Mortgage Rate Rises

[Stretch]

Well yes I suppose it will. So they need to realise that this way of controlling inflation doesn't work.

They are the perfect example of trying the same thing over and over when it didn't work the first time, in blind faith that it will work next time.

I suppose ultimately rate rises will work, but only by destroying millions of people and most of the economy in the process.

May as well drop the nukes now, that will control inflation too, and save us all this misery.

It’s the only tool they have at their disposal and it will work… eventually.

Rates will just keep going up until wages cannot keep pace. There is also a lot of lag in the system with people being on long fixed rate loans.

However, the longer it takes to bring inflation under control the more damaging it will be, and there probably are quicker/better ways of dealing with imo.

If you are looking for alternative solutions you should be looking to the government not the BoE.

However, all of it will involve a large slice of misery.

 

[Stretch]

maybe i'm just not woke enough for you and you would be right .. i'm nearly 60 and all i hear is men who are supposed to lead there family's crying like little girls because they made mistakes and can't own up to it or except it

I agree. We saw a lot of that in the endowment mortgage thread.

 

[Mercenary Keyboard Warrior]

I agree. We saw a lot of that in the endowment mortgage thread.

Woaa there sunshine

Don't get us gen x stuck in a sandwich of boomers and gen z / millennials both telling us they were completely fooled by the situation!

Its almost as if... people have always struggled with buying a house for whatever reason and its never their fault and someone should make it good for them

The odd thing is, if I was a recentish purchaser with high LTV I would be crossing my fingers for another few years of high inflation, whilst the pain short term will be that, nothing devalues a fixed value loan like some good old inflation.*

*It may take some time as typically pay lags inflation.

 

[danlightbulb]

Making personal mistakes is one thing, but having the country's mistakes send individuals to ruin is quite another.

And the pain is not spread equally, it never is. It falls disproportionately on younger people in middle income work, as everything seems to.


I see no logic in the BoE continuing to use a hammer to fix a problem that anyone can see requires more finesse. These are supposedly intelligent people, in a supposedly intelligent society, yet they continue to bash that hammer without questioning whether a different tool could be better. It is an absolute nonsense that no other industry would do.

"blah blah remit blah blah blunt tools etc etc" - Yes it may well be the Government who need to step in and say enough is enough, completely accept that. But that doesn't mean BoE should be acting like trained monkeys and still bashing away with that hammer until someone tells them to stop. Why do we need highly paid people to do this, when the actions of the BoE in this could have been replicated by an IF formula on an Excel spreadsheet for the past 15 years.

 

[413x]

To be fair, the former problem is tackling the latter one

You know. I wouldn't be surprised if behind some closed doors that has been talked about.

Under fund the nhs
-Saves money
-reduces pension burden

 

[413x]

It’s the only tool they have at their disposal and it will work… eventually.

Rates will just keep going up until wages cannot keep pace. There is also a lot of lag in the system with people being on long fixed rate loans.

However, the longer it takes to bring inflation under control the more damaging it will be, and there probably are quicker/better ways of dealing with imo.

If you are looking for alternative solutions you should be looking to the government not the BoE.

However, all of it will involve a large slice of misery.

Yeah. It's looking more and more grim.

For all. Labours attacks I don't think they'd be doing any better.

This is what it is. The truss disaster is in the past. This inflation is a global + brexit + many other factors.

But what can be done? The rate rises are cruel as they catch many people out and really hurt some (mortgages/rent) , while benefiting others a bit (big savings).

When it's rooted in food and energy, you are still going to be eating same amount and many are already cutting back on energy.


If people start buying just bread and milk (cliche example) and let's say those are the inflated prices, it will actually make the impact worse.


Its now clear to me you have to destroy vulnerable businesses like pubs by hurting that big demographic of the public so much that they have no discretionary spending power to support those businesses.


As in individual you just have to do all you can not be be caught out to the best of your ability. Sometimes this is impossible.


