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Intrest rates - Good or Bad for you?

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So they have increased to 5% today. Is this good or bad for you? Plus, those who were right about this rise are predicting another 2 rises. For me, its neither here nor there, have both savin…
grdesign Avatar
1d, 4m agoPosted 1 decade, 4 months ago
So they have increased to 5% today. Is this good or bad for you?

Plus, those who were right about this rise are predicting another 2 rises.

For me, its neither here nor there, have both savings and a mortgage, so on one hand it's good, on one it's bad.

Anyone reckon they will rise further? To say 5.5% the first quarter of 2007?
grdesign Avatar
1d, 4m agoPosted 1 decade, 4 months ago
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1 Like #1
grdesign
So they have increased to 5% today. Is this good or bad for you?

Plus, those who were right about this rise are predicting another 2 rises.

For me, its neither here nor there, have both savings and a mortgage, so on one hand it's good, on one it's bad.

Anyone reckon they will rise further? To say 5.5% the first quarter of 2007?


?? How can this be good ??

Can you do maths? Unless your savings exceed your mortgage, you lose - you can't win.

And if your savings do exceed your mortgage, why haven't you paid it off?

Madness...
1 Like #2
Savings are about the same as my mortgage. No point paying the mortgage off. Hefty fee's for doing so in the first five years.
#3
Well said, Jimbobaggins.
#4
Right. Look out of the box. Higher intrest rates steady the economy. Sure, there are always winners and losers.

Were all moaning house prices are insane. This is the one and only thing that will cure that. The one and only thing that will hopefully, make people think twice about debt.

It's bad as things cost more, but it has to get worse before it can get any better and we see how prices level off or actually start to drop.
#5
grdesign
Savings are about the same as my mortgage. No point paying the mortgage off. Hefty fee's for doing so in the first five years.


So the hefty fees exceed the mortgage interest payments??

Crikey, you must have fees costing tens of thousands of punds if you have an average mortgage!
#6
No, you know nothing about my circumstances. And this thread isn't about them.
#7
grdesign
Right. Look out of the box. Higher intrest rates steady the economy. Sure, there are always winners and losers.


We have had the steadiest economy in history during the past few years with interest rates at an all time low, so that doesn't make sense, if anything it suggests that the opposite is true. The only winner is someone with no mortgage (or very little mortgage) and lots of savings.

grdesign
Were all moaning house prices are insane. This is the one and only thing that will cure that. The one and only thing that will hopefully, make people think twice about debt.


This is not a cure for house price increases at all, it is designed to limit increases in inflation, and house price rises or losses are not necessarily related to this at all. "the one and only thing" is a massive overstatement with no relation to fact.

grdesign
It's bad as things cost more, but it has to get worse before it can get any better and we see how prices level off or actually start to drop.


This is designed to limit rises in inflation or even reduce it - ie make things cost less, not more, other than a mortgage or any other variable rate lending. It doesn't have to get worse to get better and frankly, I can't see why you are just posting things because you feel smug, without trying to understand what you are talking about.

mod edit: personal comments removed
1 Like #8
You are trying to "tell us as it is", giving your opinions as absolute facts, backed up with sweeping generalisations and stuff you have picked up in the Sun.

I actually sympathise with those people who are now struggling to pay a mortgage, support their families and work all hours that god sends because of what appears to be a small rise in interest rates.

There are many who this affects massively and to belittle this as insignificant, I find rather distressing.

mod edit: personal comments removed
#9
The governemt moan about too many imports coming in from the likes of asia which destroy many manufacturers around the UK. Increasing interest rates does not help this cause, interest rates affect the exchange rate, an appreciation of exchange rate results in cheaper imports which can be favourable to many businesses to gain a higher profit margin, however this may not be the case as a rise in interest rates reduces the amount of consumer spending which lowers the demand especially on luxuries such as cars.
In a consumers point of view an appreciation can lead to an advantage of lower prices simply as businesses buy stock at a cheaper cost and will sell at a lower price because of a drop in demand. and theres some more but i forgot what i wanted to say, but nevertheless interest rates come with both advantages and disadvantages.
House prices should begin to slow down and begin to fall, but in reality previous interest rises have not reflected this, i think it requires more than just high borrowing rates.

