Negative interest rates
Discussion
gangzoom said:
but I don't want to pay 1.67% interest if 0% is coming!!
I don't think 0% could possibly work for lending, because it would mean money was free. You could simply go out and buy a 12-bed house in the country, a fleet of luxury cars and a yacht, and never have to pay anything back. Furthermore there wouldn't be enough 12-bed country houses, luxury cars or yachts for everyone. We call this reptile logic 'Simponomics'... It's often wrong, but often a good starting point!
Simpo Two said:
I don't think 0% could possibly work for lending, because it would mean money was free. You could simply go out and buy a 12-bed house in the country, a fleet of luxury cars and a yacht, and never have to pay anything back. Furthermore there wouldn't be enough 12-bed country houses, luxury cars or yachts for everyone.
We call this reptile logic 'Simponomics'... It's often wrong, but often a good starting point!
Presumably you would still need to pay back the capital at the rate set out by the length of the loan? And therefore will be subject to the normal income multipliers.We call this reptile logic 'Simponomics'... It's often wrong, but often a good starting point!
A few banks have offered 0% mortgage rates in Scandinavia. Nothing changes a part from the repayments being slightly lower, and only slightly because its not like we have high interest rates at the moment.
For our needs, around £150k loan amount, paid back over 15 years, at 1.67% its only £200/month interest though over all still £35k over 15 years.
Am going to make an mortgage appointment booking before xmas to get the formal application going.
If rates drop in the new year I'll just start a new application. Overall still cheap money really at the moment- presuming you pay it all back on time.
A 1% drop in rated would reduce interest paid per month to a comical £90/month, not life changing difference but rate drops will obviously impact of debt costs. However at these interest levels the main cost of the debt is paying back the capital not servicing interest. So if we couldn't afford to pay back an additional £833/month for 15 years on the mortgage interest rates could be 0% but the debt would still be 'unaffordable'.
Am going to make an mortgage appointment booking before xmas to get the formal application going.
If rates drop in the new year I'll just start a new application. Overall still cheap money really at the moment- presuming you pay it all back on time.
A 1% drop in rated would reduce interest paid per month to a comical £90/month, not life changing difference but rate drops will obviously impact of debt costs. However at these interest levels the main cost of the debt is paying back the capital not servicing interest. So if we couldn't afford to pay back an additional £833/month for 15 years on the mortgage interest rates could be 0% but the debt would still be 'unaffordable'.
Edited by gangzoom on Sunday 29th November 07:22
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