Interest rates on the up

vickster

Legendary Member
Whoopie do :laugh: unless you have many millions like yourself :whistle:

My Vanguard shares ISA is floating around 12% now which is better (unfortunately not on millions though :ph34r: )
 
OP
SpokeyDokey

SpokeyDokey

64 and some.
Whoopie do :laugh: unless you have many millions like yourself :whistle:

My Vanguard shares ISA is floating around 12% now which is better (unfortunately not on millions though :ph34r: )
Good performance!

They are a decent step in the right direction though so hopefully we'll see further rises. We would not countenance putting all our dosh into Stocks and Shares investments as we are risk adverse on the money front. We have jointly agreed 25% maximum.

Our Vanquish LS 80 started in Feb this year is just under 6% and the A J Bell started at the same time is 6.46% so that's good news too.
 

Drago

Flouncing Nobber
Location
Poshshire
In the main though its for goods beyond the control of the UK government.

OPEC are advising their members to restrict production, which is elevating the price of oil, which in turn affects road fuel (which affects the price of evrrything), plastics, fertilisers, etc.

Building materials are in short supply due to weather conditions in Scandiavia (wood) and America (polymers and concrete ) so prices are going up there.

And on it goes...

So while inflation is rising it is due, in the main, due to things beyond the control of the UK. That being the case, further screwing headline interest rates upwards won't have any real effect on rising prices, as they are due to factors external to the UK economy - its not runaway consumerism leading to these rising prices.

I don't think there is much cheer yet for savers, but there is also not much prospect of a late 80's inflationary scenario, never mind a Zimbabwe one.
 

Beebo

Firm and Fruity
Location
Hexleybeef
Too many people are mortgaged to the hilt with credit card debt and cars on finance.
Even rates at 3.5% would put many young families in a financial spin.
The last few governments have allowed us to get addicted to cheap credit.
A short sharp shock now could be catastrophic for lots of people who may appear outwardly well off but are in fact living life on credit.
 

ebikeerwidnes

Über Member
I do worry about my wife's son (I suppose my step son but I didn;t meet him until he was in his 30s so that seems wrong) - they are sensible with money but even so I'm sure they would have problems with an interest rate increase
and then there is the new kid who has some health problems

sigh
 

Beebo

Firm and Fruity
Location
Hexleybeef
I remember mortgage rates at 15% !
I remember my parents sitting me down to explain why we wouldn’t have a holiday for a while. I can only imagine the pain of Losing the family home.
 
Interest rate has to go up to tackle inflation which is seeing a significant upturn breaching the first safety barrier. Not good for mortgage owners and businesses looking for loans.


598216
 

gzoom

Senior Member
The last few governments have allowed us to get addicted to cheap credit.
The impact of low mortgage rates for the last decade has certainly enabled us to move up the property ladder far earlier than planned. We have been lucky that we have been able to over pay with relative ease but any increase in mortgage rates will have a massive impact on the disposable income of people with mortgages.

A £500K mortgage in the south/London is pretty normal these days, interms of impact on increase on rates in mortagage payments:
  • £500K loan at 1.45% = £620/month in interest
  • £500K loan at 2.5% = £1000/month in interest
  • £500K loan at 3.5% = £1500/month in interest.
Personally I cannot see mortgage rates going up to over 3% any time soon, the government simply cannot afford to let that happen if they want to win the next general election.
 

Beebo

Firm and Fruity
Location
Hexleybeef
The impact of low mortgage rates for the last decade has certainly enabled us to move up the property ladder far earlier than planned. We have been lucky that we have been able to over pay with relative ease but any increase in mortgage rates will have a massive impact on the disposable income of people with mortgages.

A £500K mortgage in the south/London is pretty normal these days, interms of impact on increase on rates in mortagage payments:
  • £500K loan at 1.45% = £620/month in interest
  • £500K loan at 2.5% = £1000/month in interest
  • £500K loan at 3.5% = £1500/month in interest.
Personally I cannot see mortgage rates going up to over 3% any time soon, the government simply cannot afford to let that happen if they want to win the next general election.
And that’s just interest. The capital needs paying back too.
 

gzoom

Senior Member
And that’s just interest. The capital needs paying back too.
Ofcourse there is but that value of the capital payments is in your control by changing length of time. If interest rates change you have zero choice but to absorb the extra cost.

A relative small 2% increase in rates will add nearly £1000/month onto payments for anyone with a £500k loan.

On the flip side there are some crazy fixed rates around, we just got approved for a £200k additional loan at 1.49% fixed for 7 years. That's crazy cheap rate, and was simply too good pass by, as it'll now enable us do a house extension a good 5 years earlier than planned.
 

Kajjal

Veteran
Location
Wheely World
The impact of low mortgage rates for the last decade has certainly enabled us to move up the property ladder far earlier than planned. We have been lucky that we have been able to over pay with relative ease but any increase in mortgage rates will have a massive impact on the disposable income of people with mortgages.

A £500K mortgage in the south/London is pretty normal these days, interms of impact on increase on rates in mortagage payments:
  • £500K loan at 1.45% = £620/month in interest
  • £500K loan at 2.5% = £1000/month in interest
  • £500K loan at 3.5% = £1500/month in interest.
Personally I cannot see mortgage rates going up to over 3% any time soon, the government simply cannot afford to let that happen if they want to win the next general election.
A very useful illustration, when we took out our first mortgage many years ago we budgeted so we could afford 10% interest rates. At 10% interest rates the repayment as above would be around £4300.
 
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