Mortgage Rate Rises

The Funktopus said:
I’m on a fixed rate until February 2025, and even now I’m bricking it, and that’s with me going from £48k to £84k since we signed a 5 year fixed in 2020. The only light at the tunnel we have is that as long as house prices don’t utterly crash between now and then, we’ll be at about 50% or so LTV.

I know it sounds like I’m worrying over nothing, but things are getting utterly out of control it seems.
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While you have a chance you should cut back on as much as you can and save like crazy. When you look for a new fix rate you can dump your savings and reduce the servicing fees.

I doubt rates will remain high for that long. unfortunately if it does or rises by your next term, people will be truly destroyed.
 
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Mercenary Keyboard Warrior said:
Interesting listening to Blunkett on QT tonight.
He said that whilst the Labour government he served in did target the BOE with the rate setting linked to inflation they did not view it as holding the bank responsible to use the only tool that they had in isolation.
Which is pretty much the opposite of what I think most of us believe is happening right now.

Of course that government never had the same issues and never had to deal with what is going on now and hence its difficult to say what they would have done in order to assist the BOE.
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They could have slowed down properly values. What ALL governments did since labour, they kept promoting property.
 
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Mercenary Keyboard Warrior said:
Interesting listening to Blunkett on QT tonight.
He said that whilst the Labour government he served in did target the BOE with the rate setting linked to inflation they did not view it as holding the bank responsible to use the only tool that they had in isolation.
Which is pretty much the opposite of what I think most of us believe is happening right now.

Of course that government never had the same issues and never had to deal with what is going on now and hence its difficult to say what they would have done in order to assist the BOE.
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Possibly teaching you to suck eggs here but might be of interest to others. In simple terms you have monetary policy and fiscal policy. BOE predominantly controls the former whereas the government controls the later.
Monetary policy is traditionally considered as the primary tool for tackling inflation but there is other stuff that could be done - the government could increase taxes and cut back on public spending for example. However, Sunak & co have already stated their desire to reduce taxes so it seems unlikely they would sign off on significant increases.
 
HangTime said:
Possibly teaching you to suck eggs here but might be of interest to others. In simple terms you have monetary policy and fiscal policy. BOE predominantly controls the former whereas the government controls the later.
Monetary policy is traditionally considered as the primary tool for tackling inflation but there is other stuff that could be done - the government could increase taxes and cut back on public spending for example. However, Sunak & co have already stated their desire to reduce taxes so it seems unlikely they would sign off on significant increases.
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I'm an accountant who studied economics so yeah I have a bit of an idea ;)

Really I just thought it was interesting since really this is the first time that BOE policy has been a problem for the man on the street since they were tasked with this inflation target.
The first time its been under stress in effect and one of the architects of that policy says it wasn't expect it would be standing alone.

And 100%, the blame the BOE whilst undertaking actions that run contrary to the BOEs attempts to lower inflation is why I say they hide behind the BOE.
Difficult though since we know that the government taking action in a high inflation time is (like the bank) going to be adding more pain as opposed to making life easier.
 
Richie said:
To go from 48k to 84k (circa £1500/month increase after tax) and be worried about rate increases, you either have stretched yourself considerably or there is plenty of stuff that can be cut back (unless you also had 1-2 kids during that period?)
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We did have a kid during that period, while my wife’s gone down from working 5 days to 2 when she returned after maternity leave, so I’m picking up the slack in terms of the household income. I’m hoping she can pick up more days, but that’s difficult seeing as she’s in a job share with a colleague who also wanted to go part time. Any increase in my wife’s hours would have to come from her colleague agreeing to reduce hers.
 
Mercenary Keyboard Warrior said:
I'm an accountant who studied economics so yeah I have a bit of an idea ;)
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Studying Economics in a Accounting module is just like reading definitions, no understanding the mechanics behind it all. Having a bit of an Idea always means winging it.

CBs have a lot of tools to slow down the economy, unfortunately they cant use them these days.

Why because after every financial downturn the system ends up more sensitive to shocks, regulation gets harder, new riskier methods evolve ( some of it due to windfall tax, and regulation etc... ), sometimes these tools make the problem worse.

Government secretly love's inflation, helps erode debt, tax revenues up medium - long run.
People end up paying more but getting less, people will end up with bare minimum.
There will come time people will get nothing, but they will not say anything.
While tax payers money is being syphoned by the wealthy.
The country is very weak, we you have been conditioned to accept everything and say nothing.

Gordon Brown: no more booms or busts, that was very funny.

Blaming Liz for the pension crisis always funny.


