From: John Laird 
Newsgroups: uk.finance
Subject: Re: Bank base rate now 4.5%
Date: Fri, 11 Jun 2004 19:29:12 +0100

On Fri, 11 Jun 2004 18:44:24 +0100, "Andy Pandy"
 wrote:

>Surprisingly it varies a lot depending on what the original rate was, and even
>more surprising, the lower the original rate the less impact any rate rise has.

Because with very low rates, much of your repayment is capital.  The
interest element is relatively small, so percentages increases in that
element don't look anything like the same percentage of the total repayment.
When rates go very high, almost all of your repayment is interest so the
effect on the total repayment is just about linear.

Strictly speaking, it's confusing to say that it depends on how far into a
repayment loan one is.  If you are 10 years into a 25-year 100K loan, you
don't *owe* 100K any more, and the repayments are not worked out on 100K.
You are essentially just starting a 15-year loan on maybe 80K - all
depending on what interest rates did during the first 10 years.

-- 
She kept saying I didn't listen to her, or something. 

Mail john rather than nospam...