@oddexperience Hard to say without a bit more detail budget wise, but if expenses can't go down, can wages go up?
Bear in mind current interests are far from high, we just got used to them being ridiculously low. It might be best to start planning for the possibility of them actually getting ridiculous, if inflation doesn't come down.
@sephkilla But you're saying that assuming the interest rates 30-40 years ago were normal? You have 0 evidence to prove the last rates were normal and the "low" rates were indeed low. Perhaps historic rates were high and the recent rates were normal?
Ultimately interest rates aren't high or low, the cost of borrowing is high or low. A 15% rate on a mortgage twice your salary is an amazing deal compared to a rate at 6% when your mortgage is 5-7x your salary
@yearning4yeshua Here’s the last 40 years of interest rates. It’s fair to say the current rates are the average rates over that time period so what josemartins says is correct.
@yearning4yeshua Last time we had this level of interest rates was 2008, 15 years ago. It ranged between 5% and 15% from the 1970s to that point. This is all public data, there's not "zero evidence".
Ultimately interest rates aren't high or low, the cost of borrowing is high or low. A 15% rate on a mortgage twice your salary is an amazing deal compared to a rate at 6% when your mortgage is 5-7x your salary
That is either not the same amount borrowed or the salary is substantially different in those two scenarios. Those are not comparable, not sure what the point you are trying to make here is as the OP is not magically able to change their mortgage to only twice their current salary.
There is historical precedent for rates being much higher than they are now.
@sephkilla What I'm stressing perhaps poorly, is the data isn't homogeneous. The borrowing landscape has completely changed and boomers have failed to accept that.
If you believe a 15% interest rate is normal, then we'll surely return to that rate yes?
No ofc we won't as it'd completely collapse the entire country. The world has changed and so "normal" interest rates will change too. Perhaps they'll settle somewhere around 4% for a number of years I don't know, but you'd be incredibly ignorant to think they will stay above 5%
@yearning4yeshua We're getting to the same point via opposite directions. I agree the borrowing landscape has changed completely. Wages have stagnated, home values have exploded, etc. The odds of me being able to buy a home in my lifetime in this situation are substantially lower than the previous generation.
That's all the more reason why a return to historical averages (note that's not 15%, I said 5% was a historically normal interest rate) is that much more pressure now, and a slightly above historically normal as one would expect in a high inflationary period should not be waved away as some "ridiculously high" interest rate that's outside of the realm of possibility. That just leaves people even less prepared. You'd be incredibly ignorant in turn to assume that it's impossible for central banks would not maintain a 5% interest rate for a period of time when they did so for decades.
@oddexperience It wouldn't bother me one iota to rent a room off you.
I work shift and I've had 2 children myself, obvs for a discount but beggars and all that.
Bought my first flat with an interest rate of 15%. I know the similarities differ with % and era, but we managed
Good luck.
@oddexperience Economise. You have a cash flow problem. Reduce your spending to the absolute minimum and keep the money you have saved easily accessible in case the rate goes up further. If you can keep going eventually your earning should increase and the rate may come down. That is in the medium to long term. Your problem is here and now making the monthly payment. Consider selling assets to raise cash if things get really desparate. SOURCE Avoided bankruptcy during the crash.
@oddexperience If you have room in your house, rent it out. I know it’s a big sacrifice and a no go for a lot of people. But desperation calls for desperate means. With the rental market being as they are right now, you’ll have no problem finding someone.
