That's the reality for most humans on earth surely
Mortgage Rate Rises
- Thread starter glenimp617
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Totally agree. Some people won't be hit for years. Those that do are already hit enough for it to achieve what it's designed to do. Any more will just drill those people exposed to it into the floor.
BoE is lucky the UK is predominantly short fix/tracker. If not it would be far less effective.
And there has been a contingent of us that have been criticising this economic model for a long time, and have been derided by the populus.
I am really not meaning to come over as unempathic about peoples individual plight or difficulties, as I understand it only far too well (been there got the T-shirt multiple times) but we are where we are because of a multitude of collective bad decisions over the last few years/decades. I struggle to not make that political, but the austerity ideology Cameron and Osbourne implemented is what stifled any wage growth in this country for over a decade, which has led to the result that people didn't have that much slack to easily absorb this inflation problem we have now. The housing market has been particularaly insane, which we've all known has been a house of cards, which has led to the unaffordability crisis now that interest rates go above 0.
But, we warned that it was a bad idea and got laughed at as 'looney lefties'. We then warned about Brexit was going to make things economically worse and again got laughed at and derided as 'remoaners' by the same people. When we have stood up for the poor in this country, the same people just replied "they should have done better at school' or 'get a better job then' but like I say, now when it's those same people are now facing hardship, it's all woe is me and the Govt should do something to bail me out. It's rather frustrating.
Its not just people, businesses are also exposed. You could argue its a flaw in the UK system of short termism fixes exposing households to this but then again the entire country is plagued by short term thinking and has been for decades.
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Soldato
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Not a fan of the "living beyond their means" mantra, as it's usually applied to those at the lower income end. If the overall standard of living was higher that would be less likely to happen, although I do admit there are some who do exactly that regardless of their earnings.
I don't dispute that but I don't know enough about economics to know what is right. Then again, neither do economists!
It's rather that economics is more of a social science to me where they work out what happened and why, rather than being able to accurately predict what will happen.I don't dispute that either, but on the whole people in this country seemed to have become very greedy and selfish with an 'I'm all right' jack attitude and just try and get as much for themselves as possible and screw everyone else. Our politics have reflected that.
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Totally agree, The "Get a better job/ done better at school" thing is what annoys me the most. How does an economy work if everyone is successful? Who serves your coffee in costa? Who cleans the office? Who stacks the shelves? etc etc.
The "just try hard and you can be anything you want to be mantra" is the biggest lie everyone is told on a daily basis. It is impossible for everyone to do that within the confines of our current society and economic model.
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Soldato
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It remains to be seen if supermarkets are trying to bump their margins back up following the recent supply chain issues, but in a normal year most of the big supermarkets are only making a 5% margin, which is pretty thin, it's only the scale of them that makes a business like that viable.
Gross profit shouldn't be the measure of profiteering - it's % margin instead.
Even if that were true and I'm not totally convinced it is tbh, I'm far more convinced that we have an issue of deflection from large parts of the press shouting "but look.. audis and big screen TVs" when the problem may well be one of making life more bearable because no amount of saving is ever going to get you a secure house/retirement etc...
Even if that were true, was it not unconsciously selfish and "screw you" for previous generations to have sucked up all the retirement and property wealth such that we're in this mess?
That is very true, gross profit is a horrible measure of profitability to be fair, it doesn't take into account basically any cost of business just the sales price minus the cost of goods.
Soldato
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I do get a bit annoyed at the all old people are rich some seem to believe.
There are plenty of older people who do not own their own home, and do not have great pensions.
The wealth gap exists within that age group as well.
Which seems really odd right, its almost as if not everyone was well paid (they werent and had no protection in regards minimum wage), not everyone had a gold plated pension (they didnt, not every company had one, although most larger ones did as part of renumeration the rest were basically forced onto SERPS), houses were not as cheap as people like to make out for the average person etc etc etc.
There are plenty of older people who do not own their own home, and do not have great pensions.
The wealth gap exists within that age group as well.