.https://gnseconomics.com/2020/10/08/the-destruction-of-the-world-economy-by-the-central-banks/#:~:text=Central%20banks%20have%20delivered%20a%20%E2%80%98double-whammy%E2%80%99%20to%20the,serious%20distortions%20%28i.e.%20%E2%80%98bubbles%E2%80%99%29%20in%20the%20financial%20markets.

ypJLjgfsTfQsx3M8NyOQqvW70kffwu-poAl2LmBkiToYfcXqGjM3wxpp_yfUttVl0D43Fg=s161
 
I was in an Uber from Heathrow earlier. I thought my situation is bad... He said most of these Uber drivers who have mortgages have no chance of getting a fixed deal. They've been hit with each rise, making up a substantial part of their take home pay.
 
dLockers said:
I was in an Uber from Heathrow earlier. I thought my situation is bad... He said most of these Uber drivers who have mortgages have no chance of getting a fixed deal. They've been hit with each rise, making up a substantial part of their take home pay.
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Just wait for councils to start failing. Some councils ( specially staff in their economic operations department ) think they are equivalent to BlackRock, Fidelity or Schroders.
 
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Some of those comments are gold.

Avocado & person Netflix? Tick
17pc? Tick
Holidays? Tick

Its always the 17pc figure. Never miras. Or the age they got thier home.
Or that holidays were super expensive then vs holidays now. Or that they could get a house so young.


You get some ridiculous comments on both sides.
 
413x said:
Some of those comments are gold.

Avocado & person Netflix? Tick
17pc? Tick
Holidays? Tick

Its always the 17pc figure. Never miras. Or the age they got thier home.
Or that holidays were super expensive then vs holidays now. Or that they could get a house so young.


You get some ridiculous comments on both sides.
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You do indeed, its so frustrating.
As I have said over and over, ask any new mortgage holders from normal backgrounds if it was super easy for them as someone said their house price was only £60k (say) and they will laugh at you.
Its never been easy for normal people.
 
Hedge said:
Some pretty funny comments in this article

www.telegraph.co.uk

‘This is not pain – try having a mortgage in the late 1970s’

Think rates are high now? Telegraph readers recall contending with even higher figures
www.telegraph.co.uk www.telegraph.co.uk

Written by people who bought their house for £6000 and it's now worth £2000000
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True... The contentious point from both sides appears to be house prices Vs interest rates i.e. low house price on high rates Vs high house price on low rate (% rate comparison e.g. 17% then and 5% now).

What would be better is to compare average mortgage payment Vs take home pay in both times (or percentage take home that paid mortgage). Then it'll be a clearer comparison.

It'll remove things like

House price differences
Interest rate differences
Income tax differences

I'm not sure if such data is easily found though.


The current issue is the usual generational BS since time immemorial of oldies decrying the young and the young moaning about the oldies.


Edit: it's seems to be human nature to be the one that are hardest done by and everyone else has had it easier... Almost like you need some kind of reassurance that, despite it all, you're better than others cause you handled worse times :rolleyes:
 
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Richie said:
What would be better is to compare average mortgage payment Vs take home pay in both times (or percentage take home that paid mortgage). Then it'll be a clearer comparison.

It'll remove things like

House price differences
Interest rate differences
Income tax differences

I'm not sure if such data is easily found though.
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Here's a financial burden translation from Neal Hudson, a UK Housing Market Analyst.

Among other factors he takes into account changing loan-to-incomes, tax policy (MIRAS etc) & product changes.

By his calculations, 6% today is around the same level of financial burden as 13% was in 1989; which is pretty much inline with every other attempt i've seen to calculate it.
 
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dLockers said:
Tbh what do you expect from such a sheltered generation. Most of them only worked one job, holiday in Marbella etc...
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Yea just agree, I try to see it from both sides but I just cannot.

And I also can justify that to myself as I believe the generation below is will have it harder then we ever did.

I was NEVER told that as a kid.
 
BUDFORCE said:
Yea just agree, I try to see it from both sides but I just cannot.

And I also can justify that to myself as I believe the generation below is will have it harder then we ever did.

I was NEVER told that as a kid.
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Part however is you have to start taking into account the decline of the west.

You cannot carry on the trend of ever improving when the thing that allowed that (western dominance) is no longer pumping that.
 
BUDFORCE said:
Yea just agree, I try to see it from both sides but I just cannot.

And I also can justify that to myself as I believe the generation below is will have it harder then we ever did.

I was NEVER told that as a kid.
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I have no doubt at all that my kids are going to have a VERY tough ride when they reach adulthood.

In hindsight, had I known all this was coming I probably would have chosen to stay child free (for their benefit, not mine). They are my world, but I have brought them into a very destructive environment.
 
dLockers said:
Tbh what do you expect from such a sheltered generation. Most of them only worked one job, holiday in Marbella etc...
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the 70s were a sheltered generation?? or did i read that wrong? everyone seems to be a victim of some sort in todays generation. Im sure it was just as hard back then but in different ways. Travel abroad was very rare for the majority of familys until the early 90s
 
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When we talk about how the 6% now is the equivalent of 15% from 1991, can someone explain this technically/terminology wise? I know it's right and support it, but I'd like to understand how mathematically these graphs were made rather than just trusting some randomer who "did the maths for us".
 
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