Energy Prices (Strictly NO referrals!)

purplesky said:
Yes, and those people who are feeling the pinch now are going to be feeling it even more the longer interest rates remain low against imported inflation.

The bottom line is that low interest rates are unsustainable. They are anything but normal, and rates at circa 5% is about right when looking at things over the decades on an average basis
The problem basically is that some people have been hooked on cheap credit for the past 15 years, and many of those people are fairly young who probably don't/didn't know that rates below 1% are not normal nor healthy.

I'm sorry that people are going to lose their homes - i've seen this before in the 80's and 90's and it's not pretty. Many people will be on a decent fix though so the widespread immediate damage will be limited, but again, as the months go on, rates are only going to increase further so I would hope that those on fixes are getting their finances in order NOW. I suspect they won't however because they'll be paying more for food, fuel and energy in the interim, and probably looking at job losses the more inflation climbs.
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The current inflation is nothing to do with rates though. This normal historical rate you speak off is from a different era.
Think for a moment on how things would have been in the last decade or so with high interest rates. You might be thinking well if rates were 5% house prices would be much lower as no one could afford to buy at 5%, but people still need somewhere to live so instead we just would have had the houses owned by far fewer people with many more private renting.

Are you one of those who thinks everyone should save up for everything they buy, borrowing should be expensive and the wealthy should have a nice easy way to profit from cash sitting in a bank? :)
 
chrcoluk said:
The current inflation is nothing to do with rates though. This normal historical rate you speak off is from a different era.
Think for a moment on how things would have been in the last decade or so with high interest rates. You might be thinking well if rates were 5% house prices would be much lower as no one could afford to buy at 5%, but people still need somewhere to live so instead we just would have had the houses owned by far fewer people with many more private renting.

Are you one of those who thinks everyone should save up for everything they buy, borrowing should be expensive and the wealthy should have a nice easy way to profit from cash sitting in a bank? :)
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I think you have a fundamental mis understanding how this all works to be honest.
Staying so long at such low interest rates is very unhealthy forever to an economy. You cant say " a different era " then talk about todays troubles without taking into account the reason why interest rates are so low. The reason no one could by a house even with sub % mortgages was because when the banks came in they all made sure people had to have stupidly high deposits, in stead of small deposits and able to take out larger mortgages. This was also when banks where handing out mortgagees like they where nothing at higher interest rates. Then, well, we still go most private landloards buying them up and renting them out for stupidly high prices.
Inflation is inflation, yes, I think theirs far more better more accurate scope for measuring how or where that sits in the market trends. The moves made by the big world banks are the same though, control and limit spending to cool the demands. Actually even with this increase, the rate of borrowing is still very low.
 
chrcoluk said:
The current inflation is nothing to do with rates though. This normal historical rate you speak off is from a different era.
Think for a moment on how things would have been in the last decade or so with high interest rates. You might be thinking well if rates were 5% house prices would be much lower as no one could afford to buy at 5%, but people still need somewhere to live so instead we just would have had the houses owned by far fewer people with many more private renting.

Are you one of those who thinks everyone should save up for everything they buy, borrowing should be expensive and the wealthy should have a nice easy way to profit from cash sitting in a bank? :)
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There isn't a different era. We are looking at things over a very long period of time that comprises of multiple credit expansion and tightening cycles.

I think people shouldn't be taking out loans they can never pay back. Have you not heard the phrase that begins "Your home may be at risk....?" You've must have heard this in an advert or 2.
 
chrcoluk said:
The current inflation is nothing to do with rates though. This normal historical rate you speak off is from a different era.
Think for a moment on how things would have been in the last decade or so with high interest rates. You might be thinking well if rates were 5% house prices would be much lower as no one could afford to buy at 5%, but people still need somewhere to live so instead we just would have had the houses owned by far fewer people with many more private renting.

Are you one of those who thinks everyone should save up for everything they buy, borrowing should be expensive and the wealthy should have a nice easy way to profit from cash sitting in a bank? :)
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If interest rates go up, it doesnt just decrease home owners, but it also decrease renters as well.

Dont forget, those rate increases effect landlords too and you recon a landlord will fit the bill themselves? Nope, they will bat the extra mortgage cost to the tenant .....
 
cu3ed said:
I think you have a fundamental mis understanding how this all works to be honest.
Staying so long at such low interest rates is very unhealthy forever to an economy. You cant say " a different era " then talk about todays troubles without taking into account the reason why interest rates are so low. The reason no one could by a house even with sub % mortgages was because when the banks came in they all made sure people had to have stupidly high deposits, in stead of small deposits and able to take out larger mortgages. This was also when banks where handing out mortgagees like they where nothing at higher interest rates. Then, well, we still go most private landloards buying them up and renting them out for stupidly high prices.
Inflation is inflation, yes, I think theirs far more better more accurate scope for measuring how or where that sits in the market trends. The moves made by the big world banks are the same though, control and limit spending to cool the demands.
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Its clear we disagree and not healthy for the forum we go round in circles, you think things are simple, I dont.

There is you and purple say its unhealthy but dont state why. Fundamentally higher interest rates increase the gap between rich and poor, thats very clear. Maybe you think if we had 5% perpetual rates we would never again have high inflation due to low supply of essential services. I dont think that would be the case, but I am willing to move on from this now. So you can reply to have the last say but I will leave this particular discussion here, also was no personal offence taken its just a debate.
 
jonneymendoza said:
If interest rates go up, it doesnt just decrease home owners, but it also decrease renters as well.

Dont forget, those rate increases effect landlords too and you recon a landlord will fit the bill themselves? Nope, they will bat the extra mortgage cost to the tenant .....
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People need somewhere to live so that rent would get paid one way or the other, even if its the government paying it. :)
 
chrcoluk said:
Inflation is not necessarily inflation, there is different type's of inflation. A few of us e.g. have commented in the past how flawed the official way of measuring inflation is.
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you mean different causes of inflation. inflation is inflation just what causes it could be different things.


like printing hundreds of billions and devaluing a currency causes inflation
 
purplesky said:
There isn't a different era. We are looking at things over a very long period of time that comprises of multiple credit expansion and tightening cycles.

I think people shouldn't be taking out loans they can never pay back. Have you not heard the phrase that begins "Your home may be at risk....?" You've must have heard this in an advert or 2.
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but what you take out now as a loan today could be very different in 5-10 years....

And peoples situations changes.

You maybe on some naff 200k perm job and u landed a nice 2% mortgage earlier this year but 5 years you could be jobless and increase rate in 2027 is now 6% when ti is time to renew...
 
200sols said:
Simply people are too used/addicted to cheap credit. This thread proves it.
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If the credit rates for mortages were late 90s/early 2000 levels with todays property prices, there is no way many people could afford a mortgage.

The interrest rates cannot be both high and also propperties being high, it is dont make sense. Its give or take.

either increase rates higher and decrease value of properties. or vice versa. increasing both will lead to reccession and many people losing their homes.

Its got nothing to do with being addicted to anything....

When you are ready to buy a property, you buy at the current market rate and you can only do your best to guestamate and gamble that interest rates will only crease a bit the next time you are due to remortgage and also hope your property doesnt lose value. Gaining value is a bonus at this point for any home owner
 
Where is all this spending that they are trying to slow down coming from? Everyone I know has cut back, some more than others but all have reduced spending. We just seem to be dooming ourselves to recession if cost of living keeps getting more and more expensive. Higher interest rates might mean you finally get some interest on your savings but most don't have any money to save.
 
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