Bank of England Interest rate increase Aug 18?

[TheAnimus]

Ah so it's a perk of the job / tax dodge then, but even so the benefit in kind must be about £3k pa by my rough calculations if you are a higher rate payer.

Also remember mortgages 30 years ago many families were single earners. Now the same families are bidding against people that are dual earners.

When it comes to buying something that isn't property we've got it pretty damn good, granted now quite as nice as 10 years ago, but still. I can buy a pair of decent jeans for only a few hours on minimum wage, my parents couldn't do that at my age. Food I've options at price points they never had. Alcohol is a bit more expensive mind. Yet things like holidays are so affordable. Even something like a car, it's just so cheap to run now and actually reliable.

One of the reasons why housing is so expensive if we've got the ability to spend more of our income on it, as things that were once required to avoid absolute poverty, now we all have for not that much of the income.

Something mundane like a phone, I'm on a £120 device I bought because someone stole my decent one on a NYE party. I've not got round to upgrading, the only thing that really gives me reason to is the camera and space. Really despite there being £1000 devices on the market, the utility difference is nothing like 10 times.

Similar thing with computers, great high powered things for only a few hundred quid. Heck half the office are on 4 year old machines and no one is even hinting that they are slow or want an upgrade.

Take something like legal music. Back in my parents time it was VERY expensive. Now I pay a few quid a month and can listen to almost anything I want, free of interruptions. Or I could just listen to adverts I guess. For less than the TV license you've got great entertainment for film/tv too.

It's hard to suggest that my parents generation had it better when you consider what the recession was like, the number of people defaulting vs the GFC. Sure there have been a few that did very well say buying London properties at £50k to flip them for £500k just 25 years later. But they aren't the majority at all.

[Hoonigan]

Ah so it's a perk of the job / tax dodge then, but even so the benefit in kind must be about £3k pa by my rough calculations if you are a higher rate payer.

Works out about that, yeah, but considering I can get 60+MPG out of it, even sometimes tickling the low 70s, and it's a genuinely beautiful car to drive in every measurable way, it's worth it no end.
Repairs are paid for, insurance is paid for, tax is paid for, tyres are paid for (already had £800 worth of tyres out of it).

[peterb]

My first mortgage had an interest rate of around 7% - which gradually rose to 15% for a while. The repayments were a fair proportion of my income. Moving house involved some complex decisions to get the maximum loan down to under 75% of the purchase price (to avoid compulsory indemnity insurance) and I ran a spreadsheet for all my outgoings to keep within my overdraft limit. Fortunately I didnt have internet or mobile phone payment to worry about, but but the time I had paid for house insurance and utilities and food, there wasn't much left for socialising, and I didn't have a new car for until 18 years later.

[Gerrard]

It wouldn't bother me too much if interest rates went up by a small margin. I remortgaged ealier in the year and decided to go for 2 year fixed as I am never sure if I am going to want to sell, which would mean losing a fair amount if I wasn't going to buy another house (early repayment fee). At the moment it's at 65% LTV, and since it's an offset, I have enough savings in it so that the interest on it is actually more like 40% LTV.

Given all the doom-and-gloom for the future, it would seem sensible to make preparations for the crap that is apparently coming. However, I am wondering what anyone is actually doing? Selling up? Emmigrating (I know directhex did)? Moving funds to off-shore? Moving to Sweden, or somewhere in Scandanavia sounds appealling, but has the small problem that I am rubbish at learning languages! Australia would be another option maybe if they would have me, but I hear they have crap Internet and games can be problematic, so you know, priorities.

[TheAnimus]

Works out about that, yeah, but considering I can get 60+MPG out of it, even sometimes tickling the low 70s, and it's a genuinely beautiful car to drive in every measurable way, it's worth it no end.
Repairs are paid for, insurance is paid for, tax is paid for, tyres are paid for (already had £800 worth of tyres out of it).

Hey, please don't take my comments as an attack, it's your life, its up to you to know what things are important to you. Myself I could have had a bigger house but instead I've a slight flying addiction. I've spent considerably more than the price of deposit on that hobby in just a 5 year period.