And these unfortunate people are just casualties of war. Because any support (I guess) will just fuel inflation.



It needs to be made clear that brexit (that the public voted for) was a mistake. And that it is one of the factors fueling inflation. None of the politicians seem to want to say it anymore.

 

[Mercenary Keyboard Warrior]

Making personal mistakes is one thing, but having the country's mistakes send individuals to ruin is quite another

Has always been the way.
Other peoples actions can cause you misery.

Do you think the Ukranians killed, or forced to relocate having lost anything are more or less affected than you from some interest rate policy?

I use an absurd comparison but history is littered with good people being affected by others. I don't think it will ever change personally.

 

[413x]

At some point you just have to accept life isn't fair. And that many people get shafted through no fault of thier own.


I have no idea how this inflation will go down. I don't really fully understand how it's gotten so high.
There are the obvious things
-brexit
-Ukraine war
-post covid demand

But Ir would be interesting to know more of the key drivers.
And how to actually tackle it beyond crippling individuals spending power.

 

[Mercenary Keyboard Warrior]

Yeah. It's looking more and more grim.

For all. Labours attacks I don't think they'd be doing any better.

This is what it is. The truss disaster is in the past. This inflation is a global + brexit + many other factors.

But what can be done? The rate rises are cruel as they catch many people out and really hurt some (mortgages/rent) , while benefiting others a bit (big savings).

When it's rooted in food and energy, you are still going to be eating same amount and many are already cutting back on energy.


If people start buying just bread and milk (cliche example) and let's say those are the inflated prices, it will actually make the impact worse.


Its now clear to me you have to destroy vulnerable businesses like pubs by hurting that big demographic of the public so much that they have no discretionary spending power to support those businesses.


As in individual you just have to do all you can not be be caught out to the best of your ability. Sometimes this is impossible.


And these unfortunate people are just casualties of war. Because any support (I guess) will just fuel inflation.



It needs to be made clear that brexit (that the public voted for) was a mistake. And that it is one of the factors fueling inflation. None of the politicians seem to want to say it anymore.

You cannot mention Brexit since its assumed (probably correctly) that those who still think it was a good idea still mainly rank it above everything else in importance. You only have to look at the red wall to see that in action.
Until something is worse than Brexit those people will not change.
Labour IMO rightly still see this and cannot say look it was ****** and needs reversing.

You still have the BBC FFS giving serial liar Farage time. Question time this week, a gammon special. Could be an interesting watch though

People have to accept we are getting poorer, well mostly. There is only really one way to reverse that, but much like Brexit the politicians remain closed lips in that regard.
We have to tax the very rich significantly more, IMO that has to be via wealth taxation and drop the fixation with income tax. And I say that as someone who almost certainly would be worse off if the balance was right with that system.

It was interesting there was a survey I saw yesterday and the top 5 things the UK are worried about / want action in. Actually Rishi has 5 correct, the one that was missing from the list, the boats, well we know why that one is there, keeps the racists on side.
The one in the top5 that he hasn't listed? the environment. Yep, way more people care about the environment than the boats. So thats the only real angle for Labour to make themselves stand out on.

 

[Mercenary Keyboard Warrior]

At some point you just have to accept life isn't fair. And that many people get shafted through no fault of thier own.


I have no idea how this inflation will go down. I don't really fully understand how it's gotten so high.
There are the obvious things
-brexit
-Ukraine war
-post covid demand

But Ir would be interesting to know more of the key drivers.
And how to actually tackle it beyond crippling individuals spending power.

It used to be, probably still is outside headlines, also split into imported inflation. IE inflation you cannot affect.

I think the main issue is we have seen how high inflation drives wage rises, and whilst wage rises in some sectors don't really matter that much, in others they do, eg NHS.

Governments cannot be that precise in their targeting so they have to take the least worst approach to tackling every problem.
I mean they could literally reinstruct the BOE with some better targets, but they don't, since the BOE are an easy scapegoat. See above, talk of hammer.

