Effect of Interest Rate Rises on the New and Second Hand Boat Market?

Nautorius

Nautorius

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Ok,

Maybe I am taking too many things into consideration of buying a new boat and sinking more cash!

With Interest rates due to rise will it effect boat demand? Most new boats and newish second hand boats are bought with some level of Marine mortgage. If Rates go up then the monthly repayments of new business goes up whilst existing customers just pay longer. If the costs of the mortgage go up will this switch people with a fixed budget from a new boat to a second hand one or will it force them out of the market?

From personnel experience, it was dropping rates that allowed me to double the amount I was spending on boats 3/4 years ago. Then a slight hike in rates had kept my Marine mortgage amount stagnant for the last 3 years.

I am a little worried that interest rate rises may not affect house prices (supply and demand) but a boat is a luxury and if their money is squeezed a lot of boats at £50-£150k range may enter the market and increase depreciation in the short term which may take several years to recover.

If this does happen I would be better waiting and losing a little on a smaller value boat but then buying a larger boat at a discounted rate and being better off?

Of course my heart says 'sod it' buy the boat...my head is screeming "do not be so flippin stupid".

Either way it will cost me, and either way I will spend my spare cash on something.....

So will Interest rates affect the £50k-£150k boat market or not?

Confused

Paul /forums/images/graemlins/laugh.gif
 
Prudence - the Accountants curse!

Lifes too short - buy the boat, if it goes wrong afterwards sort it out then.

Martyn
 
Ask your self this. Were people bying boats 3 years ago when the interest rate was 5.25%? Answer, Yes.

So will the rate being 5.25% again effect ownership. I doubt it.

Anyway, most Marine mortgages work of FHBR (Finance House Base Rate), which is affected by the LIBOR rate and has been at 5% for the last 2-3 years any way. BOE rates would probably need to climb to 5.5% for FHBR to move upwards (that is the beauty of an FHBR/LIBOR linked loan, rather tha BOE link like your home mortgage).

That said FHBR stayed at 5% when the bank rate dropped to 4.5%, so it works the other way as well.

LIBOR is the London Inter Bank Offer Rate, and is an averaged rate from the last 8 weeks trading.
 
fair guess is they wont go up more than .25pct- as things stand now. Cant see many £100k boat owners are going to find £20 a month too heavy.
 
Yup, I think its a pretty sure bet that interest rates will go up next time but I can't see them rising by more than 0.25-0.5%in total which is a lot less that the sort of movements we used to have. All the BoE wants to do is to take the heat out of the housing market; they don't want to damage the rest of the economy, especially manufacturing or whats left of it and they dont want to see a stronger £ so there wont be any large increases. So, I dont think one or two small rises will damage the boat market or people's ability to own a boat. After all, 0.5% rate increase on a £100k mortgage is only £500 a year or £10 a week, not enough to put peeps off IMHO
 
Yes, but house prices have gone up 20% over the last three years so any one buying a bigger house has had to fork out a lot more on a mortgage (I am guilty as charged m'lud). So disposable income has, in reality dropped by about 20% for me. With increased rate rises the disposable income will shrink and that may effect boats regardless of Marine mortgage costs.....

Oh Sod it, how many people who buy a boat are rational about the costs anyway! I am cursed with putting too much rational thought intro a completely irrational purchase!

Cheers

Paul /forums/images/graemlins/laugh.gif
 
A curse and a Pain in the Arse!

When I got kicked out of University I had realised a little knowledge was a dangerous thing so I gave up learning!

Then I discovered professional exams....should have left them well alone and stayed in blissful but poor ignorance!

No one has yet talked me out of spending all my cash on a boat....... /forums/images/graemlins/cool.gif

Cheers

Paul /forums/images/graemlins/laugh.gif
 
Buy a big enough boat and you'll get a silly rate anyway.
I managed 1.27 over FHBR from Lombard, which meant the BMB only cost me £90/month more than the Bayliner.

I keep telling SWMBO it was their fault not mine, but she doest seem inclined to beleive me /forums/images/graemlins/smile.gif
 
Barclays Asset were pants and wouldn't shift below 2.25% over. Had the Bayliner with BoS who said they would do 1.75% over.

I initially asked Lombard to approve me for £105k, which put me in there best rate bracket, then when I bought the boat they re-calculated the loan amount but not the rate as I was accepted and pre-approved.

Go with Lombard, and beat them up on the rate. Even now you should get 1.5% over at worst if you push them I reckon.

Even a 0.67% drop will make a chunk of difference. I have done 1.25% on 60k BMW's in the past, so I KNOW it is possible.
 
Lucky you. I can only dream of buying a boat with spare cash.
But then, I am not paying into a conventional pension, and my investments are working very hard in other areas, so I see the boat as treating myself while I can really enjoy it.
 
Fair point Haydn,

I wish I was in your possition and If i trimmed back in 10 years I could be (I could also be dead) I am a beliver in "enjoy life, but do not ruin old age" I have an Interest only mortgage because in 10 years Salaries will have doubled so I can pay it off a lot easier without any pain. I consider a boat purchase as HP, and I will not own one for many years. I have no car Finance and I have a Final salary Pension with 8 years in the Pot. I have small investments, but my earning when I hit 40+ should ensure my reduction in debt levels. ( I am 33)

I know too many people who save and save and do not enjoy life. I may spend it and enjoy but there is planning and prudence in their. I have also been Divorced and lost my original pot so have been bitten!

I would love to be in your possition, but it will take me many years to get there. In the meantime I will enjoy life. Will you visit me in the poor house? /forums/images/graemlins/shocked.gif

Cheers

Paul
 
If the interest rate goes up so will the cost of New boats as the manufacturers will also need to pass on their finance costs. So I would guess that second hand boats will look better value and therefore be more sought after and may even appreciate??? :-)
 
1.27% over FHBR! Blimey, you're a hard man. Do you hire yourself out for negotiations in which case I've got a few of my customers who I would like you to meet /forums/images/graemlins/smile.gif
 
Money is indeed cheap and plentiful. My first house mortgage was at a rate of 16.5% and there was a cap on how much you could borrow irrespective of income. You were made to feel that the building society were doing you a huge favour for lending you money at that rate
Now, if you want it, banks and building socs are falling over themselves to lend you money
 
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