UK Interest Rates

[MancunianStacker]

Today is the day folks...

So the rumour is UK Interest rates are going to go up around lunch time. ? I have three mortgages lol (all interest only - gold is my savings plan to repay them over he next 27 years).

Great for pensioners but this will take £’s out of the pockets of everyone else and reduce spending which then reduces tax income to the UK.

What are your thoughts on this? 

Is the BOE trying to take the UK into higher rates over the next 2-3 years to generate an inflow of cash from Europe and other countries with lower rates?

Will this impact on you ability to buy the same amount of PMs each month?

I’m hoping they stay the same or a small increase only. 0.5% would be awful!!!

 

 

[KevjustKev]

It's very good news for savers, or which there are many more than those paying a mortgage. A £1,000 savings account can pay as little as 0.1%. Can't even buy a pint for that. 

[KDave]

Bookies are odds on for a rise and they are not usually wrong. I have debt but it is all 0%, mortgage is fixed for 5 years, rates were not getting much lower than 0.25%. My brother fixed for 10 years but he is less of a gambler than I am. 

3 interest only mortgages seems a tad over leveraged in my view but if you can manage them on income then fair play. I would not use io debt personally. I have my fair share of debt myself but all interest free and being paid off so the banks get nothing out of it. 

[shawy2510]

Only got the 1 mortgage & a 0.25% increase will only be £20pm worse off so doesn't really affect me too much.

Looking to move into a bigger house in the New Year so that will probably make a £50pm addition to what I pay now.

[whitesands1]

I don't think there is much to worry about - there is so much debt in the UK that low interest rates are going to be around for a long time.

In the low wage economy and with the ever nearing brexit "deadline" there is simply not enough spending power to drive prices higher - business will just need to adapt to managing costs and lowering price expectations or wither on the vine. 

You can't get blood out of a stone.

[Paul]

anyone who is worried when rates move a mere 0.25%  have over borrowed.

[Martlet]

16 minutes ago, Paul said:

anyone who is worried when rates move a mere 0.25%  have over borrowed.

Absolutely this, interest rates have been at unprecedented low levels and will rise from here.  Anyone should be anticipating/budgeting for 1-2% increase over the next 5 years (which would still be low).  I dont think thats likely but its a reasonable possibility.

That said I think it can go either way today, there's an argument that the inflation is not from domestic demand but due to $ exchange rate.  A rate increase would solve that, but at the risk of stifling growth.  They may well err towards wait and see (as they have done so long) and hold.

[Thelonerangershorse]

I'm hoping to a rise, this should hopefully strengthen Stirling against the euro and drop prices of silver from Europe just in time for the November GS.BE order.

[MancunianStacker]

52 minutes ago, whitesands1 said:

I don't think there is much to worry about - there is so much debt in the UK that low interest rates are going to be around for a long time.

In the low wage economy and with the ever nearing brexit "deadline" there is simply not enough spending power to drive prices higher - business will just need to adapt to managing costs and lowering price expectations or wither on the vine. 

You can't get blood out of a stone.

Good points ?

[MancunianStacker]

1 hour ago, KDave said:

Bookies are odds on for a rise and they are not usually wrong. I have debt but it is all 0%, mortgage is fixed for 5 years, rates were not getting much lower than 0.25%. My brother fixed for 10 years but he is less of a gambler than I am. 

3 interest only mortgages seems a tad over leveraged in my view but if you can manage them on income then fair play. I would not use io debt personally. I have my fair share of debt myself but all interest free and being paid off so the banks get nothing out of it. 

They are rented out so I’d just put the rent up by the equivalent eventually. I’m sure they know this happens. There is a huge housing shortage too (I’ve not helped) but it’s supply and demand. 

My interest rates (old tracker rates) are about 1.5% and buying and selling my Sovereigns at the right time (then buying back again tax free) has made this a nice little earner.

I’m planning on paying 2 off in the next 10 years so I have a few options. 

Everyone is expecting a rise but I’m not too sure this time.

[Thelonerangershorse]

As long as someone is living in the house, how can it be contributing to the shortage? surely the problem is simply the total number of houses, not who actually owns them.

[KevjustKev]

5 minutes ago, MancunianStacker said:

They are rented out so I’d just put the rent up by the equivalent eventually. I’m sure they know this happens. There is a huge housing shortage too (I’ve not helped) but it’s supply and demand. 

My interest rates (old tracker rates) are about 1.5% and buying and selling my Sovereigns at the right time (then buying back again tax free) has made this a nice little earner.

I’m planning on paying 2 off in the next 10 years so I have a few options. 

Everyone is expecting a rise but I’m not too sure this time.

Of course you have helped, those who you to now have a roof over their heads. If no private landlords were about how many homeless people would here be? For every bad landlord there are 1,000 good ones. It's in your intrest to keep them happy other wise you would have no rent.

[Pipers]

28 minutes ago, MancunianStacker said:

They are rented out so I’d just put the rent up by the equivalent eventually. I’m sure they know this happens. There is a huge housing shortage too (I’ve not helped) but it’s supply and demand. 