At this current moment I have no real view on the effect of interest rates, it doesn't affect me as much as it does to others, im not a homeowner implying i have no mortgage. Where the mortgage seems to be the biggest area to be hit if you are on a variable rate.
#10
Wow, it's like A-Level economics all over again....!
#11
Was gonna say that i love interest rate rises as i have no mortgage.....but i don't think i dare......don't wanna get shouted at and have my head bit off. :giggle:
#12
i want intrest rates to rise, if it means house prices coming down. i havent got a morgage but i would like one - but cant afford to buy a house in a nice area so i rent in a nice area.
1 Like #13
Yes bazr I'm applying caution for fear of a backlash..I'm in the same position as you but recall the days when interest rate rises did hit me hard in the pocket. I do feel for those with hefty mortgages...particularly if they also have a young family..it cannot be easy when so much of your earnings are just paying off interest on a huge debt.
1 Like #14
Backlash!? LOL. I was only asking how it affects you and if you think it's a good or bad thing, and whether they will rise again.
[SIZE=2][/SIZE]
[SIZE=2]I get called smug and that I read the Sun! I don't actually read any papers. I also get called stupid for not paying off my mortgage as I have some savings, when he don't know anything about my circumstances. Would be stupid to pay off the mortgage in my house.[/SIZE]
[SIZE=2][/SIZE]
[SIZE=2]Anyway, glad to see the topics got back on track....though Jimbo, please do come back, cus I do love a good argument!!![/SIZE]
#15
grdesign
[SIZE=2][/SIZE]
[SIZE=2]Anyway, glad to see the topics got back on track....though Jimbo, please do come back, cus I do love a good argument!!![/SIZE]


I can vouch for that :roll:
#16
jimbobaggins
You are trying to "tell us as it is", giving your opinions as absolute facts, backed up with sweeping generalisations and stuff you have picked up in the Sun.

I actually sympathise with those people who are now struggling to pay a mortgage, support their families and work all hours that god sends because of what appears to be a small rise in interest rates.

There are many who this affects massively and to belittle this as insignificant, I find rather distressing.

mod edit: personal comments removed


All I said was personally it's neither here nor there you fool!!! That means in plain english, my mortgage goe's up, as does the intrest on my savings.

So 1 hand it's good while the other hand bites it.

Thats my personal circumstances, not the whole countries and I never said it was!!

Dude, have one of my chill pills, they work well :thumbsup:
#17
Joshanna
I can vouch for that :roll:


You're spot on Joshanna...I see in his next post he's giving the "come on then lets continue the debate" invite....by the way grdesign have you had any luck with the car sale on ebay?
1 Like #18
landofdan
i want intrest rates to rise, if it means house prices coming down. i havent got a morgage but i would like one - but cant afford to buy a house in a nice area so i rent in a nice area.


If interest rates rise and house prices come down, the net effect means that you will be paying more for less, not the other way round.

Say interest rates go up to 6% and house prices drop 10%. The average monthly payment for you will go up, because of the length of term of the mortgage (25 years) and the overall cost of your house will go up as you will be paying money straight to the interest pot, rather than paying it off the house.

It would make more sense to say, I want interest rates to go down for the long term and house prices to stay where they are. This would be cheaper for you.

If you have a £200K mortgage, you actually pay interest on the whole £200k, so an increase in interest rates, means more interest on a huge sum of money. Alterntively, if the house price went up to £210k, you therefore would make £10k, to offset the increase in interest rates, which may cost you an extra £100+ per month. Over a 25 year period, if interest rates were raised by say 1%, this could mean an extra £30k straight to interest!!!

Higher interest rates cost much more than higher house prices in the long term. The money doesn't go anywhere.
#19
currychops
You're spot on Joshanna...I see in his next post he's giving the "come on then lets continue the debate" invite....by the way grdesign have you had any luck with the car sale on ebay?


