Why Haven't Mortgage Payers Factored In The Possibility Of Mortgage Rates Going Up To 7%?

[dave50]

The ultra low rates of the past 15 years have always been unrealistic and unsustainable, they were always going to rise eventually.

[Peter Pedant]

/I'm afraid the people who have been running the asylum for the past 20 years are the lunatics.//

that is a very insulting comment about our criminal justice system !
contempt even !! - I say - I was at law skool with two of our Lords of Appeal in ordinary, and one Master of the Rolls, and they werent mad then ! ( Bean and Simon - of whom there are a few, let me not say these things are hereditary)

[Peter Pedant]

to say nothing of Wright ( a few) Gore and Geake

[davebro]

oh dear - NURSE!

[weecalf]

Just humour me here as I don’t understand .This happens that happens okay but why does that mean companies that have nothing to do with the running of the country are allowed to raise mortgage rates acause goverment are borrowing more money .

[davebro]

Cos the money they lend isn't their own money - they borrow it from someone else & if they pay more interest they have to charge more interest. (but you knew that of course!)

[ToraToraTora]

weecalf: "Just humour me here as I don’t understand .This happens that happens okay but why does that mean companies that have nothing to do with the running of the country are allowed to raise mortgage rates acause goverment are borrowing more money . " - well you have 2 things there, government borrowing and interest rates. I assume the main thrust is interest rates so I'll concentrate on those. By companies I assume you mean lenders. Lenders are mostly lending someone else's money, money they borrowed directly or money they have on deposit from savers. If interest rates rise then they have to pay more for their borrowings from whatever source, they are just passing it on. The base rate effects everyone because the BOE actually lends to banks all the time for various reasons so every other bank must inevitably follow suit, right down the line to the consumer. Think of it like a potato, if the farmer increases the price then so must everyone until finally the chip shop puts up the price of a bag of chips.

[weecalf]

Thank you both .So would it follow that savers will see an increase in their saving interest . Getting 1 pound for 10000 quid Wont happen again you would think .

[New Judge]

//Getting 1 pound for 10000 quid Wont happen again you would think.//

It should never have happened in the first place. Unrealistically low interest rates have been one of the main reasons the economy is in the state it's in now. For fourteen years those rates have borne no relationship to reality and have encouraged so-called growth by allowing people and businesses to buy things they otherwise could not afford. It isn't growth at all - it's printing worthless money. The chickens have now come home to roost and Ms Truss is trying to do something about it.

[ToraToraTora]

14:38, yes there will be better savings account rates but they'll come more slowly, twas ever thus! Note also, as now they have a tendency to give you a good rate for an agreed period then switch you into a 0.01% rate and hope you don't notice.

[MargoTester]

If I remember correctly in late 1960's and 1970's you could only get a mortgage for 3 times husband's salary and the wife's salary was only be taken into account for 2 years because they would then be having kids (yes really) We didn't have credit cards so didn't run up big sums on those. We had deck chairs in the lounge until we could afford a settee. The mortgage rate went up to 17% at one point and we really struggled but just about stayed afloat without any help from the government or anybody else

[pimplyteen]

MT 15.09 Yes you are correct, now they want the house with everything in it plus a new car on the drive.

[jourdain2]

Margo tester, you are just about right. They allowed 2 and a half times the husband's salary for the amount you could mortgage for in 1974 and it was rare for a wife's earnings to be allowed for (unless they were past child-bearing age or otherwise unlikely to be stuck at home).
As someone said, possibly you, to 'do credit' was frowned upon. Even my running a catalogue to enable me to spread costs was rather looked down on. We didn't dare get into debt and we 'made do and mended' - there was a section on that in a book on home management I was given as a wedding present in 1970. Now people want new and they want everything.

[pimplyteen]

^ You also had to accept that there would be very little room for luxuries going out very often and even a holiday for a long time. In other words, you couldn't have your cake and eat it.

[Zacs-Master]

And that's why we're in the trouble we're in! And have you seen the price of fish!!

[MargoTester]

We also made do with a lot of stuff donated from both our families, bits of cutlery etc. We usually ended up with egg and chips at the end of the week before we got paid! This tends to make everything sound miserable which it wasn't we enjoyed ourselves.

[Zacs-Master]

And we used the Daily Mail as toilet paper. My dad had the football results printed on his backside regular.

[pimplyteen]

Daily mail for loo paper, not that posh in our house we had to wait for the local free advertiser.

[Zacs-Master]

Luxury!

[pimplyteen]

There is however one area that I think is totally wrong for young people is zero contracted hours.
You either had a fulltime job 40 hours and may be some overtime, or a parttime job. Either one you knew what your pay would be.

[MissTerious]

I joining in ans agreeing with Margot onwards. Those born 40s onwards are made of much sterner staff. We never expected much help and didn't get it. These days younsters expect government help for everything and have no clue whatsoever of how we lived when we first set up homes. And most of us were happy. I'm glad I'm not young now! I have learned how to cope without government handouts.