For the economists, what effect will the imminent interest rise have on house prices in the UK? | ExpatWoman.com
 

For the economists, what effect will the imminent interest rise have on house prices in the UK?

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EW EXPERT
Latest post on 12 April 2011 - 10:24
Jewels middle, sugarbeach does not appear to be upset, in fact I think if you read properly you will see that you have the wrong end of the stick in regards to what this thread is about...and what point she herself was making. Not sure we really need a lesson in how the world economy imploded in on itself in regards to interest rates on the rise in the UK.
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EW GURU
Latest post on 12 April 2011 - 10:18
Sugar beach, why are you upset over comment, I am not having any go at you at all. Read carefully what I had written and it was not personal to you . It is a fact if interest rates are low people , will not save cash and people over the past years have mortgages and remortgage , borrowed to the hilt, lived good lives and it is now crashed down. Many people got mortgages more than one or two but would not have been able to pay them if they did not have tenants and that is one example of someone not able to afford. I hope when you reread you will see the point and be objective and not take it personally. aJM. If you read carefully, I didn't say I don't save cash (I do - but I effectively pay for doing so, the bank doesn't pay me in real terms), I said I didn't FEEL ENCOURAGED to do so. Of course, people buy their home on money they don't have, it's called a mortgage. Not sure what the point is you are trying to make in your post. But no, I don't believe I'm part of the problem you are referring to. edited by Sugarbeach on 12/04/2011 <em>edited by jewelsmiddle on 12/04/2011</em>
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EW EXPERT
Latest post on 12 April 2011 - 09:39
JM. If you read carefully, I didn't say I don't save cash (I do - but I effectively pay for doing so, the bank doesn't pay me in real terms), I said I didn't FEEL ENCOURAGED to do so. Of course, people buy their home on money they don't have, it's called a mortgage. Not sure what the point is you are trying to make in your post. But no, I don't believe I'm part of the problem you are referring to. <em>edited by Sugarbeach on 12/04/2011</em>
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EW GURU
Latest post on 12 April 2011 - 08:59
people not saving cash/ interest rates low ..................and this is one of the reasons we are in the world wide mess we are in as people used money to buy property all over and in many cases on money they did not have. We are all suffereing whether we own property or not and many people have lost jobs. Vicious circle Interest rates are always tricky, because higher interest rates encourage saving and discourage spending [on credit'>... which is not good in difficult times. I have friends on interest-only mortgages and they could see themselves in a pickle (hopefully not!) and if they did, they wouldn't be the only ones. People who bought in the last 5 or so years would have mortgaged up to the max, so the current financial climate with job losses et all and now the interest rate hike could well see repossessions... and fewer purchases. ... but prices coming down would be no bad thing at all for first time buyers coming back from a decent job abroad... Just wanted to say that I have NEVER in over the last 10 years felt encouraged to save cash, given the meagre interest rates in savings accounts (even tax free ISA ones) and inflation. Simply no incentive to do so. <em>edited by jewelsmiddle on 12/04/2011</em>
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EW EXPERT
Latest post on 11 April 2011 - 21:30
It all depends on your personal circumstances LT. We've not gone for fixed term deposits with large lump sums, we homed in on easy access cash ISA's - I honestly do not remember seeing 7% interest rates on cash ISA's for the last 4 years at least. And when your mortgage rate is 7%, say, anyway - it makes no sense to save cash. Might as well pay off the mortgage with the money instead. Maybe I should qualify to say that, for us, there is no incentive. edited by Sugarbeach on 11/04/2011 No, it's true... the fixed term regular deposit things have gone down from 6.5-7% 5 years ago to something like 2.5%. Ironically, when the interest on savings accounts was high, the interest on credit was low... I was a self-confessed 0% credit ho between 1999-2004... interest free loan for my Uni! Either you spend it or you save it after all... <em>edited by Hello.Again.Kitty on 11/04/2011</em>
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EW EXPERT
Latest post on 11 April 2011 - 21:20
It all depends on your personal circumstances LT. We've not gone for fixed term deposits with large lump sums, we homed in on easy access cash ISA's - I honestly do not remember seeing 7% interest rates on cash ISA's for the last 4 years at least. And when your mortgage rate is 7%, say, anyway - it makes no sense to save cash. Might as well pay off the mortgage with the money instead. Maybe I should qualify to say that, for us, there is no incentive. ETA - And even when my ICESAVE cash ISA went bust in Sept 2008, oh yes, I remember that well. I distinctly remember it was one of the top paying cash ISA's at 5.xx%, and then there was all those people gloating that that's the "risk" you take for being a rate tart. :\: <em>edited by Sugarbeach on 11/04/2011</em>
