National News Cost of Living Crisis

[QR]

As one of those interested in such matters I am amazed I haven't seen anyone call out the following....

The BoE is being blamed for inflation. Some, mainly on the right, say it should have increased interest rates sooner. (Many of those same people are trying to gaslight the public into thinking only the BoE has the powers to impact inflation (patently not true as seen in France where the government's action to limit increases in gas and electricity prices took some of the heat out of inflation) and will miraculously praise Sunak when inflation falls ).

Anyway back to my point... so now the BoE raise rates, taking money out of people's pockets to make higher mortgage repayments, thus damping demand, thus forcing suppliers etc to reduce their costs, or so the theory goes.

Now, my point....... why doesn't anyone point out that if the government start giving financial support to affected people (see Ed Davy in the Guardian below) this would only put money back in people's pockets which will reverse the dampening of demand the BoE is trying to achieve!! This will increase the likelihood of even more interest rates rises in the future! So many are between the devil and the deep blue sea. It just shows how fvck this laissez-faire form of capitalism is.

UK homeowners face huge rise in payments when fixed-rate mortgages expire

More than 2.4m deals are ending in 2024, raising fears of financial timebomb

www.theguardian.com

 

[bashamwonderland]

As one of those interested in such matters I am amazed I haven't seen anyone call out the following....

The BoE is being blamed for inflation. Some, mainly on the right, say it should have increased interest rates sooner. (Many of those same people are trying to gaslight the public into thinking only the BoE has the powers to impact inflation (patently not true as seen in France where the government's action to limit increases in gas and electricity prices took some of the heat out of inflation) and will miraculously praise Sunak when inflation falls ).

Anyway back to my point... so now the BoE raise rates, taking money out of people's pockets to make higher mortgage repayments, thus damping demand, thus forcing suppliers etc to reduce their costs, or so the theory goes.

Now, my point....... why doesn't anyone point out that if the government start giving financial support to affected people (see Ed Davy in the Guardian below) this would only put money back in people's pockets which will reverse the dampening of demand the BoE is trying to achieve!! This will increase the likelihood of even more interest rates rises in the future! So many are between the devil and the deep blue sea. It just shows how fvck this laissez-faire form of capitalism is.

UK homeowners face huge rise in payments when fixed-rate mortgages expire

More than 2.4m deals are ending in 2024, raising fears of financial timebomb

www.theguardian.com

Laissez faire capitalism!? Universal credit is £578.82 a month for couples over 25, or a few hundred quid more if you've got kids. Our banks were bailed out to the tune of billions back in 2008, which we've never recovered from. QE (possibly the least "capitalist" concept in existence) has kept rates low for a decade. During COVID Rishi Sunak subsidised our restaurant dinners. Millions were paid their full wage to sit at home doing nothing for a year. Landlords are literally being taxed out of existence, restricting the rental pool and driving up rents.

You're right that the meddling and has been shitty, and has prolonged suffering for people (to prevent society from basically shutting down after 2008). Bail outs for banking and COVID have hurt the entire country. I don't think "laissez faire" capitalism is to blame for the mess we're in.

 

[QR]

Laissez faire capitalism!? Universal credit is £578.82 a month for couples over 25, or a few hundred quid more if you've got kids. Our banks were bailed out to the tune of billions back in 2008, which we've never recovered from. QE (possibly the least "capitalist" concept in existence) has kept rates low for a decade. During COVID Rishi Sunak subsidised our restaurant dinners. Millions were paid their full wage to sit at home doing nothing for a year. Landlords are literally being taxed out of existence, restricting the rental pool and driving up rents.

You're right that the meddling and has been shitty, and has prolonged suffering for people (to prevent society from basically shutting down after 2008). Bail outs for banking and COVID have hurt the entire country. I don't think "laissez faire" capitalism is to blame for the mess we're in.

I'm thinking of the Thatcher version rather than the Truss version .

 

[bashamwonderland]

I'm thinking of the Thatcher version rather than the Truss version .

I've always thought (which you'd expect of someone who is a fan of Thatcher) that the housing problems often ascribed to her actually wouldn't exist if we had built any social housing over the last 30 years. She lifted so many into the middle classes, but that came with risks and downsides and none of those risks or downsides were managed properly when she left office.

 

[SteMerritt]

Millions were paid their full wage to sit at home doing nothing for a year

Not by government funding they weren't, the scheme topped out at 80% of wages. I can't remember now if there was an upper limit for money.

