# mortgage rates - how low will they go?



## m4rkymark (Aug 17, 2014)

so as the hole deepens and gets bigger mortgage rates keep coming down... most banks/BS are now offering rates in the 1.xx% range with HSBC offering 1.19% fixed for more than 2yrs. deflation is now on the cards - good for people who want to borrow money but is it a good state for the economy to be in?


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## S63 (Jan 5, 2007)

a tory analyst would say all is good, Labour the opposite. Always going to be winners and losers, as a saver with a paid off mortgage I fall into the latter category sadly. I've paid up to 15% on a mortgage, couldn't be better now for those starting on the ladder but that just isn't the case with frozen wages and rising house prices.


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## phillipnoke (Apr 1, 2011)

I paid 13.5% and people say that they can't afford a mortgage at the rates konw they are for nothing


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## GleemSpray (Jan 26, 2014)

m4rkymark said:


> so as the hole deepens and gets bigger mortgage rates keep coming down... most banks/BS are now offering rates in the 1.xx% range with HSBC offering 1.19% fixed for more than 2yrs. deflation is now on the cards - good for people who want to borrow money but is it a good state for the economy to be in?


No its not a good state for the economy. You have to balance borrowing against lending, so interest rates should really be in the range of 5 - 10% to make the world tick smoothly.

Less than 5% and money is too cheap to borrow, so investors don't make any money and borrowers take out unnecessarily big loans, which fuels house prices, credit and store card use and personal loans for new cars they don't really need. Which mean people end up in more debt.

When Interest rates are at more than 10%, people cant afford to borrow, so house prices fall and the economy slumps because people stop using their credit cards and store cards and hold off taking out a loan for that new car this year.

I took out a mortgage at the peak of the 92 bubble and it was (briefly, phew) at 15.4% variable, but quite quickly dropped to "only" 13% then gradually came down further.


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## kh904 (Dec 18, 2006)

m4rkymark said:


> so as the hole deepens and gets bigger mortgage rates keep coming down... most banks/BS are now offering rates in the 1.xx% range with HSBC offering 1.19% fixed for more than 2yrs. deflation is now on the cards - good for people who want to borrow money but is it a good state for the economy to be in?


Deflation is bad for people wanting to borrow money, and inflation is good for those wanting to borrow money (bad for those lending money as they get paid back with currency with less value).

Gleemspray is totally spot on with his analysis. 
The world has been addicted to cheap currency and many people will struggle when rates do rise (even if it's slightly).


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## shycho (Sep 7, 2010)

I think Gleemspray has it spot on, but can't see interest rates moving any time soon as a lot of people seem to be just about surviving despite the low rates, and nobody wants to be the bad guy who cripples 100,000s of households by raising the rates back up.



phillipnoke said:


> I paid 13.5% and people say that they can't afford a mortgage at the rates konw they are for nothing


Paying back £10,000 with 13.5% interest is a lot easier than paying back £30,000 with 1.1% interest. Hence the reason I do not own a castle despite the low interest rates.


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## goRt (Aug 26, 2013)

Exactly right 


shycho said:


> I think Gleemspray has it spot on, but can't see interest rates moving any time soon as a lot of people seem to be just about surviving despite the low rates, and nobody wants to be the bad guy who cripples 100,000s of households by raising the rates back up.
> 
> Paying back £10,000 with 13.5% interest is a lot easier than paying back £30,000 with 1.1% interest. Hence the reason I do not own a castle despite the low interest rates.





m4rkymark said:


> so as the hole deepens and gets bigger mortgage rates keep coming down... most banks/BS are now offering rates in the 1.xx% range with HSBC offering 1.19% fixed for more than 2yrs. deflation is now on the cards - good for people who want to borrow money but is it a good state for the economy to be in?


Wrong way round, deflation means things get cheaper - why buy today if it will cost less tomorrow, all of a sudden no one buys anything waiting for tomorrow - just look at Japan for the past 20 years and the tricks bring tried now to get people spending!


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## robertdon777 (Nov 3, 2005)

All this talk of 13% etc etc. It was only at that rate for a reason, house prices were doubling every 4-5 years and they were still underpriced and still a low percentage of the household income.

My parents generation 60-70's now had the best of it for housing bubbles. Many of that generation purchased family houses on one wage. This will never be seen again for the working classes.

The rates won't drop any lower IMO, but if they do it won't have much effect on say a 100,000k mortgage as the rates already low.

But as mentioned above 100,000K buys you nothing. 20 years ago 100,000K bought a decent house and wages haven't increased as an average that much over the last 20 years. I don't see them increasing much on the next 10 either if so much cheap labour is available across all business sectors.


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## m4rkymark (Aug 17, 2014)

robertdon777 said:


> All this talk of 13% etc etc. It was only at that rate for a reason, house prices were doubling every 4-5 years and they were still underpriced and still a low percentage of the household income.
> 
> My parents generation 60-70's now had the best of it for housing bubbles. Many of that generation purchased family houses on one wage. This will never be seen again for the working classes.
> 
> ...


Yep I would agree with you, I worked in finance in the 90s when interest rates were very high and tbh there was no shortage of people taking out financial products like mortgages - council housing stock being sold off at massive discounts helped to fan that fire. 100k will still buy a decent house in a lot of different places - as long as you don't want to live in the south it still goes a long way.

I don't think low interest rates are particularly bad but everyone is addicted to them, it's not just the man in the street - it's businesses and govts. all around the world. I do think it's bad for the normal man in the street who has money in savings but tbh the govt. or the finance industry don't care about them/us because they have their eyes on bigger things.


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## ChuckH (Nov 23, 2006)

Anyone who had a mortgage that started when rates were say 6 % and have kept their payments up so in effect are way in front are the sensible ones. Those that have just paid the minimum they have to are in for a big shock IF rates ever rise. 

I like many struggled to pay the huge rates of not that many years ago. It really was a struggle but we somehow did it. Now wait and see what happens of rates were to rise by say 5 %. 

Low rates are a bonus and should be treated as such. But expect rates to rise and factor this in and many should be ok... Bet not that many think that way .


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## Andyg_TSi (Sep 6, 2013)

I currently on my lenders standard variable rate, which is 2.5%.

I've been looking at deals available & while, yes I can get a 2 year deal with fixed rates at 1.XX%, the standard variable rates if these deals once the 2 years are up are in the region of 3.89% - 4.49%.

So while the initial rate is attractive, the SVR is higher.

Id rather stick on 2.5% and pay a lump sum off the capital borrowed.

If you have savings then pay your mortgage down. by current rule of thumb, you pay £5 per month for each £1K you owe on your mortgage.
So if you had 'say' £10k paying that off your mortgage would save you 10 x 5 (£50) per month.

Savings rates are sh1te so if you can, pay down debt (mortgage) instead of remortgaging.


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## pxr5 (Feb 13, 2012)

I was overpaying my mortgage when I was on a fixed at 6.29%. Only a little bit, but it all helps right? Anyway when the rates came down a lot when the fixed ended I just kept paying what I had before and still am. Not sure what I'll save over the mortgage term, but quite a bit I'm sure.


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