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Homeowners shocked by massive interest rate increase
12 Nov 2003 by Flash Gorman
The Bank of England's interest rate rise of 0.25 percent has this week sent shockwaves through households the length and breadth of the UK. The shock was greatest amongst those who have bought houses in the past few years and were unfamiliar with the concept of interest rates rising.
DeadBrain spoke to one young homeowner, Gary from Bedford, who voiced a common viewpoint. "I'd done a lot of research into interest rates and concluded that the most likely trend was a continual reduction of interest rates until they reached zero. Indeed I was hoping they might actually drop below zero and I'd start to make a bit of profit from my mortgage. I couldn't believe it when I saw the rates had gone up – I thought my paper must have printed the chart upside down!"
Even those with a slightly more astute grasp of finance were shocked by the sheer size of the rise. The ever-quotable Douglas Ramsbottom gave us his point of view. "At the back of my mind I always thought it was possible that interest rates might go up one day so me and the wife have put a bit extra away but there's no way we can cope with a 0.25 percent increase. We could have handled 0.001 percent say, or even maybe 0.002 percent at a pinch, but this is ridiculous."
It was at this point that we showed Mr Ramsbottom a graph showing interest rates over the past decade, including their peak at fifteen percent. Hospital staff have assured us that Mr Ramsbottom is likely to come out of his shock-induced coma any day now and have promised to return our graph to us just as soon as they can prise in from his whitened fingers.
With Britain's borrowers seemly unprepared for any increase in mortgage rates, is it time to point the finger of blame at the lenders? We spoke to a number of mortgage companies who, whilst refusing to give us actual quotes, pointed out their strict policy on lending – in most cases they refuse to lend more than twenty times a person's salary and will only allow mortgage agreements to be signed by either people with a pen or people who have been lent a pen by someone else.
We did manage to obtain a quote from Barclay's chief executive Matt Barrett who pointed out that while the interest rate rise has made mortgages more expensive, they are still "much cheaper than a Barclaycard". We were hoping to obtain further quotes from Mr Barrett but he had an urgent appointment to go and shoot himself in his one remaining good foot.
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Wow, look at this!
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