Which seems really odd right, its almost as if not everyone was well paid (they werent and had no protection in regards minimum wage), not everyone had a gold plated pension (they didnt, not every company had one, although most larger ones did as part of renumeration the rest were basically forced onto SERPS), houses were not as cheap as people like to make out for the average person etc etc etc.
Soldato
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Exactly
People just don't get it generally - if they were going to start their own business and put there money at risk for such a low margin, they must realise they'd be better off sticking it into a low risk investment and having the same margin with hardly any of risk...
I think we're at the stage of placating the markets more than anything.I don't dispute that but I don't know enough about economics to know what is right. Then again, neither do economists!
There was no "unconsciously" about it. They know exactly what they are doing but they have "earned it". They don't give a crap about future generations because up to a point, if you do well enough you are able to isolate anyone you actually care about from the consequences of your actions. You wouldn't want to have to suffer even a little so that future generations could have a slightly better life.
It is all a ponzi scheme and relies on infinite growth to prop it up. As that slows it all starts to fall apart. We aren't even addressing the massive elephant in the room that is going to ruin us all. Climate change.
You are right. Not every older person is wealthy.
However, houses WERE cheaper for the "boomer" generation, and they made insane amounts of money on the house price growth. My parents house went up nearly 8x in value in ~20 years.
For people that didnt make it onto the housing ladder in the 70'/80's then they will likely be rather poor in comparison. Most of those that did though, made a fortune, especially in the south east/London etc.
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Soldato
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I don't disagree but as have been over before it was harder to get a mortgage then. Hence why the home ownership numbers were not that much different.
I suspect that was part of the reason they were cheaper, since many people who can get a mortgage now would not have passed the lender vetting that they did then.
And again as we have discussed, its very difficult really comparing generations since so many things change, for better and for worse.
I would say IMO middle class from Boomer times was all you needed to end up rich (in wealth terms even if not in cash terms). That has moved higher now.
Personally I think the poor then were probably in effect worse off than now. One of the advantages they did have however was better public services and the fact that way more people worked locally.
When cars became much cheaper and more reliable that link was broken as people sought to work further away for more money.
Yes, i somewhat agree.
As you mentioned, it is much harder now to break out from average/middle class into something higher/more wealth.
However, you cannot escape the fact that houses were between 4-6 times average earnings during the boomer generation's 20's to 40's and they are now approaching 10x though. That is a collosal difference in affordability, and i highly doubt we will see anything like the increases in house prices that they saw.
Also the much touted "15%!!" rates they had were only the peaks. Through most of the 80's it averaged around 9/10% and through most of the 90's it was about 5/6%.
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For sure. But as a whole the next "generation" to get old is going to be in a far worse state come retirement.
We completed on our first house in Feb 2021 on a 2 year 2.69% fix at an LTV of 90%. Fast forward to October 2022 and we renewed on a 5 year 3.89% fix at 73% LTV (around the time of the horrendous budget announcement). That very same deal shot up to around 4.5% a mere 24 hours later. It's now 4.77%.
A first time buyer on the same deal we took in 2021 at 2.69% is now 5.69%, which is an increase of circa £870 > £1700 per month. Absolutely bonkers.
A first time buyer on the same deal we took in 2021 at 2.69% is now 5.69%, which is an increase of circa £870 > £1700 per month. Absolutely bonkers.
It is too late now and the cat is out of the bag, but i think lending for houses should have always been far more limited, as it is the fact that banks are willing to lend so much that pushes prices up.
To be honest, i would have put a cap on the amount that can be borrowed when buying a house, regardless of how wealthy you are. If you want something more expensive or luxurious you save and make up the shortfall yourself.
high wages etc and the fact that what can be borrowed is based on a multiple of that, means vast sums can be borrowed and house price competition just becomes based on who can borrow more money, not who actually has more money.
I would also likely ban all lending for second homes/buy to let.
To be honest, i would have put a cap on the amount that can be borrowed when buying a house, regardless of how wealthy you are. If you want something more expensive or luxurious you save and make up the shortfall yourself.
high wages etc and the fact that what can be borrowed is based on a multiple of that, means vast sums can be borrowed and house price competition just becomes based on who can borrow more money, not who actually has more money.
I would also likely ban all lending for second homes/buy to let.