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EW OLDHAND
Latest post on 11 April 2011 - 21:16
Interest rates are always tricky, because higher interest rates encourage saving and discourage spending [on credit'>... which is not good in difficult times. I have friends on interest-only mortgages and they could see themselves in a pickle (hopefully not!) and if they did, they wouldn't be the only ones. People who bought in the last 5 or so years would have mortgaged up to the max, so the current financial climate with job losses et all and now the interest rate hike could well see repossessions... and fewer purchases. ... but prices coming down would be no bad thing at all for first time buyers coming back from a decent job abroad... Just wanted to say that I have NEVER in over the last 10 years felt encouraged to save cash, given the meagre interest rates in savings accounts (even tax free ISA ones) and inflation. Simply no incentive to do so. Nonsense, until two years ago it was possible to get a very good return on savings..........i was averaging 7% with a variety of fixed term deposits. Now..........2% is about the best.
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EW EXPERT
Latest post on 11 April 2011 - 21:06
Interest rates are always tricky, because higher interest rates encourage saving and discourage spending [on credit'>... which is not good in difficult times. I have friends on interest-only mortgages and they could see themselves in a pickle (hopefully not!) and if they did, they wouldn't be the only ones. People who bought in the last 5 or so years would have mortgaged up to the max, so the current financial climate with job losses et all and now the interest rate hike could well see repossessions... and fewer purchases. ... but prices coming down would be no bad thing at all for first time buyers coming back from a decent job abroad... Just wanted to say that I have NEVER in over the last 10 years felt encouraged to save cash, given the meagre interest rates in savings accounts (even tax free ISA ones) and inflation. Simply no incentive to do so.
1861
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EW EXPERT
Latest post on 11 April 2011 - 21:02
Interest rates are always tricky, because higher interest rates encourage saving and discourage spending [on credit'>... which is not good in difficult times. I have friends on interest-only mortgages and they could see themselves in a pickle (hopefully not!) and if they did, they wouldn't be the only ones. People who bought in the last 5 or so years would have mortgaged up to the max, so the current financial climate with job losses et all and now the interest rate hike could well see repossessions... and fewer purchases. ... but prices coming down would be no bad thing at all for first time buyers coming back from a decent job abroad...
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EW OLDHAND
Latest post on 11 April 2011 - 20:56
Moustique..........the real pain is having paid 10 or II% all my working life on a mortgage and/or business loan......at one point 13%............but now, when I should be looking at living off the interest on the money I broke my back to amass......suddenly it's worth less than nothing. Now, that is PAIN.
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EW NEWBIE
Latest post on 11 April 2011 - 20:49
But interest rates didn't rise last month in UK. I know ... but i needed to share the pain ;)
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EW EXPERT
Latest post on 11 April 2011 - 20:49
Again not an economist, but so many angles to this depending on whether you are a saver, in debt, have mortgage, particular financial products etc.. Unless you have a fixed rate mortgage, generally the monthly mortgage payment would go up. In theory it should be good for savers, but banks are not known to pass on the interest rate benefits fully to savers.
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EW OLDHAND
Latest post on 11 April 2011 - 20:49
It should mean that house prices fall, because as someone below mentioned, the cost of maintaining a mortgage goes up. People can afford less and either don't buy or bid lower. Some people can't afford the house that they have, so they sell. More supply, less demand means prices fall.
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EW OLDHAND
Latest post on 11 April 2011 - 20:44
But interest rates didn't rise last month in UK.
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EW NEWBIE
Latest post on 11 April 2011 - 20:26
Not an economist, but for us it meant an increase in our mortgage repayment, as of last month!!!!!:(
Anonymous (not verified)
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EW NEWBIE
Latest post on 11 April 2011 - 20:08
Does anyone know what generally happens if the interest rates rise?
 
 

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