Quizzes & Puzzles0 min ago
Should I Be Worried In Light Of Carney's Worst Case Scenario?
Long-winded question alert - there are cleverer people on AB than me so I'm interested in opinions!
I'm in my mid(ish) 40s with a wife and two school age children. This is my second marriage and therefore we met each other after we had both had serious previous relationships (thankfully no previous children between us).
As such we bought fairly late in our lives.
I live in a reasonably affluent area where house prices are, frankly, absurd and therefore have a mortgage that takes up approx 30% of my net take home. Doesn't seem a lot, but once you add everything else....the pennies still have to be watched.
I won't be so crass as to tell you my earnings, but suffice to say it is in six figures.
If Carney's comments come to fruition and post-Brexit house prices could crash by 35% and the base rate increase to 10%, I would (a) be bordering on negative equity and (b) possibly be unable to afford my mortgage.
I doubt I am alone.
In this eventuality, would the Government allow a situation to arise where there could be mass mortgage defaults?
I earn a decent living, but I would not describe myself as rich.
I'm in my mid(ish) 40s with a wife and two school age children. This is my second marriage and therefore we met each other after we had both had serious previous relationships (thankfully no previous children between us).
As such we bought fairly late in our lives.
I live in a reasonably affluent area where house prices are, frankly, absurd and therefore have a mortgage that takes up approx 30% of my net take home. Doesn't seem a lot, but once you add everything else....the pennies still have to be watched.
I won't be so crass as to tell you my earnings, but suffice to say it is in six figures.
If Carney's comments come to fruition and post-Brexit house prices could crash by 35% and the base rate increase to 10%, I would (a) be bordering on negative equity and (b) possibly be unable to afford my mortgage.
I doubt I am alone.
In this eventuality, would the Government allow a situation to arise where there could be mass mortgage defaults?
I earn a decent living, but I would not describe myself as rich.
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And only homeowners who didn't consider the risks, or who did and opted to take them anyway, by choice, would have the risk of defaulting. That was the chance they willingly took in order to gain the perceived advantage of buying property with dirt cheap loans; if it goes wrong for them it proved a poor wager.
To address your particular situation, dd.
You (and many, many others) have taken out large loans when the interest rate on them can only go one way. You have been ultra-protected thusfar due to governments' (note the plural because it is not only the UK government I'm talking about) insistence that the only way to "stimulate" the economy is by providing money to borrow and rock-bottom rates. It also helps them because they can do the same to lavish on their ideologies by demonstrating the largesse with other people's money. It's a contributory factor to house prices being ridiculous.
I on't think you need fear any catastrophic interest rate rises (for the reasons I outlined in may earlier post. But an economy based on borrowed money (rather than the earned variety) will always be fragile.
You (and many, many others) have taken out large loans when the interest rate on them can only go one way. You have been ultra-protected thusfar due to governments' (note the plural because it is not only the UK government I'm talking about) insistence that the only way to "stimulate" the economy is by providing money to borrow and rock-bottom rates. It also helps them because they can do the same to lavish on their ideologies by demonstrating the largesse with other people's money. It's a contributory factor to house prices being ridiculous.
I on't think you need fear any catastrophic interest rate rises (for the reasons I outlined in may earlier post. But an economy based on borrowed money (rather than the earned variety) will always be fragile.
This might be helpful in answering NJ, Gulliver:
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I didn't ask what the result of raising interest rates was. I asked if you knew the reason why interest rates might be adjusted.
You seem to be of the belief that because the UK is leaving the EU that is a reason for raising interest rates. It isn't. Other things have to happen and I wondered if you knew what they might be. I suspect you don't but since you've never previously allowed ignorance to interfere with your argument I don't suppose you'll start now.
You seem to be of the belief that because the UK is leaving the EU that is a reason for raising interest rates. It isn't. Other things have to happen and I wondered if you knew what they might be. I suspect you don't but since you've never previously allowed ignorance to interfere with your argument I don't suppose you'll start now.
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