Finally, An Interest Rate Rise.

[youngmafbog]

First in 10 years although it is only returning to what it would have been had Carney not tried to badmouth Brexit with it.

Still must have a fair way to go to stem inflation, 1% by 2019 perhaps?


http://news.sky.com/story/live-boe-expected-to-raise-interest-rates-11109529

[New Judge]

I read this morning that many households will be "pushed to the brink" by this rise. Households with a £200k variable rate mortgage will see their repayments rise by £25 per month. Wow!. Almost as much as two weeks' mobile phone subscription, two and a half packs of cigarettes, a bottle of wine a week or two pints of beer a week. And all you get for that is a roof over your head.

[jim360]

Depends on the amount of disposable income people have, surely? £25 a month is not a lot unless you had basically £0 to spare to start with.

[youngmafbog]

Yes, I saw that too Judge and I really do wonder about it. One of my daughters at the age of 24 has a 300k mortgage. She seemed ok with this and said they took it into account at the time and got a fixed rate one 6 months ago.

To be honest if you will struggle paying another £25.00 then you are in over your head. Probably best to call it a day now as the interest rate will only go one way from now.

[ummmm]

Jim...comfortably off people don't think like that!

[youngmafbog]

Jim, there will be a few who are in the situation through no fault of their own such as redundancy and sickness. However many are simply over their heads with too much mortgage, a couple of cars on tick and everything in the house on tick. Basically they do not live within their means and so will suffer the consequences.

[dunnitall]

New Judge, I always love your take on things and all your knowledgeable post. I totally agree with your sentiments! IMO that is what's wrong with society today! Wrong priorities that's for sure, plus the fact they take out so much credit for things that often aren't needed etc....that any little rise in repayments totally floors 'em. Should have lived in my day lol....didn't have the money you couldn't have....roof over our head and sorting living costs were the priorities...

[youngmafbog]

What utter sanctimonious rubbish ummmm

[Old_Geezer]

0.25% is a start I suppose. Can't afford to make it a reasonable rate all at once.

[ummmm]

No it's not.

Most people do not intentionally get in over their heads (do lenders even allow that nowadays?) but circumstances often change. It's so easy to think how little £25 actually is...unless you haven't got it. People who can spare it and not miss it tend to have a more blase attitude.

[New Judge]

I'm afraid that people who are "pushed to the brink" by an extra £25 a month need to re-assess their finances. Nobody should have taken a mortgage at the ridiculously low rates of interest that have prevailed recently without having a plan to cope with a (very modest) increase.

[jim360]

I'm sure there are some people to whom ymb's diatribe applies. I'm not sure it's "many" who are in that position though.

I can't say I really appreciate what a 0.25% increase in basic interest rate will mean -- my economic understanding is, to put not too fine a point on it, crap.

[ummmm]

Like I said, NJ, circumstances change.

[dunnitall]

Of course circumstances change and for them it is devastating. However many younger people have grown up with thinking if you want something you can have it...despite the potential cost. As for lenders not allowing people to take out more than they can afford, from experience with younger family members that goes by the by.....with the cards in their possession they are offered more and more credit and those not considerate of future circumstances or who don't care less...will take the loans and damn the consequences. People rarely IMO plan ahead for unforeseen problems.

[New Judge]

"People rarely IMO plan ahead for unforeseen problems."

Nor indeed for those which are reasonably forseeable, as a modest rise in interest rates most certainly is.

[youngmafbog]

//Most people do not intentionally get in over their heads //

Depends what you mean by intentionally. I would class those that dont bother to think of the consequences as being intentional and yes, lenders do lend money - haven't you seen all the furore on car loans recenlty there was enough of it.

And I acknowledged for some, circumstances change.

So, I still think your original catch-all statement is sanctimonious rubbish.

[gulliver1]

" Finally an interest rate rise" GOOD.

[237SJ]

I bet the banks raise their mortgage rates faster than they raise their savers rates.

[CrapAtCryptics]

During our time with a mortgage we had separate periods of 15.5 & 16 percent. My entire wage was going to cover it and my wifes wage kept us afloat barely. 0.25% is a pittance both if your priorities are right.

[jno]

depends, CaC, in those days wages shot up as well; and now they don't. To survive in your sort of situation you need wage inflation to stay just that bit ahead of monetary inflation; if the reverse happens you're out of luck. Mr Micawber and all that.

[Deskdiary]

Plus price of houses in those days are not relative to the price of houses now.