Quote:
Originally Posted by Chris
Luck schmuck …. The writing was already on the wall at the beginning of last year for those willing to see it. Perhaps being old enough to remember high rates in the late 80s/early 90s gave me more perspective than those a few years younger but even so, it was pretty clear to me that the modest additional monthly cost of fixing for 5 years would be more than offset by not having to deal with rates as they will be this time next year.
What’s surprised me is that it has taken the bank so long to get rates back to what in the long term is only what ought to be seen as ‘near-normal’. It has undoubtedly contributed to the present state of affairs and moreover, it has further entrenched the idea that mortgage rates around 2% are something you should plan for when borrowing money over 25 years or more.
When I got my first mortgage almost 25 years ago the BoE base rate was 5.5% and less than a year later it had risen to 6%.
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I’m not sure the Government setting an inflation target and the bank working towards it counts as the bank entrenching an idea as much as Government doing so.
The low rates are what’s kept the Ponzi scheme afloat for the last 15 years, giving homeowners a nice boost in house prices too.
Of course anyone who genuinely saw the writing on the wall would have mortgaged themselves up to their eyeballs last year and slotted away what used to be their equity in nice 5%+ savings accounts now for the remainder of the term while being charged 2.something by the mortgage provider. I suspect those people are few and far between.