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Hmmm...

Appalling for savers. Even worse for those about to retire. They will find that their pension pot buys them a pathetic pension, so goodbye to the dreams of people retiring soon.

All this will do is end up in another property bubble which will be even worse than before. The only thing that people should do while rates are this low is clear debts, especially mortgage rates because when they do go up and they will if there is another crisis.

If they are about to retire and they are going to buy an annuity claim they are a smoker.. you get better rates (as its expected you will die sooner then go oh bugger better give up!!! ).

As for people who are that close to going under if the rate goes up a few points.. well my heart bleeds for you it really does <heavy sarcasm> as it means you bought beyond your means and well to be totally heartless... tough!!! (I know there will be a few exceptions but Im talking about the majority)
When I went for a mortgage in 2000 (unfortunatly it never went ahead.. I would of made a killing ) , the guy at the bank I was discussing it with, advised to bank on the rates going up a few points and checking if it was still affordable. If it wasnt then it could be too risky to buy. As there would be no leeway in my(and GF at the time) finances to cover the additional cost.
+

I would not suggest lying to get a higher annuity rate. Though walking into the insurance office smoking and cough would mean that you do not have to lie.

I do not have much sympathy for those that over extended themselves, but do not ignore the social pressure to get on the housing ladder. Many regard you as a failure if you are not on the ladder. Plus the rampant property bubble that governments ignored because it was in their interests. Too many people regarded property as a risk free investment and government policies supported that. If the economy had not been given a boost from housing then the feel good factor would be considerably lower. Also it would expose how poorly the economy has done since the 1980's. In the US what would have taken a single income to buy (a home) now requires two full time incomes, just to have the same standard of living as someone in the 70's. I am sure that the same sort of effect would have occurred here.

In the olden days, you made a choice. If you were going to try and buy a house, you'd had to give something - or several somethings - up to afford the mortgage until you got a better job, or whatever. You'd beg and borrow furniture, you'd do without holidays and luxuries like TVs, and make the car last a few more years - if you even had the luxury of a motor car.

People don't want to give stuff up to live within their means nowadays. They want the house, to furnish it, fill it full of gadgets, have a posh car and lavish holidays, and spoil their kids rotten.

All done on the never-never. Buy now, pay sometime.

And we wonder how this country got into such a mess...

Yes the whole ethos of saving has been ruined by governments not clamping down on lending in the past and relying on people to borrow for their education. Then encouraging housing bubbles which mean that people will be in debt for longer than ever before.

When I bought my first house, with my brother, we got a load of furniture of friends and family. We bought a house that one of use could afford (good, as my brother lost his job 6 months later) and we bought when the interest rates were around 15-16%, so it got cheaper and cheaper over the years and I could gradually do things like buy a TV (I spent 9 months without a TV).

With my girlfriend, we've done the same, we bought a house we could easily afford, but we couldn't afford all new furniture, although, with the money I inherrited, we managed to renovate a lot of the house, but there is still a lot that needs to be done, which we will have to do over the years.

At the moment, all my bank accounts are in credit, my credit card has a positive balance and the only loan I have is the mortgage.

The eldest daughter is starting her training as a nurse and wants everything new for her flat, she has an old sofa at home, we have several spare matresses and she has cupboards in her room... She has bought a new wardrobe, a new sofa and a new bed... Personally, I'd have saved the money, in case she needs it for other things during her training.

Well on a purely selfish view point that’s good news as have a big mortgage. Got it when interest rates were higher so can afford it but it allows us to
Over pay
Save for a new Kitchen
Have holidays

It will go up so over pay your mortgage as much as possible.

I know it will unfortunately if I overpay I can’t at a later date underpay – I did ask them – it just brings the term down.
I could have a more flexible deal but as I have a really good tracker it would costs a lot more

If you over pay now when you need to remortgage you can get a much better deal because your requirements will be less. Also if you over pay it may not mean that you are tied to maintain those payments just that you cannot go below your original repayment.

I can see no need to remortgage as I have a life time tracker at a very low margine
I also only borrowed 75% of the value - I had the other 25%

Even so once they start climbing they could go much higher than people expect. Murphy's Law could push them much higher than anticipated. They did hit 15% during the ERM crisis. So best to pay off any other debts while you can and build a cash surplus just in case. If I am right and house prices fall another 30% then you will be in negative equity and then that might be awkward if you want to move.

Most mortgages that allow overpayment have the option for you to draw back the amount you've overpaid (or a portion of it) at anytime during the lifetime of the mortgage. It means that you can overpay when you have the money and decrease the interest you're paying on the mortgage, but draw it back if you want to for a ktichen or a holiday. Check with your mortgage company on the terms of your overpayment scheme.