Imagine this, you go to remortgage your property or you are on a tracker deal and your financial advisor turns round to you and says “ok the best rate I can get you is 12%” pardon? 12% ouch!
Yes that’s right 12% interest rates are looming large in the next couple of years, well that’s according to one think tank who decided to give us that jolly news at a time when the economy and particularly the housing market is as fragile as a snowman in the sun.
Maybe they are trying to scare the living daylights out of just about every householder in the land, for example if you are on a reasonable 4% rate at present on a £200,000 mortgage then you’ll pay £666 per month interest, if rates go to 12% then you’ll pay £2,000 per month just in interest. Scared yet? You’re not alone.
Sometimes you wonder why we bother trying to save the pennies and secure our savings when people are allowed to write such ridiculous dribble at a time when we really could all do with a boost, the housing market is on its knees and stories like this do nothing but make things worse.
Now I’m not saying for one minute that interest rate will never be 12%, in fact they have been as high as this before but to come out and mention this possibility at a time when the rates are 0.5% is absurd. It’s like saying “you’re all gonna die!” yeah sure we understand that but we don’t really want to be reminded of it right now or even think that it will ever happen, we don’t plan our days around that theory as if we did then the whole world would crumble.
The scaremongers out there are unfortunately unstoppable, but we all to be realistic, yes rates will rise for the sole reason that they cannot fall any further! So it’s worth considering that you may have to pay out a few quid more each month next year or the year after but the economy would not function on rates as high as 12% it would be meltdown.
The question I ask is what happened to the banks rate and the bank of England rate? When did they get divorced? They used to be tied together but now the greedy banks have decided that they can earn more money from the loyal customers by ramping up their rates whilst borrowing at the lovely rate of 0.5%. When was your last loan you borrowed at 0.5%? exactly.
It’s complete rubbish that the banks say the credit market is tight, they are making it tight and it’s easy to see this just look at their profits again this year, it amazes me that they tell us how hard things are for them, oh really so how hard is it to borrow money at 0.5% and lend it out at 5%, how DO they get away with it?
The banks hold all of our futures in their hands, so long as they can do what the hell they like with rates we all have to get on with it, let’s just hope that a new player enters the UK mortgage market soon with a fair approach and I’m not talking about those with 20% or more deposits, I’m talking about the mid market and first time buyers who get stung on rates for no fault of their own but from banks making sure they milk everything they can out of the banking crisis which by the way banks, is now history and you’re not struggling anymore!