Ohh, that’s nice. We have a dad joke opener to our morning meetings and I’m going to lead with that.
Printable View
Ohh, that’s nice. We have a dad joke opener to our morning meetings and I’m going to lead with that.
In the UK, our fixed rate mortgages will be for the full term, usually 25 years, but will have a shorter "fixed period" in which the rate is fixed and there are penalties for paying early, usually 3 to 5 years. after that they typically fall back to a variable rate. What most people do is "renew" at the end of the fixed period - basically get a new fixed period at a new rate. So if you're in a fixed period when the interest rates jump you're OK... until the end of your fixed period when you can suddenly find yourself in dire straits, particularly if house prices have dropped in which case you can find yourself in negative equity, saddled with a house you can't sell and a mortgage you can't afford.Quote:
Not sure what you mean by "renew" a mortgage
I'm looking at being pretty badly screwed because I have two fixed rate buy to let mortgages that are due for renewal in Feb 2024 which is likely to be about when interest rates peak (though hopefully not now Rishi and Hunt are in charge - I'm not a big fan but at least they're far more responsible than Truss and Kwarteng). Thankfully I've been pretty responsible. My equity level in each is well above 50% and even an interest rate of 6 or 7% won't take the mortgage payments higher than the rental incomes. I won't take a loss as such but I will see a significant cut in profits, probably about 7 or 8 hundred a month. Thanks Liz:rolleyes:
On the interest/inflation thing I can think you can look at it either way. DD is right that raising interest rates curbs inflation so you would argue there's an inverse corelation. Personally I look at it the other way, high inflation causes central banks to raise interest rates, leading to a direct corelation. I would argue that looking at historical data indicates that a direct corelation is a more accurate way of looking at it:-
Attachment 186053
I think that's because interest rates are within our control while inflation typically isn't. So inflation tends to be the driver which interest rates respond to.
But DD is also right in that interest rates aren't the only way of affecting inflation, you can raise tax rates or reduce quantitative easing. So a government does have the option to go for high tax rates and low easing to keep inflation down while having high interest rates. This would make bubbles less likely to form as people would be disincentivised to borrow to invest. It's a low interest approach that caused the great crash in the 20s and I think you could argue it's led to a bubble in the UK housing market today.
That Post...
...was way too long...
...for post race
Quote:
The wasters who bet against prudence and diligence are whining about their casino mortgages from their gaming chairs now? While avarice was king in lending why didn't they obtain fixed rate mortgages?
In the UK our Fixed rates last for 2 or 5 years, that how long you can fix for, thats the system. My Fixed rate ended so I had to remortgage where you obtain a new fixed rate otherwise you automatically go to a higher variable rate.Quote:
Not sure what you mean by "renew" a mortgage.
Maybe you could have looked that up before spouting nonsense about casino mortgages!!
I like the casino.
I go sit at the digital blackjack game at the bar.
They serve me free alcohol while I play and $20 can last me hours when I bet only $0.10 a hand.
No, for that to happen, you have to have a functional government. That won't be happening in the US. If one party were to try raising taxes, that's ALL the other party would be talking about at the next election, which is never more than two years away.Quote:
Originally Posted by FunkyDexter
From a political perspective, this behavior is entirely correct. Politics is a zero sum game. You only win with somebody else losing, so anything that gives you advantage is worth doing. From a good governance perspective, however, that means that rational behavior will only happen when one party has been utterly flattened, which happens only during major war or depression in the US.
In the US, we typically have fixed rate mortgages of 10, 15, or 30 years. Alternatively, we have what is called an ARM, which is generally fixed for some number of years, then floats. It sounds like the UK has something like the ARM, but nothing like our 30 year fixed rate mortgages.
What if a political party gets majorly depressed about a war? What happens then :confused:
Bankers in the UK have it a bit better. A borrower with a 30 year fixed rate can calculate whether or not to refinance as interest rates drop, but the banks have no means to real means to force them into refinancing at a higher rate as interest rates rise. The banks kept trying to get my parents to get a second mortgage, or refinance, throughout the 80s, because they had a 6.25% interest rate. Now, there are people with 30 year mortgages paying less than 3%, and likely loving it. Not much incentive to pay off a mortgage early when you get more in interest on a bond fund than you are paying on your mortgage.
Historically, that means we get the Gettysburg Address.Quote:
Originally Posted by dday9
Lincoln was not the main speaker at that event, and pretty much mailed it in. He scribbled down some notes and kept it brief. Less is often more.
This has been a bit serious for the Post Race.
It's almost as if we had something to say.
Almost....
Don't read this post.
Nonsense? How is it my fault if you live in the casino? It doesn't change the facts.Quote:
Originally Posted by NeedSomeAnswers
I'm not sure how a system made up exclusively of ARMs could have arisen. Was there never competition from local banks, savings and loans, or credit unions? No wonder films like "It's a Wonderful Life" are such a mystery to you. I suppose that's also why so many rent in Potter's Slums.
Seriously, you have my sympathies. Is the interest paid on fixed term bank deposits (CDs here) always variable as well?