There is still some Brexit pain to come.
Ukraine well we will see, hopefully thats now potentially got signs of finishing, very small shoots, but a more robust view will be taken in 3-4 months I am sure. A lot of the inflationary aspect could be driven out by then however. (prices will remain high, but wont be increasing anywhere near as much)
Post COVID, yeah we are still trying to adapt to find the correct balance on that one. Eg people like Hunt still talking of getting people back to offices!

Energy IMO is the one we are best placed to start to tackle internally. Its funny when you speak to people who saw the last energy crisis and talk to them they say its just the same. Talk of self reliance etc, but if its not state owned it makes little difference.
Me, well I have done the one thing so far that I will probably do short term, bought solar, I liked the idea from an environmental standpoint, but the financials were attractive as well. 6 months in, over £1k saved (I am a high user of elec) and 7.8% of capital "repaid" in effect.

 

[413x]

Solar will be for next house for sure.
There are a number of things I've learnt from this house for next.

1) Get a house that is solar friendly. This house really isn't with the big trees and awkward roof shape/orientation. I'm not sure it's even viable.
2) don't get a big mortgage that will make life difficult when rates spike. Ideally I'd not get a more expensive house than now. If it was 20k more? I'd just meet the difference in savings.
3) don't buy one that's close to sea level. Sea level rises are going to get more and more headlines as time goes on. At the moment I don't think many think about it when buying. But over time they soon will.
4) easy to manage garden!




We are for sure getting poorer. The median person anyway. Having to pay for private health care when nhs doesn't work. Wages not keeping up with inflation. More and more personal debt. Tax thresholds not moving. Etc etc. We all know the list. But most can't accept it. Just have to get the best job you can, always look for pay rises, or jobs paying more. Sometimes just moving company nets a big pay rise!.. Sorry BoE!

 

[Mercenary Keyboard Warrior]

Solar will be for next house for sure.
There are a number of things I've learnt from this house for next.

1) Get a house that is solar friendly. This house really isn't with the big trees and awkward roof shape/orientation. I'm not sure it's even viable.
2) don't get a big mortgage that will make life difficult when rates spike. Ideally I'd not get a more expensive house than now. If it was 20k more? I'd just meet the difference in savings.
3) don't buy one that's close to sea level. Sea level rises are going to get more and more headlines as time goes on. At the moment I don't think many think about it when buying. But over time they soon will.
4) easy to manage garden!




We are for sure getting poorer. The median person anyway. Having to pay for private health care when nhs doesn't work. Wages not keeping up with inflation. More and more personal debt. Tax thresholds not moving. Etc etc. We all know the list. But most can't accept it. Just have to get the best job you can, always look for pay rises, or jobs paying more. Sometimes just moving company nets a big pay rise!.. Sorry BoE!

Yes I can imagine if you dont have an acceptable roof for solar and you would have considered it thats annoying.
Its an area I think some bravery will be required on in future. I am 100% a total convert to domestic solar. I would even support the government aiding those who would get solar but have conditions that make it economically problematic.
EG say you needed to spend £6k for a decent system, but the generation would be too low to see an acceptable payback, so 15 years. I would support at least paying say 1/3 to get that to 10 years (which is acceptable IMO)

There were some other techs coming, like a clear treatment that allows windows to function as panels. Hopefully we will see more and more over time.

I agree though, unless energy was to suddenly drop a lot in relative terms (like 75% or more) I think solar installed / solar "capable" will increasingly be on peoples wants lists. Not necessarily number 1, but on the list.

Personally I want better garaging (mine is hidden away and shared which looks nice sure but I dont like it, so double with parking for 4 at the front, next time.
A garden / plot around an acre, I am about 1/3 now and its not enough I would put 1/3 of an acre to food production in the next house, assuming around 1/3 for house and parking etc and 1/3 for 'er to make look pretty

I am not that far above sea level (near fens as you know) so whilst I am pretty low if this was all under water would be medieval again with Ely an island. I don't see it happening.

