Comments by "Guinness" (@GuinessOriginal) on "The i Paper"
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It’s even worse than she suggested. She only looked at the demand side of it, and didn’t consider the effects Government bonds are having on interest rates and supply. Mortgages are already at 6-7%. As the BoE sells off all the bonds it bought to prop up the pound and pensions, it will push up interest rates to probably 9 or 10%. This means everyone on a 2-3 year fixed mortgage paying, say, £700 a month, are going to renew their mortgage and find that they have to pay £1500 a month. Energy bills are going to rose massively in 6 months too, so basically people are going to have to find an extra grand a month. Most people haven’t got anywhere near that, so when they renew their mortgages the back is going to just repossess them. This means all these houses will go on the market at the same time, and people will be desperate to sell, so the price they are willing to sell at will come down. This is going to leave a lot of people in negative equity. It was bad in the 80s when interest rates hit 17.5 %, but people were no where near as heavily mortgages as they were back then, and inflation is already higher than the 80s and rising rapidly, which probably means interest rates are going to keep rising too.
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