 

[Marked Ox]

I've always thought (which you'd expect of someone who is a fan of Thatcher) that the housing problems often ascribed to her actually wouldn't exist if we had built any social housing over the last 30 years. She lifted so many into the middle classes, but that came with risks and downsides and none of those risks or downsides were managed properly when she left office.

She is to blame for right to buy housing not being replaced but as you say certainly those following since are to blame as well.

 

[LowerSouth]

As one of those interested in such matters I am amazed I haven't seen anyone call out the following....

The BoE is being blamed for inflation. Some, mainly on the right, say it should have increased interest rates sooner. (Many of those same people are trying to gaslight the public into thinking only the BoE has the powers to impact inflation (patently not true as seen in France where the government's action to limit increases in gas and electricity prices took some of the heat out of inflation) and will miraculously praise Sunak when inflation falls ).

Anyway back to my point... so now the BoE raise rates, taking money out of people's pockets to make higher mortgage repayments, thus damping demand, thus forcing suppliers etc to reduce their costs, or so the theory goes.

Now, my point....... why doesn't anyone point out that if the government start giving financial support to affected people (see Ed Davy in the Guardian below) this would only put money back in people's pockets which will reverse the dampening of demand the BoE is trying to achieve!! This will increase the likelihood of even more interest rates rises in the future! So many are between the devil and the deep blue sea. It just shows how fvck this laissez-faire form of capitalism is.

UK homeowners face huge rise in payments when fixed-rate mortgages expire

More than 2.4m deals are ending in 2024, raising fears of financial timebomb

www.theguardian.com

Ed Davy suggests the government should borrow even more money, in order to bail out the “poorest” in society, who have a mortgage.

How would that work.
Who would qualify.
Would there be an upper limit i.e. only mortgages below a certain figure would qualify , say £2000 per month ?
Should those experiencing huge rent increases and not already receiving housing benefit, also receive the same help ?

 

[Charles]

Make what you will in the following statement !
CHARITY BEGINS AT HOME !!

 

[QR]

Laissez faire capitalism!? Universal credit is £578.82 a month for couples over 25, or a few hundred quid more if you've got kids. Our banks were bailed out to the tune of billions back in 2008, which we've never recovered from. QE (possibly the least "capitalist" concept in existence) has kept rates low for a decade. During COVID Rishi Sunak subsidised our restaurant dinners. Millions were paid their full wage to sit at home doing nothing for a year. Landlords are literally being taxed out of existence, restricting the rental pool and driving up rents.

You're right that the meddling and has been shitty, and has prolonged suffering for people (to prevent society from basically shutting down after 2008). Bail outs for banking and COVID have hurt the entire country. I don't think "laissez faire" capitalism is to blame for the mess we're in.

Just because the government does the minimum it has to to prevent extreme poverty and homelessness which would eventually lead to civil unrest doesn't mean it's policies aren't laissez-faire capitalism. You need to look at other factors to see this is true.

A system that not only allows but also enables ;
-a great and relentless shift of wealth to the already super rich.
-People in fulltime employment being paid so little they are also entitled to Universal Credit and they still struggle to survive,
-People who work fulltime but are unable to build up saving to help they through hard times,
-Companies to be run to complete detriment of the general population (eg water companies) in order to achieve their only objective of enriching their shareholders. And the system/government do sweet FA about it.
I could go on but it's father day and I don't want to get any more angry.

 

[QR]

Make what you will in the following statement !
CHARITY BEGINS AT HOME !!

BIG SOCIETY BULLSIHT.

Pull out your own teeth at home!

 

[Peterdev]

Interest rates were always going to go up.
Of course they were a lot higher in the 80s around 15%
There will certainly be a lot of pain because of the covid loans to business, largely not paid back. I don’t know why Starmer hasn’t made more capital on that.
The problem is the government cannot help fund mortgage payments as the money is simply not there.
Our commitment to HK to agree so many to come to Uk will only exacerbate the housing situation…whist the homeless situation goes unresolved.
So much wrong with this country, a change of government won’t help either

 

[Big Ron]

Interest rates were always going to go up.
Of course they were a lot higher in the 80s around 15%
There will certainly be a lot of pain because of the covid loans to business, largely not paid back. I don’t know why Starmer hasn’t made more capital on that.
The problem is the government cannot help fund mortgage payments as the money is simply not there.
Our commitment to HK to agree so many to come to Uk will only exacerbate the housing situation…whist the homeless situation goes unresolved.
So much wrong with this country, a change of government won’t help either

No, you’re right, we should absolutely carry on supporting this government. They’ve done a tremendous job over the last 11 years, so much so that Sunak seems determined to distance himself from his predecessors.