But you can't then complain that deposits are out of reach when it's been a choice.

[Dashers]

I don't like when people trot out houses could be afforded on a single salary argument. This is due to equality and the increase of purchasing power of average families. Yes, it sucks that if you're not a working couple it's harder, but it also sucked before that if you were a women you couldn't work.

Now that women have (pretty much) equal working ability, they do, and guess what, what couples can afford has gone up. Supply hasn't changed massively in relation to the population, so costs go up. This is nothing to do with naff economies but everything to do with society generally being better.

Mortgages have always taken the lion's share of the income. The house I was brought up in didn't have floor boards in many rooms, and no paint on the walls - simply because it couldn't be afforded - in the days before digital toys and even car ownership was low. I started off in a crappy fixer-upper. Buying your first home has always been hard.

We make decisions early on about what we want to spend our cash on. That comes home to roost. By the sounds of things, Hoon requires his car for his job - but there are plenty of people who see a car as a necessity when they could suffice (and save) with public transport. Smartphones, Netflix subscriptions etc. are all things that I see my younger siblings spend their money on and then wonder how they're going to afford a home when the time comes. I frankly have no time for it. Make do and save, not through high interest rates, just by not spending more than you need to. As generations before, your income is likely to go up and things will get easier and you can start to spend more.

[Zak33]

i honestly think that if the rates go up, house prices will come down a tad, because, simply put, the loan values will have to drop. Moreover, with a whiff on interest on savings, the deposit will grow a little better. Anyone with growing deposits now, will become the mainstay of lenders.. and mortgages will be within reach.

I hope so anyway, because the arguments about youngsters now having it harder on a first time purchase than people 30 years ago are all irrelevent if the rest of their income is going on things that didn't even exist 30 years ago.

Internet, mobile phones, car finance at 2.9% and jobs 30 miles from home. almost none of that existed in 1988. But the 12% flat rate (APR 24%) car loans did, on cars with no powersteering and manual windows, and tape decks. Mortgages with 12% flat rate, and 10% deposit, single glazed windows, e rated fridges and tv's that weighed more than your car but were 14" across.

its a diff world

[Saracen]

i honestly think that if the rates go up, house prices will come down a tad, because, simply put, the loan values will have to drop. Moreover, with a whiff on interest on savings, the deposit will grow a little better. Anyone with growing deposits now, will become the mainstay of lenders.. and mortgages will be within reach.

I hope so anyway, because the arguments about youngsters now having it harder on a first time purchase than people 30 years ago are all irrelevent if the rest of their income is going on things that didn't even exist 30 years ago.

Internet, mobile phones, car finance at 2.9% and jobs 30 miles from home. almost none of that existed in 1988. But the 12% flat rate (APR 24%) car loans did, on cars with no powersteering and manual windows, and tape decks. Mortgages with 12% flat rate, and 10% deposit, single glazed windows, e rated fridges and tv's that weighed more than your car but were 14" across.

its a diff world

Well, while I agree with the general thrust of that, especially that it's always been hard buying a house, I'd just point out that my first cellphone certainly wasn't much later than '88, and while there was no internet as such, I was paying a monthly subscription to CIX, that being an online service, albeit diallup .... using a modem that cost a fortune (£I000, or so). And, because I needed phone and that diallup, simultaneously, I was also paying for two phone lines.

And a mortgage.

However, I had been saving steadily for years and compared to many contemporaries, was late onto the housing msrket. Then again, when I did jump on I did so with about 30% deposit and keeping the mortgage to 70% of purchase price made the mortgage cheaper (lower rate) and much easier to get.

Of course, I could have gone for a 5% mortgage and a more expensive house, but I was well aware that buying thd house was the start of the expense and I allowed a healthy margin for equipping, renovating, etc.

Considering what happened to interest rates (the 15% period) and house prices ( nearly halved) I'm glad I didn't push it as I could just sit tight znd wait it out. Had I done 95% mortgage, those rate rises might have sunk me.


