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Thu May 2, 2013, 06:32 AM

Deja vu ?

Guardian published this back in March :

Bank of Ireland doubles and triples tracker mortgage payments

http://www.guardian.co.uk/money/2013/mar/02/bank-of-ireland-mortgage-rates-double-triple

Now today for some obscure reason the subject has come to the fore again :

Is this a warning of things to come? Bank of Ireland doubles tracker rate mortgages overnight affecting 13,500 UK customers

Read more: http://www.dailymail.co.uk/news/article-2317872/Bank-Ireland-doubles-tracker-rate-mortgages-overnight-affecting-13-500-UK-customers.html#ixzz2S7wTCoO5

Lender raises 'tracker' mortgage rates for 13,500 customers.

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/10029752/Lender-raises-tracker-mortgage-rates-for-13500-customers.html

I recall years ago a financial expert politely pointing out that what would screw those who had spoofed mortgage applications by overstating income would be an upward change in interest rate.

As far as the buy to rent mob are concerned who look to be subject to a more substantial change - tough. I regard them as parasites anyway.

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Arrow 5 replies Author Time Post
Reply Deja vu ? (Original post)
dipsydoodle May 2013 OP
muriel_volestrangler May 2013 #1
mwooldri May 2013 #2
dipsydoodle May 2013 #3
mwooldri May 2013 #4
dipsydoodle May 2013 #5

Response to dipsydoodle (Original post)

Thu May 2, 2013, 07:19 AM

1. I think it's come up now because this is the first month they've actually gone up

The Guardian said, in March, "that this will jump to 2.99% in May, and then leap again to 4.49% in October". And the 13,500 affected is the same in all reports.

I guess it will all depend on the wording of the mortgage agreement. It's hard for anyone who's struggling because they're out of work, or in a lower-paid job than when they took the mortgage out. Those who afforded the earlier higher payments, like the couple in the Guardian article who bought in 2004, and still seem to have 2 jobs, you'd think can afford it. They'll just have to argue about whether the loan was worded in a way that allows this.

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Response to dipsydoodle (Original post)

Thu May 2, 2013, 07:20 AM

2. It's worse than that when...

... you cannot control the currency. I see deja vu again here, namely thinking of Black Wednesday of 1992 when interest rates rose sharply in a bid to keep sterling within the band set by the European Exchange Rate Mechanism, or ERM. The UK government left the ERM when they finally fathomed out that they couldn't throw enough money at keeping the pound from going below 2.778 DM . George Soros got wealthy this way - making $1 billion on short trading the pound. As a result, the UK entered a depression... and this financial mess hit us close to home - namely losing it because mortgage rates escalated beyond control and having entered into a balloon mortgage about a couple of years before this mess. My father is still paying down a mortgage on a home we left in 1993 - the mortgage ballooned too much and when the house was sold it simply wasn't enough to cover it - house prices dropped too.

As such, Ireland can't just drop out of the Euro to fix the interest rate problem. I'm glad I got our mortgage here on a fixed rate... I would never have it any other way.

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Response to mwooldri (Reply #2)

Thu May 2, 2013, 08:13 AM

3. Fixed rate leaves no doubt

so I don't blame you. Back in the eighties I had a variable rate interest only 70k mortgage which at least was shored up by a large pension fund which I subsequently dumped anyway - a 70k mortgage seemed huge at the time. Financial and family circumstances forced me to bail of that of necessity early nineties and downsize into my Victorian cottage but still with a 30k interest only having paid off a 55k overdraft too At least with that amount interest rate increases seemed less significant. I gave the building society 10k a few years later and put the remaining 20k onto repayment which I paid off 2001.

Where you referred to your father was that here in the UK ? The house price drops then had been caused by price inflation due to over demand prior to the end of multiple mortgage relief followed by an in increase in mortgage interest rates. There are few winners when house prices escalate only to be followed by collapsing prices when demand drops.

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Response to dipsydoodle (Reply #3)

Fri May 3, 2013, 08:02 AM

4. Yup, that was back in the UK.

Rate increases, especially on a balloon mortgage, were quite painful. Change in employment in the middle of this didn't help much either. The early 1990s was tough financially on a lot of people

I left home (near Guildford, Surrey) in 1999. If I came back, it's highly unlikely I'd be able to go back to my childhood village. I blame Ringo Starr for moving in... lol... having even a modest income brings home ownership way out of reach for "working class" people in most of Surrey and West Sussex. Getting a home through a housing association or through the council is almost like winning the lottery. My parents did the right thing when my sister and I "flew the nest" - they got on the waiting list and ended up with a one-bedroom bungalow in the same village. My sis made it a whole lot better than me - her and her hubby purchased their house (admittedly when prices were going way up) and paid about 230,000. Here on the outskirts of Greensboro, NC, we paid $87,000. The major differences are that we're more rural and are on an acre plot than they are. I always believed that you had to be quite rich to be able to have a home on an acre of land in rural Surrey. Now I'm convinced one has to be filthy rich to be able to afford such a home and acreage.

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Response to mwooldri (Reply #4)

Fri May 3, 2013, 08:11 AM

5. One of my banjos pals lives in Sparta NC.

We were sitting in my garden here a some years ago eating breakfast and I asked how big his "back garden" was. He smiled and said "you mean "back yard" and its 45 acres". Next time he was over I said "how's the 45 acres" ? He said its 90 acres now.

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