PR scare story will increase your mortgage, claims Telegraph
Now seems as good as time as any to scare the living hell out of people, so that's what the Telegraph have promptly gone and done today:
Yes, everything is going to turn to shit very quickly, because interest rates are going to soar through the roof. What is this entirely hypothetical doomsday scenario based on, then?
A leading think tank warned that the Bank of England may have to increase interest rates sharply – to as high as 8 per cent - to choke off soaring inflation. Once lenders have added their profit margins, it could push the rates offered to home owners to 12 to 14 per cent, according to personal finance website Moneyfacts.
Of course these numbers aren't entirely relevant to the reader; what the Telegraph needs to do is frighten them with an example expressed in pounds that'll make them break down on the spot:
"At 14 per cent, borrowers would pay £1,750 a month on an interest only mortgage of £150,000. It compares with a monthly mortgage payment of £313 for those with the same mortgage, but paying a rate of just 2.5 per cent."
Suffering Jesus! Surely that would lead to tens of thousands of mortgage payments being defaulted on, homes beings repossessed, property values plummeting and banks that are already in the financial mire being stuck with negative equity? An- oh, wait a minute, did you say:
"...according to personal finance website Moneyfacts."
You mean you've based this story on a press release from a website that provides price comparisons for financial products? Like mortgages, for example? I see.
The Telegraph piece is puffed out with a couple of other expert views, but not one single quote to provide any balance, not even to suggest it might not be as bad as all that. Of course there's a chance it could happen - there's been talk of interest rates rising for months - but there's nothing like a proper scare story to grab a few column inches, is there?