 

[danlightbulb]

Has always been the way.
Other peoples actions can cause you misery.

Doesn't make it right, and doesn't make it not solvable, in a fair way.

The Ukraine situation is of course worse. We live here and are lucky to do so in many respects, but that doesn't make it beyond improving for the better. Other countries having it worse is not a reason not to improve our lot if we have the power to, and its situations like this inflation problem that highlight the weaker parts of our economy/infrastructure/culture that then enable solutions to be found and to move forward.

The problem with our Government, which I really can't fathom, is why they take so long so reassure people and to put actions in place. For example, the energy crisis and support package. It was obvious they would need to do something, but they hold back for months, making people worry about it and building up anxiety, before finally taking the action that was obvious in the first place. I imagine something similar could happen with mortgages and rent, but why be so reactive and waiting till the last minute instead of setting up proactive, sustainable ideas now?


The 2% inflation target is a nonsense when it is driven by external circumstances. Now it may be for the Government to change that target, but the BoE should also be calling out the absurdity of the target and the tools they have to control inflation right now. Maybe they are doing that behind the scenes, but outwardly they are not and in my opinion it makes them look like idiots, because we all know the drivers of inflation right now are not domestic.

There is no empirical reason that the UK would have entrenched domestic inflation right now. It is all a reaction to external pressure, which is a result of us being so reliant on global markets for food, power, goods.

But no, instead we'll let the BoE raise rates, knowing full well that it won't do hardly anything to solve the problem until we reach a cliff edge point when potentially millions of people and hundreds of thousands of small businesses go bankrupt because they've been bled dry to try and solve an externally driven issue. Then those same people in power will pat themselves on the back for getting inflation down.

BoE:

 

[Mercenary Keyboard Warrior]

Doesn't make it right, and doesn't make it not solvable, in a fair way.

The Ukraine situation is of course worse. We live here and are lucky to do so in many respects, but that doesn't make it beyond improving for the better. Other countries having it worse is not a reason not to improve our lot if we have the power to, and its situations like this inflation problem that highlight the weaker parts of our economy/infrastructure/culture that then enable solutions to be found and to move forward.

The problem with our Government, which I really can't fathom, is why they take so long so reassure people and to put actions in place. For example, the energy crisis and support package. It was obvious they would need to do something, but they hold back for months, making people worry about it and building up anxiety, before finally taking the action that was obvious in the first place. I imagine something similar could happen with mortgages and rent, but why be so reactive and waiting till the last minute instead of setting up proactive, sustainable ideas now?


The 2% inflation target is a nonsense when it is driven by external circumstances. Now it may be for the Government to change that target, but the BoE should also be calling out the absurdity of the target and the tools they have to control inflation right now. Maybe they are doing that behind the scenes, but outwardly they are not and in my opinion it makes them look like idiots, because we all know the drivers of inflation right now are not domestic.

There is no empirical reason that the UK would have entrenched domestic inflation right now. It is all a reaction to external pressure, which is a result of us being so reliant on global markets for food, power, goods.

But no, instead we'll let the BoE raise rates, knowing full well that it won't do hardly anything to solve the problem until we reach a cliff edge point when potentially millions of people and hundreds of thousands of small businesses go bankrupt because they've been bled dry to try and solve an externally driven issue. Then those same people in power will pat themselves on the back for getting inflation down.

BoE:

Its just not realistic to solve every issue.
And its not been the way in the UK, well in any country really.

The government simply cannot buy their way out of every citizens issues.

Look what happens when ever a leader who leans towards those sorts of policy stands for election. (They don't do that well)

 

[Richie]

Woaa there sunshine

Don't get us gen x stuck in a sandwich of boomers and gen z / millennials both telling us they were completely fooled by the situation!

