Interest rate rise?
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How do you feel about a rise in the interest rate? How much do you think it will contue rising and do you have any facts and predictions on it?
Interest rate rise?The interest rate rise is due to inflation (I am sure we will find out in the next few days that inflation is not looking good, the Bank of England is clearly hoping to control this by the increase in the interest rate).
Buying a home is always a risk - it is a huge responsibility but I think we all forget that it is a RISK and that there are never any guarantees and that our security is all dependent on the interest rate being affordable - and if it continued to rise each month most of us would not be able to afford it after it passed 14%+ unless you have small mortgages and big savings! Basically if interest rates were to rise as they did in the 90's you would see a faster default process than then due to the inflated house prices and hence the huge mortgages that average house buyers have taken on over the last 8 years to purchase just 'ordinary' homes.
I hope we don't see a repeat of the 1990s rates - but the housing market is all about risk and speculation - you have to speculate to accumulate. Economists argue that there is a pattern/cycle and it has been predicted that we will have another crash in housing prices in the next 7 years.
All you can do is weigh up the pros and cons of buying a house i.e. is it cheaper than renting and will the home be nicer than you could afford to rent, secondly work out how many interest rate increases you could afford on the mortgage you intend to take out, and even when you couldn't afford it, are there ways you could earn extra cash - a spare room to have a lodger? Make sure that the price you pay for a property is what you feel to be good value for the area - this is important and the areas facilities: transport, health facilities all add value - so lots of homework.
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