pork pie]

Interest rates could be 0.5% until the end of 2011 now. There is no chance of them going up this year. The problem now is that people are used to paying unrealistically low rates on their mortgages and even commentators are talking as if interest rates rising from 0.5% is bad and 2% would be high ?!. Considering the Bank of England base rate has averaged nearly 9% over the last 20 years I am worried that people think paying nothing on their mortgage is normal and will be in for a shock when they finally go up.

Please, please let me know where I can get a Mortgage paying nothing? The only ones I have seen look nothing like a small margin on 0.5% base.

 

[Uncle Spielberg]

The comment is for existing borrowers. I have many people paying diddly squat as their rate when to BBR plus 0.49% after the initial rate ended.

 

[pork pie]

The comment is for existing borrowers. I have many people paying diddly squat as their rate when to BBR plus 0.49% after the initial rate ended.

Lucky them. However, it does not detract from the fact that most people are paying interest rates that have little relationship to the BoE Base Rate.

 

[Uncle Spielberg]

It depends on the deposit/equity. You can get tracker rates at 2% and fixed rates at 3% now.

 

[Gritt23]

But some people are £500-£700 a month better off since interest rates went to this historical low. That is all disposable income.

LOL, yes, thanks for the economics lesson, I know that disposable income.

The point is, the increase in disposable income from low mortgage rates, and the disincentive to save will have increased spending levels that we would have otherwise seen over the last 12 months. Yes, I'm saying it could have been WORSE if the price of money had stayed high.

Despite that increase in disposable income we are only slowly lifting ourselves out of recession, but to hike interest rates now, will only increase the risk of the double-dip recession that everyone fears, as people have to cut back on their spending due to mortgage payments going back up.

 

[Gully]

I am worried that people think paying nothing on their mortgage is normal and will be in for a shock when they finally go up.

Except for the wise ones who have maintained their payments at the same level they were before interest rates plummeted, then sat watching as the amount owed on their mortgage sailed southwards at a healthy rate...they won't be at all shocked when the rate rises again!

 

[Uncle Spielberg]

Fair point gully but about 2% of the people I believe.

 

[Uncle Spielberg]

Fair point Gully but about 2% of the people I think.

 

[Gully]

Fair point gully but about 2% of the people I believe.

All fool them then US...I am looking forward to being mortgage free, the sooner that happens the better!