I can answer on his behalf :)
Its on ebay at the minute :) Its got a couple of bids and quite a few watchers :thumbsup:
#20
jimbobaggins
If interest rates rise and house prices come down, the net effect means that you will be paying more for less, not the other way round.

Say interest rates go up to 6% and house prices drop 10%. The average monthly payment for you will go up, because of the length of term of the mortgage (25 years) and the overall cost of your house will go up as you will be paying money straight to the interest pot, rather than paying it off the house.

It would make more sense to say, I want interest rates to go down for the long term and house prices to stay where they are. This would be cheaper for you.

If you have a £200K mortgage, you actually pay interest on the whole £200k, so an increase in interest rates, means more interest on a huge sum of money. Alterntively, if the house price went up to £210k, you therefore would make £10k, to offset the increase in interest rates, which may cost you an extra £100+ per month. Over a 25 year period, if interest rates were raised by say 1%, this could mean an extra £30k straight to interest!!!

Higher interest rates cost much more than higher house prices in the long term. The money doesn't go anywhere.


Ok, structured post and I see exactly where your coming from.

However. It's cost more anyway. Houses since 2000 have more than tripled in value. My mums for instance, bought in 98 is literally worth 9 times more now. This does not mean anything to her, she has to sell, to move and buy a more expensive property again.

What it does mean is that first time buyers are completely stuck. Therefore, a decrease or at least a leveling off will help these people. They do not have mortgages, may have savings for a deposit and if intrest rates go up, house prices stay the same or drop, their deposits increase faster thanks to the intrest rate.

Higher intrest rates hopefully might stamp out the debt, and less people going bankrupt and less bad debt which effects us ALL when we want to borrow. When someone goes bankrupt or has bad debt, it's passed onto all other customers who haven't, much the same as insurance works. I realise that this intrest rate rise will increas the bad debt and bankrupcies to start with, but hopefully, given time, those will be less and less frequent.

The 3.5% intrest rates are what started all of this. People buying, people buying to let several proprties, pushing up house prices, because borrwing was at an all time low in terms of costs. As soon as the rates go up, people moan, but it was inevitable. Some of those who bought to let are now over on MSE complaining as their rent is less than their mortgage, or would be should the intrest rate go up more, so their tenants are paying less than it costs them

These are the people hopefully intrest rate rises will stop from borrowing, or at least make them think, as those are the prime targets for bad debt.

Not having a go at anyone before anyone says anything. But this country has a massive debt problem and bad debt problem, record bankrupcies. The 3.5% rates paved the way for this.....this is my personal opinion anyway.
1 Like #21
LOL Jimbo I didn't neg you, so there was no need to neg me!
1 Like #22
jimbobaggins
?? How can this be good ??

Can you do maths? Unless your savings exceed your mortgage, you lose - you can't win.

And if your savings do exceed your mortgage, why haven't you paid it off?

Madness...


Not all of us have mortgages. Some of us have realized that buying a house in today's climate is madness when a crash is just round the corner, and have all their money tucked away in savings accounts. An interest rate rise is just what I needed. :thumbsup:
#23
poppy10
Not all of us have mortgages. Some of us have realized that buying a house in today's climate is madness when a crash is just round the corner, and have all their money tucked away in savings accounts. An interest rate rise is just what I needed. :thumbsup:


And you fall in quite nicely to my above post!!
#24
Guys, there was no need to fight about things! Everyone here is entitled to an opinion, be it be based on edu-macation or wikipedia!

Thanks for getting back on track and keeping things civil.
1 Like #25
grdesign
Ok, structured post and I see exactly where your coming from.

However. It's cost more anyway. Houses since 2000 have more than tripled in value. My mums for instance, bought in 98 is literally worth 9 times more now. This does not mean anything to her, she has to sell, to move and buy a more expensive property again..


What has cost more? This isn't to do with the value of the property but the size of the mortgage. Interest rates affect the outstanding debt, not the value of the house.

grdesign
What it does mean is that first time buyers are completely stuck. Therefore, a decrease or at least a leveling off will help these people. They do not have mortgages, may have savings for a deposit and if intrest rates go up, house prices stay the same or drop, their deposits increase faster thanks to the intrest rate.


