Mortgage Rate Rises
- Thread starter glenimp617
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Can you imagine the carnage last summer if he hadn’t done that? Of course the Tories defend the independence because it suits them to blame someone.
Truss, Kwarteng, Brexit, Currency devaluation, loss of credit rating oh no boss nothing to do with us
As i was actually “there” in 2007/8 I remember when Fannie and Freddie tanked (because don’t forget it was them first) and the squawk box guy screamed out “they’re cutting, they’re cutting, they’re cutting” (he was a South African guy, very entertaining) and IIRC it was Sweden who cut to 0 first. I miss the trading floor action! FWIW I think we took 160BN back on the books from the SIVs at that point. Within a week we were peering out of the 26th floor window at the Lehmans lot lined up outside getting their marching orders. Nothing to do with Brown whatsoever I’m afraid.
It was 1997 when Brown gave the BoE independence to fix the rate, not 2007. I was responding to all the cries for the government to do more as the Bank changing rates had been too blunt an instrument.
Yes, I was also there, and for the 1990's recession and for the eighties and for the seventies. Before then memories were of a childish nature.
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Soldato
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IMO the BOE setting rates is the best solution.
The previous criticism was that as the government controlled them they did what was best for the governments election chances (like with everything else) and not what needed to be the interest rate.
I believe what we see is the issue with people being given a specific brief that is not well set.
Nothing is stopping the chancellor from writing to the BOE and giving them a new target, say 6% by the end of 2023, 4% by the end of 2024 and 2% again after that.
I believe the only reason why Hunt and predecessors have not done so is that they can hide behind the BOE being independent.
I shudder when I think what Boris would probably have done had he have had that lever in his control. Would probably have been more free money for everyone added to the debt.
I think despite some peoples protestations the bank are doing what is necessary. The real risk is we allow inflation to become ingrained and we switch from mainly imported inflation to domestically driven inflation.
The bank has for example in the past said they did not see the need to change rates as they saw the inflation as a short blip. The fact they have not said that this time makes me believe the data they have shows inflation becoming more "sticky"* this time.
* I believe this is the term that is used.
The previous criticism was that as the government controlled them they did what was best for the governments election chances (like with everything else) and not what needed to be the interest rate.
I believe what we see is the issue with people being given a specific brief that is not well set.
Nothing is stopping the chancellor from writing to the BOE and giving them a new target, say 6% by the end of 2023, 4% by the end of 2024 and 2% again after that.
I believe the only reason why Hunt and predecessors have not done so is that they can hide behind the BOE being independent.
I shudder when I think what Boris would probably have done had he have had that lever in his control. Would probably have been more free money for everyone added to the debt.
I think despite some peoples protestations the bank are doing what is necessary. The real risk is we allow inflation to become ingrained and we switch from mainly imported inflation to domestically driven inflation.
The bank has for example in the past said they did not see the need to change rates as they saw the inflation as a short blip. The fact they have not said that this time makes me believe the data they have shows inflation becoming more "sticky"* this time.
* I believe this is the term that is used.
Absolutely, economic levers should be pulled for what's best for the economy, not political expediency.
I did have a eye roll, though was not surprised, that Hagars reply about the current issues was "But Labour"
It's funny...this forum is the only place I get to talk about the reality of life in the UK with people that are actually realistic though. In real life conversations with people if I ever try to bring up some of the dark - but realistic - views and points raised in this thread, it generally gets laughed off in true British style and I get called a moaning old git. I mean I am one
but still... People shy away from admitting to the reality of life in the UK. I fear for the future of our children. I believe many kids will live at home well into their late 20s now. It's going to become the norm.
It's funny...this forum is the only place I get to talk about the reality of life in the UK with people that are actually realistic though. In real life conversations with people if I ever try to bring up some of the dark - but realistic - views and points raised in this thread, it generally gets laughed off in true British style and I get called a moaning old git. I mean I am one
People shy away from admitting to the reality of life in the UK. I fear for the future of our children. I believe many kids will live at home well into their late 20s now. It's going to become the norm.
That's why I love this forum. I only have a couple of people and they are remote to me now anyway.
I like to think I'm slightly reasonable and realistic.
I've never relied on handouts or support. As much as I'd love the world to be a nicer place. Humans are inherently selfish. And unfortunately, our society rewards it.
My partner used to say "why can't someone decent be in charge?" because decent people rarely crave that level of power. And can't do what it often takes to get there.
I've been dealt a good hand (relatively) and would never say I've got where I have (to just above mediocre
) off my own back. But I haven't had literal hand outs either. Unfortunately much of financial success is down to luck. (inheritance, being born into opportunity, a good family, a safe country). But there are also many who do put the effort in, come from nothing.
But living life thinking you are owed, because that's the way it should be? You're only going to be disappointed.
As much as we would all love an amazing NHS, we aren't prepared to pay for it. Tories keep getting voted in, we mostly vote for low tax, so for all the "I want a world class nhs" we don't really.
People are fascinating and selfish (mainly).
Should a FTB really be expecting to buy a house that costs around 40% more than the average house price though (under £250k in Wales in believe)? I mean if FTB are expecting to buy well above average then who is buying all the cheap stuff to bring the average down?