As for car loan rates, dunno. Only ever bought cars outright, never on finance. My attitude was to buy what I needed, which was transport from A to B, and if a car needed finance I couldn't afford it.

Regulars may remember my aversion to subscriptions (like Netflix, Photoshop, etc). Truth is that extends to almost ANY form of debt, unless absolutely necessary. Even if avoiding ig costs me. For instance, no way will I pay car insurance monthly. Annual, up front. I usually evrn pay water rates and council tax annually in advance, and very, VERY rzrely use a credit card. If I do I pay it off in full. In part that's due to a nasty experience of relying on projected earnings then beinv taken ill. Never again.

So now, beyond utility bills and monthly arrears on TV/BB etc, I operate on a zero debt basis Nothing, zip, zilch.

[Saracen]

Oh, and as for a BofE rise in August, very possible, though if it happens, I'd bet on very small. Any rise in retail rates will then be even smaller, if they hsppen at all.

Bear in mind that, in normal times, wholesale and especially retail rates tracked changes in base rates fairly well, but thexe are not normal and haven't been for nearly a decade. The 'elasticity' between base rates and market rates is much bigger and base rstes are quite a way down the list of factors determining market rates.

[Smudger]

i honestly think that if the rates go up, house prices will come down a tad, because, simply put, the loan values will have to drop. Moreover, with a whiff on interest on savings, the deposit will grow a little better. Anyone with growing deposits now, will become the mainstay of lenders.. and mortgages will be within reach.

I hope so anyway, because the arguments about youngsters now having it harder on a first time purchase than people 30 years ago are all irrelevent if the rest of their income is going on things that didn't even exist 30 years ago.

Internet, mobile phones, car finance at 2.9% and jobs 30 miles from home. almost none of that existed in 1988. But the 12% flat rate (APR 24%) car loans did, on cars with no powersteering and manual windows, and tape decks. Mortgages with 12% flat rate, and 10% deposit, single glazed windows, e rated fridges and tv's that weighed more than your car but were 14" across.

its a diff world

Up until yesterday, my car had a tape deck. Also a CD-changer, and the tape was never used, but still, tape deck. None of your bluetooth/aux rubbish. Good old-fashioned mechanical music. There was probably a record player under the bonnet.

[Saracen]

Up until yesterday, my car had a tape deck. Also a CD-changer, and the tape was never used, but still, tape deck. None of your bluetooth/aux rubbish. Good old-fashioned mechanical music. There was probably a record player under the bonnet.

So did I .... until some <bleeep> broke into the car and nicked it.

I took the opportunity to replace it with a Minidisc player, and a boot-mounted CD-changer. Add a good quality MD recorder to my home hifi and .... sorted.

One of these days I'll get around to joining the 21st century .... at least in this regard.



The irony? The "bleep" who nicked the car stereo forgot the separate little box of electronics that controlled the display, etc, so I doubt he, or whoever he sold it to, ever got it working.

[TheAnimus]

I took the opportunity to replace it with a Minidisc player, and a boot-mounted CD-changer. Add a good quality MD recorder to my home hifi and .... sorted.

Disappointed you didn't have a PD drive and a small CRT too!

[cheesemp]

And its now officially been set at 0.75%...

[Jonatron]

Rise to 0.75% confirmed.

Typical that rates would rise just after I get my first mortgage. Luckily I didn't stretch myself at all, so even a rise of 2% wouldn't be an issue for me. Still annoying for people like me who missed out on house price increases while paying high rents and paying back student loans.

[Hoonigan]

So, my phone packed in yesterday. Thought I'd further all you lucky house-owners high-horse-man-ship and show you this.

[cheesemp]

Dangerous game to play Hoonigan. I could show you my 60 plate i20 with 70,000 miles on the clock and ageing moto z... But then again I have 2 young children and small 3 bed down south... Its all relative - My wife's Scottish relatives (from somewhere near Dumfries I think?) almost had a fit when they saw our little 3 bed semi house (in a not great location for commuting anywhere) cost double their 4 bed detached! You just can't compare these things.