If interest rates go up, so does the cost for a first time buyer, in fact due to the high prices of houses, this could be a huge difference ie. £100 per month on an average house, with no actual return - if prices level off they are not gaining equity to offset the increased interest payments.

As I said earlier, interest rates do not necessarily have any influence over the price of houses, as we have seen during the last few years. First time buyers actually need house prices to increase and interest rates to be lowered, meaning more gain in equity and a lower proportion of the mortgage payment going towards interest rather than capital repayment.

grdesign
Higher intrest rates hopefully might stamp out the debt, and less people going bankrupt and less bad debt which effects us ALL when we want to borrow. When someone goes bankrupt or has bad debt, it's passed onto all other customers who haven't, much the same as insurance works. I realise that this intrest rate rise will increas the bad debt and bankrupcies to start with, but hopefully, given time, those will be less and less frequent.


Higher interest rates cannot possibly 'stamp out the debt' as they actually increase the debt and reduce the ability to pay it off. It actually means more people going bankrupt and more bad debt and I agree, this then affects us all.

It will also not reduce the frequency of bankruptcy or bad debt.

grdesign
The 3.5% intrest rates are what started all of this. People buying, people buying to let several proprties, pushing up house prices, because borrwing was at an all time low in terms of costs. As soon as the rates go up, people moan, but it was inevitable. Some of those who bought to let are now over on MSE complaining as their rent is less than their mortgage, or would be should the intrest rate go up more, so their tenants are paying less than it costs them.


When this started interest rates were 6%, not 3.5%. The buy to let boom started in the early 90's due to changes in the 1988 Housing Act, abolishing security of tenure for tenants and the subdued prices following the house price crash.

grdesign
These are the people hopefully intrest rate rises will stop from borrowing, or at least make them think, as those are the prime targets for bad debt.


Nope, these are the people with massive assets who can afford to continue buying more properties against the equity in their existing properties. The dangerous stuff is first time buy to letters.

grdesign
Not having a go at anyone before anyone says anything. But this country has a massive debt problem and bad debt problem, record bankrupcies. The 3.5% rates paved the way for this.....this is my personal opinion anyway.


You are 'having a go' at lots of people here, and currently the country does not have a massive debt problem. It simply might have one if things go awry.

I don't see my responses as negative as I am trying to correct incorrect statements in a factual manner, but I still don't get where you are coming from. As far as I can tell, having read the above, the opposite is true of nearly every statement you made.

Fascinating.
1 Like #26
sorry for not having a clue what im on about, and please dont have a go at me but....

didnt the housing market collapse when intrest rates went really high in the 80's, was under thatcher? i was only a lttle kid at the time so dont know too much.

then for first time buyers if the same happened again house prices would fall and first time buyers could buy houses cheaper? obviously with higher intrest rates but in time that might fall again and the first time buyer would be better off?
#27
It is fascinating.

I take it you have a mortgage, therefore, your upset by this intrest rate rise.

In all honesty then, as I'm so wrong on everything I say, what is the reason for the intrest rate rise? Is everything i read, watch and listen to completely wrong and all their reasons, which relate to mine, are also, fascinating?
#28
no i dont have a morgage, and im hoping that the intrest rate rise will help me to buy a house, as at the moment i cant afford to buy a house in my area.
#29
landofdan
sorry for not having a clue what im on about, and please dont have a go at me but....

didnt the housing market collapse when intrest rates went really high in the 80's, was under thatcher? i was only a lttle kid at the time so dont know too much.

then for first time buyers if the same happened again house prices would fall and first time buyers could buy houses cheaper? obviously with higher intrest rates but in time that might fall again and the first time buyer would be better off?


This is where I'm coming from. No one wants it to crash as it can cause such devastating effects, however, we all want it to level off, or start coming down, apart from those who dont care.

First time buyers will be much better off with lower prices and higher rates. It enables them to get on the ladder, and if intrest rates come down, they can always re-mortgage to get a fixed rate when they do, so they dont get hit if they go up again.

This is all my own opinion.