 

[MC Yellow]

Interest rates were always going to go up.
Of course they were a lot higher in the 80s around 15%
There will certainly be a lot of pain because of the covid loans to business, largely not paid back. I don’t know why Starmer hasn’t made more capital on that.
The problem is the government cannot help fund mortgage payments as the money is simply not there.
Our commitment to HK to agree so many to come to Uk will only exacerbate the housing situation…whist the homeless situation goes unresolved.
So much wrong with this country, a change of government won’t help either

As much as I agree that things will probably be no better in a decade or so (and the blame game will be very prevalent), I do think it is very much time for a change.

In terms of mortgages, I think we have just had it too good for too long and people are struggling to adapt to what is still a reasonable base rate compared to decades past.

However, I have very little time for these people on BBC stressing about the fact that they may lose their house because after 15/20 odd years of paying their mortgage they are experiencing a huge uplift in monthly interest charges.

Why on earth is their mortgage still so big? Why do they not have a sizeable investment running alongside their mortgage… This is basic financial planning. After so many years it should be so much lower so as not to be so affected by these interest rate hikes.

If they haven’t made provision to actually pay down their mortgage after so many years then I’m afraid they only have themselves to blame.

 

[QR]

As much as I agree that things will probably be no better in a decade or so (and the blame game will be very prevalent), I do think it is very much time for a change.

In terms of mortgages, I think we have just had it too good for too long and people are struggling to adapt to what is still a reasonable base rate compared to decades past.

However, I have very little time for these people on BBC stressing about the fact that they may lose their house because after 15/20 odd years of paying their mortgage they are experiencing a huge uplift in monthly interest charges.

Why on earth is their mortgage still so big? Why do they not have a sizeable investment running alongside their mortgage… This is basic financial planning. After so many years it should be so much lower so as not to be so affected by these interest rate hikes.

If they haven’t made provision to actually pay down their mortgage after so many years then I’m afraid they only have themselves to blame.

They probably expected, not unreasonably, that their real wage would be greater than or was 15 years ago. Wonder where all the money's gone?

 

[MC Yellow]

They probably expected, not unreasonably, that their real wage would be greater than or was 15 years ago. Wonder where all the money's gone?

I just can’t buy into that argument.

As much as you can argue that wages may not have kept pace, this would have been massively offset by the lowest interest rates in history, lasting for over a decade. Don’t also ignore the fact that inflation has not been much of an issue for a decade too.

The harsh reality is that It comes down to people not planning ahead and failing to make sufficient provision to pay off the very cheap liabilities they had taken on. This was a personal choice.

After the banking crisis mortgage applicants were financially stress tested to ensure they could still afford a mortgage if interest rates significantly increased. So if they passed this stress test, where has that money gone? Why was it not put aside or used to overpay mortgages?

We took on a mortgage at 1.5% knowing full well it was cheap and wouldn’t last forever. We have aimed to pay it off on the basis that it was a 5% mortgage, meaning we now how have a much smaller mortgage than originally projected and the recent rate rises have had a much smaller impact on our monthly finances.

Our mortgage will be paid off much earlier than anticipated, which is still on the back of low annual pay increases/pay cuts in our household.

Blaming low pay rises is just an easy cop out for people who have failed to budget their household finances properly and lived in this bubble of financial freedom and excess for too long. Time to ease off on the all the expensive foreign holidays, driving around in heavily financed cars and freely running up sizeable credit card debt.

 

[Peterdev]

With data in today on inflation can easily see 1/2% rise today
I can’t understand how some people are surprised interest rates have risen so far.
It was always going to happen. Talks of mortgage borrowers paying £3000pm. I can’t imagine how much they borrowed in the first place.
Difficult to think of solutions. A reduction in fuel duty would filter through thr economy. I find it unjustifiable that thr owners of big diesel vehicle owners escape paying higher tax duties. A lot of pensioners I know are falling into the tax trap because of their private pensions too.
Carol Vorderman reckons fraud is endemic in government and so much money has been lost that way.
Government ministers giving money to their mates, and information released on days when secondary to news related to the Harry and Meghan nonsense going on.
The end of Sunak is nigh and there won’t be too many tears