Shh, dont get them trying to involve the generation that's just getting on with it (in general)

Let the 2 either side have their handbags at dawn

Though I will say it's as if @flea.rider had it tough so everyone else has to have it tough or "it's just not fair"

And the pain is not spread equally, it never is. It falls disproportionately on younger people in middle income work, as everything seems to.

Of course it does. These are the people that haven't lived long enough to build up a large buffer to absorb life's trials....

I'm sure that, once you eventually reach old age (if your stress doesn't kill you first), you'll be in a much better position financially than younger people.

You don't seem to have much future vision and only obsess about your current position without looking ahead at being in a better position once day... But then, that's society - want it now mentality.

 

[danlightbulb]

Its just not realistic to solve every issue.

We're not talking about Mrs Miggins down the road who has leaking gutter for god sake! These are national, potentially catastrophic, issues. And you don't think the Gov should be stepping in to resolve or ease the pain? What the hell do they exist for then, because they don't seem to have much other purpose in our interests do they.

 

[koolpc]

Wages are too low
Inflation is too high
Interest rates too high (for borrowers)

 

[Mercenary Keyboard Warrior]

We're not talking about Mrs Miggins down the road who has leaking gutter for god sake! These are national, potentially catastrophic, issues. And you don't think the Gov should be stepping in to resolve or ease the pain? What the hell do they exist for then, because they don't seem to have much other purpose in our interests do they.

No offence but you would probably have out credit rating to a F before the first week was out if you were PM.

No I don't think the government should be stepping in to make life easier for people who are complaining about their mortgage costs.
Come back when you cant afford to pay that, your council tax, some energy and some food and we can talk.

You still dont seem to get it, your supposed to be having it tough at the moment. To help lower inflation your being drained of everything they can in order to prevent you spending on anything you dont need to.
Those with money are being encouraged to not spend as well in order to do their bit.
Its unfortunate if your a borrower since you get the stick, those with savings get the carrot.

Shh, dont get them trying to involve the generation that's just getting on with it (in general)

Though I will say it's as if @flea.rider had it tough so everyone else has to have it tough or "it's just not fair"

IMO everyone will have it tough at some point in their life. Your very lucky if you go through life with no issues.

 

[danlightbulb]

You still dont seem to get it, your supposed to be having it tough at the moment. To help lower inflation your being drained of everything they can in order to prevent you spending on anything you dont need to.
Those with money are being encouraged to not spend as well in order to do their bit.
Its unfortunate if your a borrower since you get the stick, those with savings get the carrot.

Oh I get it, I fundamentally disagree with it, because killing discretionary spending will destroy the economy and take people's jobs with it. There has to be a better way than that.

Killing discretionary spending in pubs is not going to lower inflation which is driven by food and energy. But it will put people and business out of work and many normal people into poverty.

The targeting is completely wrong.

I agree with your previous points on tax though.

 

[Angst]

Reading through the thread i keep seeing people saying that boe have no choice but to do this to curb inflation and that it will eventually work because its worked before. Most of the current inflation is been driven by increased energy and fuel costs which have then increased the costs of basics and neccesities like food. If inflation does slow down it will only be because energy prices are going back down. Making people who already cant afford to go out and spend on luxuries then also not be able to afford their homes does not seem like a wise solution to the current inflation issue. Just because its worked in the past doesnt mean its a good solution in the current scenario.
We can tell how little people were spending last year on luxuries by the fact we had to have energy price support to stop people dying over winter because they cant afford their energy bills, on the one hand we are giving hand outs ackowledging people literally dont have enough money to pay their bills yet on the other we are making their homes both mortgaged and rented unafordable to curb inflation. Its a joke that people worth far too much money are orchestrating from up on high while telling is it will be ok and were all in it together.

Even at the best of times its such an unfair way of solving it, you make the poorest poorer so they cant afford to buy even small luxuries to make their lives more tolerable while tellign all the wealthiest that if they dont spend their hoards of gold that they will get even richer. There are other ways of solving it but that would mean telling corporations and the rich to make less profit but that is unfair so we cant do that.