Housing

With the Bank of England looking set to raise interest rates today (Up 0.25% to 5%) it seems many borrowers are likely to face an unpleasant rise in their mortgage repayments. With insolvencies up, it's clear that many borrowers have extended themselves to the limit financially and even small rises in the interest rate are going to have a negative effect.

Ally that trend of present over-extension to the ridiculous multiplications of salary banks are willing to lend now (The Abbey are willing to lend up to five times your salary in some casess), the changing nature of mortgage repayments (One paper today leads with news of 57-year mortgages) and the strong resurgance of the Buy-To-Let market on the back of massive immigration, and it doesn't look particuarly healthy for those on or below average income to get their foot on the housing ladder.

Whether or not it's a good idea to get your foot on that ladder at all costs in the first place is another matter. People possibly expect too much now - a house in their early twenties, fully furnished with all the mod cons and still enough disposable cash to spunk up the walls on fashion, holidays and leisure pursuits- whereas in the very recent past, expectations were probably more realistic, ie you can't have both.

thedacs are priced out of the housing market entirely at the minute and for the foreseeable future. Since we're in a Housing Association property though it isn't really such a big issue (Rent is low and any repairs to the property are taken care of by the association) until the family grows and the property becomes too small. Then we may have to bite the bullet and purchase through a shared-ownership scheme.

But truth be told, i'm not entirely positive about buying. a) For the reason of over-extension financially, b) I don't believe the properties are worth the vast amounts being asked at present, c) the properties around here are badly built and d) I can't see the present trend continuing, it has to collapse under its own grossly inflated weight someday soon.

Anyway, if interest rates go up, what little money we have saved will at least grow a tiny bit more.