My interest rates (old tracker rates) are about 1.5% and buying and selling my Sovereigns at the right time (then buying back again tax free) has made this a nice little earner.

I’m planning on paying 2 off in the next 10 years so I have a few options. 

Everyone is expecting a rise but I’m not too sure this time.

You may get yourself in a mess with this method, you and all the other landlords will be going to court at the same time balliffs will put up there costs too!  This is just a thought and if and if private landlords are seen to be being 'unreasonable' by the government then laws will change. 

I am out of that game now and glad I lease no properties I see things changing. 

As far as other debt and the rates go most other debt is not even linked to the boe interest rates anymore  eg credit cards, car loans,

[sixgun]

So i see the rates went up.

i expect there are plenty of people overstretched with their mortgages, there always are. It depends what mortgage rates go up to. It would have been a good time to have fixed your rates for as long as possible. i hear lots of talk about inflation. Food prices will certainly be rising, the futures prices have started picking up after years of decline. i see oil prices rising as well. We have had base materials moving down since 2011 in a low interest rate environment. Exporting jobs to Timbuktu and falling food stuff/base material prices has meant inflation has been low. We all know the headline inflation figures do not truly reflect prices and eventually they cannot juggle the figures any more. As inflation comes into the picture these academic central bankers will apply their faulty formulae and push up rates. This will put a lot of pressure of ordinary people and many will lose their homes. Good for me as i have no debts and have precious metals. 

[sovereignsteve]

2 hours ago, MancunianStacker said:

Great for pensioners

you're assuming banks etc will raise interest rates on savings accounts.

[sovereignsteve]

1 hour ago, Paul said:

anyone who is worried when rates move a mere 0.25%  have over borrowed

Indeed. I remember in my days of having a young family paying a mortgage that went up as high as 14%.

People of today don't know they're born!

[sixgun]

According to the Guardian the Nationwide stated "The society added that if the base rate were to rise to 0.5% on Thursday, it would pass on the full benefit of this increase to the majority of its savers."

[KDave]

You can't just put the rent up, the market decides what rent it can carry, driven by wages first and foremost and landlord benefits (housing benefit) second. I am assuming you are not currently renting you houses out at a discount? If people can't afford them you will be paying all three houses yourself. 

There is a shortage whether you rent them out or if the houses go to first time buyers, so don't worry about that. But if you can not afford to make up the difference in interest rate yourself i would think again. 

[Markh]

If they raise rates at every opportunity they get, we will still be behind the norm, this is because for the last 10 years they have been going down. 

I hope they raise them, it will in my opinion just fast forward a crash and wipe those people out who have not been prudent with there approach to finances. 

The less well off in Society will cope as they always have. 

Preparation is key. Don't over extend your abilities. Only have what you can afford. Just like in the good old days

[MancunianStacker]

39 minutes ago, sovereignsteve said:

you're assuming banks etc will raise interest rates on savings accounts.

so true 

[whitesands1]

....... and on the news "The pound is down against the dollar following the interest rate increase.

It's at $1.3145 - a fall of 0.75%.

It's also 1.18% down against the euro at 1.1264 euros."  BBC News.

They suggest that the rise had already been priced into exchange rates.

So a great call from Carnage - a rate rise today has increased the pressure on inflation with a fall in the value of Sterling.  I think this speaks volumes about the markets' view on the true state of the United Kingdom economy.

One positive is the price of Silver and Gold in £'s spiked back up a little.

[MancunianStacker]

31 minutes ago, KDave said:

You can't just put the rent up, the market decides what rent it can carry, driven by wages first and foremost and landlord benefits (housing benefit) second. I am assuming you are not currently renting you houses out at a discount? If people can't afford them you will be paying all three houses yourself. 

There is a shortage whether you rent them out or if the houses go to first time buyers, so don't worry about that. But if you can not afford to make up the difference in interest rate yourself i would think again. 

I’m lucky in that demand for my property if very high due to location 

[Martlet]

2 minutes ago, whitesands1 said:

....... and on the news "The pound is down against the dollar following the interest rate increase.

It's at $1.3145 - a fall of 0.75%.

It's also 1.18% down against the euro at 1.1264 euros."  BBC News.

They suggest that the rise had already been priced into exchange rates.

So a great call from Carnage - a rate rise today has increased the pressure on inflation with a fall in the value of Sterling.  I think this speaks volumes about the markets' view on the true state of the United Kingdom economy.

One positive is the price of Silver and Gold in £'s spiked back up a little.

You really shouldn't draw too much from changes on the day.  Buy on the rumor, sell on the news is the old adage.  Example, £:$ is up about 8% on the year low and £: €  about up 5% (though still off the trend for the year).  Today's trading adjustment isn't going to directly affect inflation, the change in the coming weeks and months is to be watched.

[vand]

real rates are still negative; if you are a borrower then the BoE is still doing you a massive favour at the expense of savers.