The latest round of Tory-induced extractive economic policy moves have led the markets to believe that the U.K. is now a real basket-case of an economy.
And let's face it - that's what neoliberal politics does at the national level - it deregulates to make it easier for capital to extract - and finally after 40 years of this bullshit the markets have said 'there's nothing left to extract from the UK'....
Tax cuts for the rich and billion pound hand-outs to global corporations while offering very little for the ordinary working people have led to a plummeting pound and the poor old Band of England is left with only one strategy when faced with such inflation - to raise interest rates quickly and steeply.. so much so that 300 mortgage deals were pulled off the market YESTERDAY, that's around 1/10th of mortgage products!
After years of VERY low interest rates, they are set to treble into 2023, which could result in some people paying 70% more on their mortgages compared to what they are paying now.
And it is likely to be mortgages where people feel this interest rate rise the most...
According to this article a rise in the mortgage interest rate to 6% could mean the average monthly mortgage payment will increase from £863 to £1490.
(Although I'm sceptical about where they got those figures from, I think they are worked out on a VERY long term repayment which won't be the case for many mortgage holders)
This will mean problems for middle-aged middle England...
People in their 40s and 50s with £100K plus mortgages on 3-4 bed houses in the South of the UK are likely to feel this raise in interest rates the most, I mean if rates do treble then....
- 2% on £100K over 20 years = £500 a month
- 6% on £100K over 20 years = £700 a month
So a realistic change = £200 a month more for someone with a £100K mortgage over 20 years, on top of all the other recent increases in the cost of living.
That's another significant squeeze on the soon to be not so comfortably well-off.
My own situation is OK....
I've only got £44K left on my mortgage, and only 6 years left to pay it off, and I've got the capacity to overpay around £10K of that over the next two years, so by the end of 2023 when I come off my fixed rate deal I should have around £25K left to pay when I remortgage, so I should only be looking at a £30 a month increase in my monthly repayments with an interest rate of 6%, even a move up to 10% would be quite easy for me to suck-up.
This is PRECISELY why I kept my mortgage relatively small by buying a cheap house 5 years ago.
Probably not the time to buy....
I'm also thinking that 2022-23 probably ISN'T the time to buy a house in the UK... what with interest rates going up what should happen is that a good chunk of people get frozen out of the market, unable to buy.
Moreover for me, it's going to be a good time to stack money for a couple of years and maybe sell my small house and buy a more expensive one in the South East in maybe as late as 2025 and just keep renting in the meantime.
It might EVEN be worth looking at some basic savings vessels such as ISAs early next year...
But for now I think paying down my existing debt and just waiting is a good move for me.
I'm just glad I'm not mortgaged to the hilt right now!
Posted Using LeoFinance Beta
Posted Using LeoFinance Beta
Posted Using LeoFinance Beta