 

[QR]

With data in today on inflation can easily see 1/2% rise today
I can’t understand how some people are surprised interest rates have risen so far.
It was always going to happen. Talks of mortgage borrowers paying £3000pm. I can’t imagine how much they borrowed in the first place.
Difficult to think of solutions. A reduction in fuel duty would filter through thr economy. I find it unjustifiable that thr owners of big diesel vehicle owners escape paying higher tax duties. A lot of pensioners I know are falling into the tax trap because of their private pensions too.
Carol Vorderman reckons fraud is endemic in government and so much money has been lost that way.
Government ministers giving money to their mates, and information released on days when secondary to news related to the Harry and Meghan nonsense going on.
The end of Sunak is nigh and there won’t be too many tears

It's difficult to think of solutions when the damage has already been done. One thing that could have been done that would have helped take an awful lot of the pain out of the current situation for mortgagors would have been a legislative reform to the mortgage market that forced lenders to offer 15, 20+ year fixed term mortgages and/or decree an element of all mortgages (say 50%) had to be fixed long term. This would have given mortgagors a less volatile but slightly more expensive mortgage (but as it would also have restricted the unnatural rise house prices (as affordability would have been dampened) the real impact on people budgets would been negligible).

Of course the big losers would have been house builders, as property prices would not have peaked as they have, and mortgagees, who would not get their extra fees income every 2 years or so when mortgages have to be re set so the Tories wouldn't do this and I have heard Labour suggest it either.

 

[MC Yellow]

It's difficult to think of solutions when the damage has already been done. One thing that could have been done that would have helped take an awful lot of the pain out of the current situation for mortgagors would have been a legislative reform to the mortgage market that forced lenders to offer 15, 20+ year fixed term mortgages and/or decree an element of all mortgages (say 50%) had to be fixed long term. This would have given mortgagors a less volatile but slightly more expensive mortgage (but as it would also have restricted the unnatural rise house prices (as affordability would have been dampened) the real impact on people budgets would been negligible).

Of course the big losers would have been house builders, as property prices would not have peaked as they have, and mortgagees, who would not get their extra fees income every 2 years or so when mortgages have to be re set so the Tories wouldn't do this and I have heard Labour suggest it either.

Totally agree with this.

In line with what I mentioned above, whilst mortgage rates were so low, actual repayments should have been based on a much higher rate. The excess would have been treated as an overpayment, people would have become used to that level of monthly payment and by now they would have had many more options to tweak their mortgage, dampening the impact on monthly finances. Providing longer fixed terms and reducing some of the hefty redemption penalties would have helped also.

As much as I bang on about people taking responsibility for their own finances, I accept that some just can’t do that and need it done for them. The above and indeed many other possible solutions and compromises would have made that happen as par for the course.

Some very simple mechanisms could have easily removed the heat in the markets over the past 10 -15 years or so.

Instead, landlords were targeted with multiple tax hits (I know some really don’t mind this) to slow the markets, but the reality is that these costs eventually get passed on to tenants (as per the market today). Throw in some Stamp Duty incentives and you just throw fuel back on the fire.

As you say, a raft of mechanisms could have been put in place to have prevented what is happening now, but it comes back to money and profits. Doesn’t it always.

So who has the solution? Probably no one, however, market forces will see to it that at some point this will all blow up in our faces and once again we will be faced with the same old questions about what went wrong, how was it allowed to happen and what can we learn from it.

Governments never learn, we never learn, and so the cycle goes on.

 

[Peterdev]

Landlords will have a torrid time. Given interest rates on BTLs will increase at a greater rate than others, they will have to try and and recoup the losses from tenants who will not be well placed to do it.
Property prices are reducing around here by around 10% so landlords will not be wanting to sell with a capital loss.
A friend of mine is selling a four bedroom house in Fulham and has reduced the asking price from £3150000 to £2550000. Whilst many won’t be shedding tears for him that is a considerable reduction. Prospective buyers are also thin on the ground.
If inflation should show signs of slowing the pain might be temporary. We can only hope for the greater good that that isnso

 

[boogaloo]

Landlords will have a torrid time.

Sorry to say it but.... good! Every cloud....

The huge swathe of BTL mortgages have been a major contributor for houses reaching stupid levels. Landlords with massive portfolios just outbid each other pushing house prices well beyond the reach of your average first-time buyer.

A house should be first and foremost - a home. Not a cash cow.