Jimbo is basing it on you will be paying more for your first time mortgage, quite correct, however, if they came down, which is why I think the rise is good, then your going to have the chance to get on the ladder at least, and any savings you have for a deposit will grow faster.

Once your on the ladder, unless a crash does happen after you got on it, or intrest rates go phenominal, you'll be ok. They come back down again and you can always fix.
#30
landofdan
no i dont have a morgage, and im hoping that the intrest rate rise will help me to buy a house, as at the moment i cant afford to buy a house in my area.


Sorry mate, was referring to Jimbo with the mortgage comment. Know exactly where your coming from :thumbsup:
#31
yeah i know mate, a bit of crossed wires then.
#32
grdesign
It is fascinating.

I take it you have a mortgage, therefore, your upset by this intrest rate rise.

In all honesty then, as I'm so wrong on everything I say, what is the reason for the intrest rate rise? Is everything i read, watch and listen to completely wrong and all their reasons, which relate to mine, are also, fascinating?


I never mentioned that I am upset with the interest rate rise, although I do have a mortgage, interest on a mortgage is an inevitability, it is not possible to get upset about something which is completely out of your control - I am simply trying to correct your inaccurate statements.

The reason for the interest rate rise is to slow or reduce the rate of inflation.

No, your interepretation of what you read, watch and listen to is completely wrong, not the information itself. Which I agree is fascinating. I am merely trying to help those who may not understand the impact of these changes not to be misled by your categoric statements about what it really means for them and the market.

Hence the comment about the pub earlier in the thread. Many people who read this thread may be worried about their finances and they need factual independant advice about what it means for them, not an incorrect interpretation of how good or bad this might be or scaremongering.
3 Likes #33
I just checked and I have received negative feedback, for simply stating facts to try and help people.

Is this forum just a massive clique or what?

How can you gang up on a new member for simply trying to give a logical, sensible response to a clearly incorrect post. It's very strange for someone to believe that they are right, and their flawed opinion has to be correct, just because they have been posting on here for a while and among their forum mates.

To then have other forum members back them up purely because they are a regular poster, regardless of the fact they are clearly wrong is reminiscent of fascism.

PS Thanks to those who recognised my logic and thanked me for my posts with positive feedback.
#34
Jimbo, I have recieved 2 neg's for this post also, probably one from yourself I would guess.

[SIZE=2]Feedback is pretty flawed to be honest and I wouldn't worry about it. Though I can see how it effects you.[/SIZE]

[SIZE=2]I have no 'clique' of mates on here.[/SIZE]

[SIZE=2]Anyway, the 'Im right your wrong' comment does not really stand. I've had people commenting also coming from exactly where I'm coming from.[/SIZE]

[SIZE=2]I haven't said anything wrong, all I have done it said what I see from the news and media and how it effects me personally. [/SIZE]

[SIZE=2]I simply wanted to know what everyone else feels about the rate rises and whether there will be anymore (I personally, hope there is).[/SIZE]


Regardless of the feedback, stick around.
1 Like #35
Maybe we should lock this thread :)
Seems to be getting out of hand, who cares about rep (apart from me!)
#36
I agree with jimbobaggins that negative reputation for an opinion is very petty. Unfortunately it's something happening too often lately. Admin is concidering removing it and keeping the postitive. That way any unhelpful posters just won't receive any reputation and those that deserve it will have green squares.

Please keep on topic in this thread, as there is a lot of useful information in the discussion. Polite and respectful of each others opinions is more important than reputation points.
#37
no, my dad was selling our flat and we had 2 people interested and now theyre not sure to go ahead as interest rates have go on up.
1 Like #38
OK. I am not sure how it relates to the thread though.

Do you mean that these are first time buyers?
#39
i think its agreat thing the rates going up it means what little money i have saved will earn me a little more than b4 and as for the mortgage i have it wont change I have a fixed rate mortgage. so keep raising it as far as i am concerned
#40
jimbobaggins
I just checked and I have received negative feedback, for simply stating facts to try and help people.

Not being nasty here but i just started reading this thread and you sort of came accross really attackive :oops: Maybe thats why someone give you a neg.

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