Whats your opinion on interest rates in 3 years?
Discussion
There is no limit to what interest rates could be. Not that long ago rates of around ten percent were considered perfectly normal and this lasted all through the 70s and 80s with some forays up to the mid teens.
Politicians will be your saviours here. Yes, really. The association of the last Tory lot with high interest rates helped to sink them for over a decade and they all know this well. As a consequence they will not make the same mistake again in a hurry. Rates will not be allowed to trouble them, some other financial lever will be moved instead. Don't kid yourself about the Bank of England being independent, if it threatens their jobs it will be brought to heel.
This leaves the question as to what is a polically acceptable figure. For an answer just look at the rates over the last ten years or so. Over this time pretty well everyone who has, or might want to get, a mortgage has got used to rates of 5 to 6 percent as being high. If rates stray much above that then politicians will start to feel the heat.
So my expectation is not more than 7 to 8 percent.
Politicians will be your saviours here. Yes, really. The association of the last Tory lot with high interest rates helped to sink them for over a decade and they all know this well. As a consequence they will not make the same mistake again in a hurry. Rates will not be allowed to trouble them, some other financial lever will be moved instead. Don't kid yourself about the Bank of England being independent, if it threatens their jobs it will be brought to heel.
This leaves the question as to what is a polically acceptable figure. For an answer just look at the rates over the last ten years or so. Over this time pretty well everyone who has, or might want to get, a mortgage has got used to rates of 5 to 6 percent as being high. If rates stray much above that then politicians will start to feel the heat.
So my expectation is not more than 7 to 8 percent.
So, this is a bit of a catch 22. In order to get investment, both local and foreign, you need to make the money worth having..... You need to encourage people to save so the banks have money to invest. You need success in order to tax.
So, in order to solve this crisis. You actually need to do something, that includes ferking with rates. If people borrowed assuming they could never change.....well, I guess they will learn the hard way.
The alternative is to find some more people to borrow money off. Snag is, I think they may have heard about us.
I agree. CMD does not have the balls to sort out this country. Cue Bliars labour with blue ties. Mark my words. There will be no rolling heads or sudden changes....just more of the same.
So, in order to solve this crisis. You actually need to do something, that includes ferking with rates. If people borrowed assuming they could never change.....well, I guess they will learn the hard way.
The alternative is to find some more people to borrow money off. Snag is, I think they may have heard about us.
I agree. CMD does not have the balls to sort out this country. Cue Bliars labour with blue ties. Mark my words. There will be no rolling heads or sudden changes....just more of the same.
Guam said:
10 to 12%
The only way out for any government will be to inflate their way out I reckon
Cheers
They'll never allow it. See my post above.The only way out for any government will be to inflate their way out I reckon
Cheers
As soon as the BoE announces interest rates anywhere near that the chancellor will renationalise it "for the public good" and use another means (taxes, NI, VAT, etc) to do what is needed.
My bet is on quantitative easing slowly reducing the debt. After ten years your debt will be eroded to a fraction of what it now is and the government can pay of their debt more easily.
It's quite a scary thought that interest rates could shoot up. I wasn't on the property ladder the last time they went very high, but from the main thing back then was that housing was much, much cheaper than it is today. A huge hike in interest on a small loan is considerably less scary than on a big loan, obviously.
Interest can only go up. However, I'd think this would be a very gradual thing as any sudden big increases would mean lots of people suddenly not being able to afford their repayments. With so many people bordering on negative equity at present you'd have the banks repossesing the houses of all the new defaulters yet still not being able to recover the original borrowings. You'd then have another round of banks going bust due to bad debts.
I would gestimate normal (if such a thing) rate is around the 5% mark, however you should always prepare for them to double (as my late father would say)- so this would be 10%
Personally I don't think they will go 10% again because the goverment will try to avoid mass reposessions of those who stupidly borrowed too much so BOE rates are likely to be reasonable (previous decades goverment raised rates to try combat recession, more recently they followed the US by reducing it and therefore avoiding mass housing repo's/bankrup/even worse ecomony etc..
but you should always be able to afford double if worst ever happens
Personally I don't think they will go 10% again because the goverment will try to avoid mass reposessions of those who stupidly borrowed too much so BOE rates are likely to be reasonable (previous decades goverment raised rates to try combat recession, more recently they followed the US by reducing it and therefore avoiding mass housing repo's/bankrup/even worse ecomony etc..
but you should always be able to afford double if worst ever happens
Soir said:
I would gestimate normal (if such a thing) rate is around the 5% mark, however you should always prepare for them to double (as my late father would say)- so this would be 10%
Personally I don't think they will go 10% again because the goverment will try to avoid mass reposessions of those who stupidly borrowed too much so BOE rates are likely to be reasonable (previous decades goverment raised rates to try combat recession, more recently they followed the US by reducing it and therefore avoiding mass housing repo's/bankrup/even worse ecomony etc..
but you should always be able to afford double if worst ever happens
Average is ~8% over last 50 years. So if you prepare for a doubling I guess ~16%.Personally I don't think they will go 10% again because the goverment will try to avoid mass reposessions of those who stupidly borrowed too much so BOE rates are likely to be reasonable (previous decades goverment raised rates to try combat recession, more recently they followed the US by reducing it and therefore avoiding mass housing repo's/bankrup/even worse ecomony etc..
but you should always be able to afford double if worst ever happens
anonymous said:
[redacted]
Disclaimer, I am not professionally qualified to provide financial advice.So, is it 5.7% over 3 or 30 years?
Many would take that for 30 years.
I'm assuming a repayment mortgage.
As you can see from the previous replies, there is no consensus about future interest rates, even from those who think about it a lot, out of interest, or, as part of their occupation.
The reason I referenced MSE is because of the ideology there, which basically, suggests you sit down and "spreadsheet" your finances, in detail.
Then, depending upon you and your partner's attitude to risk, factor in potential life changing events.
Which might, for instance, be a child.
"Key workers", always sounds secure, yet there have been times when that wasn't true.
Pension provision?
Critical illness cover, many don't bother and it can be a minefield, yet a friend of mine has benefitted from it. As has another friend from mortgage protection insurance when made redundant, twice.
I'm just trying to suggest that you approach your decision based upon a solid appreciation of your financial position.
Good luck, the journey of life.
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