Chortlepuss Posted February 4, 2016 Share Posted February 4, 2016 I know that interest rates are currently being suppressed by the Govt partly in order to prevent all hell breaking out with potential mortgage repossessions BUT are there any circumstances that would mean interest rates have to rise irrespective of Govt fiddling? I remember when interest rates were 14% and many people lost their homes (late 1980's/early 90's) - what is different now to then and why is it suggested that this level of interest 'could never happen again?' Quote Link to comment Share on other sites More sharing options...
flag of convenience Posted February 4, 2016 Share Posted February 4, 2016 Of course it can happen again. In fact we are in a far worse situation today than back then in many ways due to different factors. The situation back then was due largely to the control of inflation which is not the case today. Back then house prices were more affordable relating to income, but high interest rates did hurt severely. Today owing to the GFC and banksters bad behaviour we have a credit led boom that has resulted in a massive rise in housing prices within several countries. This may be 'affordable' while credit is dirt cheap but the slightest of rises will impact severely on mortgagees. Rates always go up depending on the cycle. This has resulted in the banking industry's room to manoeuvre being extremely limited. Further cuts being likely to add to housing inflationary pressures and a rise a danger of collapsing the pack of cards. Of course ever more Generation Y's will find themselves unable to get into the market and as numbers grow the onus could easily tilt the other way. Quote Link to comment Share on other sites More sharing options...
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