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Not been a homeowner and renting our home doesn't mean i wont be affected by this, the landlady may have to pass the rate increase to us and we would have to move cause she is already charging more then a house like this should be and we simply cant afford to pay her a penny more!
Can anyone explain please why the rate MUST increase? i mean why risk all this extra unwanted turmoil? one of my best mates owns his 3 bed detached, he earns a decent 20k per year working for Jewsons but he is seriously worried IF this increase was to happen he would for sure loose his house putting himself and his wife plus two kids in a right dilemma..
Here is the story!
The interest rates will eventually rise if only to combat inflation. They may also rise in order to pay investors/savers a decent return. Banks/lending agencies get their money from investors/savers or borrow it and then lend it out at a higher interest rate. In order to get money in they may have to raise the rate or it might become more difficult to borrow. When that happens mortgages will go up. The interest rates are currently very low and some of us remember paying 15% plus. The problem is that people have been given money that they can only just afford to repay. That didn't use to be the case.
I'm not a financial person and others will explain it better.
BTW you seem to like the scaremongering stories.
i stated "Not been a homeowner and renting our home doesn't mean i wont be affected" in other words just cause we rent i would be foolish too think this doesnt affect us cause it will, i didnt say we would have to move out i stated my friend would have to?
I do feel for you here, last year I'd have been in a similar position, but a chance came to purchase a cheap property outright came along so I'm fairly comfortable.
I can see many of the people who rode the buy-to-let bandwagon falling off as soon as the base rate rises, which will create all kind of mess when the repossessions start.
I'm not 100% sure why the rates have to increase, because the banks seem to be unduly careful about lending money at the moment.
Last week I bought a car, on the day I made the purchase everything was hunky dory, finance went like a dream, as it should because I've never defaulted on a loan, and my salary is OK. Then the next day a bloke from the company that manages Mini finance phoned. Of the 20 companies they tried to sell the credit to, 19 said no. And the reason, 5 years and 11 months ago I took a car finance company to court because they'd sold me a faulty car. On the day of the court case, which they lost, they showed me as defaulting on the loan, the next day the was shown as cleared, but the default remained on my history, and cannot be deleted. My bank put a note on the record to state that I'd won a court case, but most credit houses just look at the default and back off. This has blighted me for almost 6 years now, next month it will be cleared, but this shows how the finance companies can ruin your life...
if they do not get a grip and raise interest rates to combat inflation. then inflation will run out of control and be harder to bring back under cointrol.
all these mortgage holders with very low interest rates if wise would have used the money saved to pay off capitol on their debt, if they have just wasted the monthly savings they only have them selves to blame for not planning their finances.
It could get worse, Under Maggie Thatcher rates were 15% and may even have went higher so you can imagine what sort of disaster that could be to home owners if it happened again.
Raising interest rates will do little to reduce inflation at the moment. Inflation is due to the increase in VAT, rise in fuel and energy prices and cost of food. Inflation will fall as these work through the system, since it measures year-on-year price increases. Raising rinterest rates would have a small affect becaue the value of the £ might increase, making imports a little cheper. This is not good for the economy because it will make it harder to export goods, exacerbating the deficit of payments.
Raising interest rates is efective when the inflation is caused by an overheating economy, with wages and spending rising. Of course, interest rates will rise in due course but, with clear evidence of reduction in spending shown by multiple retail failures this past week, the time is certainly not ripe. Fortunately, the majority of the MPC subscribe to this view.
I see another Journo desperate to find a subject for his Contracted 500 words.
Of course, some who have borrowed more than they can afford to pay will have troubles when the Interest rates rise.
Interest Rates have rarely been as low or as stable as they have been in the last couple of years, so to express surprise at the possibility of a change/rise in the Bank Rate is to ignore history.
Maybe they'll have to drop their Sky Subscription and Cycle into town or use a Scooter to get to work instead of a Car. Possibly to use all the food that they buy instead of throwing half of it away. That kind of thing.
Incidentally, to those of you that feel it appropriate to blame one Political Party or another. As someone born in '45 and a mere 66 y.o. I have seen high and low Bank Rates presided over by both Parties. High Rates benefit those who have already built up their savings and penalise the Borrowers. Low rates penalise those that are trying to live off the Interest on their Savings and benefit the Borrowers.
Neither scenario is roses all the way.
Rate rises are a forgon conclusion it's what Tory governments strive for and I don't blame them as most of them have no mortgages but do have savings so the higher the rate the bettr off they and their supporters are.
Interest rates have been at a record low for a long time, and anyone who didn't suspect that they might go back up eventually must still believe that petrol and energy prices may come down!
When my mortgage repayments dropped by 70% some years ago I put the extra cash into an ISA so that I could, when it becomes necessary, necessary, top up my endowment which is also currently at a low interest rate.
It's called finacial prudence.
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