Interest rates on the up

[Gunk]

Too many people are mortgaged to the hilt with credit card debt and cars on finance.
Even rates at 3.5% would put many young families in a financial spin.
The last few governments have allowed us to get addicted to cheap credit.
A short sharp shock now could be catastrophic for lots of people who may appear outwardly well off but are in fact living life on credit.

The average unsecured debt per household in the UK is around £14,500. You’re right, if interest rates go up there are a lot of families with no contingency plan. There are also people out there with large interest only mortgages and no pension provision.

they’re living the dream though!

 

[DCLane]

That's why last Christmas, rather than buy presents, we paid off the mortgage. Yes it's boring but we've no unsecured or secured debt.

 

[dodgy]

Is it the beginning of the end of leasing that Range Rover Sport to impress your neighbours. Surely families will prioritise the mortgage over trinkets.

 

[Gunk]

Is it the beginning of the end of leasing that Range Rover Sport to impress your neighbours. Surely families will prioritise the mortgage over trinkets.

no that’ll never end, a bit like back in the 70’s your neighbour had a Cortina GXL and your Dad had a humble L or even worse a Hillman Hunter

 

[DCLane]

+1 to the above. I've a neighbour who's cashed in pensions so he can have the best car on the street

Meanwhile I'm in my battered Pug Tepee with a house paid off, pension pots building and a longer-term plan.

His view is that you never know what'll happen, so he might as well spend it now.

 

[SpokeyDokey]

That's why last Christmas, rather than buy presents, we paid off the mortgage. Yes it's boring but we've no unsecured or secured debt.

Likewise.

That was our first base almost 20 years ago now when we were extracting ourselves from the grind if the rat race that was corporate life ie kill all debt.

Sadly not many people who have decent incomes can do this - they just spend away amassing more and more debt seemingly oblivious to potential structural financial changes outside their control. As well as possible income security issues, health issues and all the other problems life can throw at you that may impact on your ability to repay debt.

 

[gzoom]

Mortgage interest rates now BELOW 1% for 2 year deals, and 1.04% for 5 year fixed......Astonishing, its free money if you need it!!!

Our fixed deal can be renewed from November lets hope rates stay low for a few more months .

 

[RoadRider400]

Too many people are mortgaged to the hilt with credit card debt and cars on finance.
Even rates at 3.5% would put many young families in a financial spin.
The last few governments have allowed us to get addicted to cheap credit.
A short sharp shock now could be catastrophic for lots of people who may appear outwardly well off but are in fact living life on credit.

Whilst you are correct about how many people are using finance the only way to break that lifestyle is to increase interest rates. Catastrophic or not it will need to happen sooner or later. The sooner this is started the more gradual the increases can be and the fewer people are badly impacted. Keeping rates this low is shifting the problem further down the road and making the eventual catastrophe for big borrowers even larger.

I do not blame the government however. I blame social media and weak minded people.

 

[gbb]

I remember mortgage rates at 15% !

My former colleague brought his house (maybe in the 90s) when interest rates were somewhere near this. I didnt realise the consequences, having a small mortgage meant proportionaloy small increases. As the rates fell quite a lot i remember asking him...'you must be saving a fair whack now ?'
...'its saving me around £1k a month , thank Christ'
Edited to add, my mortgage at that time was a lowly £18k, he brought a new build, detached, on a then sought after development...IRO £300k, very expensive back then.