Well, in crude terms the economy is still growing, so people aren't that skint (certainly not skint enough yet!) especially when you look that it was pub and bar retail that propped things up! Doesn't sound like people can only afford the essentials.
Some other points from that article
And a good insight into why raising interest rates hasn't curbed things as quickly as maybe expected
UK has no alternative to Bank interest rate rises to calm inflation - Hunt
Chancellor says he "unstintingly" supports the Bank of England to "do what it takes" to cut inflation.
www.bbc.co.uk
Some other points from that article
And a good insight into why raising interest rates hasn't curbed things as quickly as maybe expected
People seem to forget that a lot of FTBers aren't buying a 1 bed flat. Yes that used to be what people did in early 20s, buy a 1 bed flat to "get on the ladder", but a lot didn't/couldn't and actually lived a life. Suddenly you end up in your 30s with kids and the first house you buy is over 400k because you live in the South East.
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Well, in crude terms the economy is still growing, so people aren't that skint (certainly not skint enough yet!) especially when you look that it was pub and bar retail that propped things up! Doesn't sound like people can only afford the essentials.
UK has no alternative to Bank interest rate rises to calm inflation - Hunt
Chancellor says he "unstintingly" supports the Bank of England to "do what it takes" to cut inflation.www.bbc.co.uk
Some other points from that article
And a good insight into why raising interest rates hasn't curbed things as quickly as maybe expected
I think you're falling foul of underestimating the wealth divide
No, perhaps a slight hilarity at prudence and the fairy tale beginning, but I thought it was a good idea at the time and still do. It was one of the high points of Blair first parliament. I don't need to be more effusive do I.
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Well. It's the only example I can give. But even on a cheaper house. You still have similar gains and simailr pain chasing a moving target.
For last 10 years at least it's only been the price rises being chased.
Now it's the interest rates and affordability.
My Post is simply to demonstrate the additional costs for 0 gain a new buyer. Would be taking on.
In 2020 the average house was 240k. This house was less than 10pc more than that then.
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But who is buying the 1 bed flats? I appreciate there will be BTL disproportionately active in that sector but in theory that should be being tempered by changing tax legislation, some retirement properties etc but my point is by definition there has to be someone buying cheaper properties if the average is less than what FTB are spending, so I'm just wondering who that is. Furthermore if FTB have raised their expectations and now expect family homes instead of a 1 bed flat then well, that's kind of moving the goalposts a lot so it's not really surprising it would be a struggle. Even if the market had remained completely static, that's obviously going to be more expensive because it's not a like-for-like property comparison.
This seems at odds what what is reported online anyway. According to everywhere I've looked, average FTB price is below average price. e.g. compare average sold price here: https://www.zoopla.co.uk/house-prices/uk/
with an article from Zoopla last week putting average FTB price at £240k: https://www.zoopla.co.uk/discover/p...e-average-first-time-buyer-deposit-by-region/
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In my head I class houses as
1st house (ie it's a means to an end, getting on the ladder)
2nd house (a house you could be OK in, but it's not your forever home)
Forever home (obvious)
As houses get more expensive and the gap between 1st house and 2nd house and forever grows.
And because of the rise and general inflation outstripping wages the costs of moving are also ballooning.
My circumstance made me push longer to skip 1st home. It required saving more deposit (40k with fees on top) and scrimping (ie hiring a van to move stuff from Lincolnshire to Cardiff) rather than paying removals (brutal job!).
But I was too old (34) to settle for a "1st home"
If I had settled for that first home 2 years earlier, the second home would be further out of reach now. Such is the increasing gap.
Plus I've avoided paying 2 sets of stamp duty, moving costs etc. As I fully expect my next home to be able to be a forever home.
Also. Non tangible savings of stress of moving.
Sometimes your earnings jump enough to make skipping that first step worth it
Overpriced new build.
You need to know the original construction of the data set.
Problem is the data in the housing market has so many fraudulent data points it has become very untrustworthy.
The problem these days there is so much fraudulent data it becoming difficult to get objective results.
Regarding the talk of overstretching earlier in the thread, FWIW, I kind of regret not stretching. We bought in 2008, when it was clear there was a slump coming, so we bought a 3 bedroom terraced house instead of a 4 bedroom detached. Both were affordable but:
a) We didn't need the extra space at that point in time
b) I was wary of losing more money in a falling market.
Fast forward nearly 15 years and we've lost out on not speculating. As you'd expect, our house has appreciated less in value compared to the bigger more expensive one. We'd probably have about ~£75k more equity had we pushed the boat out (not to mention having 15 years living in a better home).
a) We didn't need the extra space at that point in time
b) I was wary of losing more money in a falling market.
Fast forward nearly 15 years and we've lost out on not speculating. As you'd expect, our house has appreciated less in value compared to the bigger more expensive one. We'd probably have about ~£75k more equity had we pushed the boat out (not to mention having 15 years living in a better home).
People have been getting pay rises, energy bills have been capped and I would wager that people are far less financially prudent than ever at the moment. Almost everyone I know hasn't reigned in their spending, they just either have less money going into savings or they are just always on the edge of broke.
That doesn't answer my question though - who is buying them?