Mortgage Rate Rises

[Jono8]

which is an increase of circa £870 > £1700 per month. Absolutely bonkers.

That sounds slightly off math wise maybe?

Anyway, it isnt far off and that is what happens when you raise interest rates so much on such ridiculous house prices. I honestly think the government and BoE dont have a clue what they are doing. In fact i dont think any "economist" does. They are all just ******* in the wind, and if by chance it works out they pat themselves on the back and tell everyone how wonderful they are....and if they fail, they don't give a **** because they earn nearly £600k a year

 

[Mercenary Keyboard Warrior]

For sure. But as a whole the next "generation" to get old is going to be in a far worse state come retirement.

Your going to need to me more specific I am afraid.
I am not far off the next generation myself.

I work with people who were lucky enough to have worked from a younger age at the company I do now. They are getting pension pots of £1M plus from basically not especially high paying jobs.
And starting to retire 10 years early. I don't know many boomers who retired early at all.

IMO the biggest issue remains wealth inequality and I just get annoyed by the waah waah look at the boomers constantly. The world was different, it will be different again in 20 years time.

The one thing I will say for the boomers from my experience is they were generally for more up for graft, they were far less whingey (partly maybe as they were doing well), and they seemed to have a more go for it type attitude.
Thats probably a lot to do with the times, if you living in a time when things seem to be improving maybe its easier to be swept up in that environment.

 

[Hagar]

@Jono8 In 1980 you had to be a customer of a building society for them to lend you money. Have an account in good standing and probably save into it for a good while first.

 

[Jono8]

The one thing I will say for the boomers from my experience is they were generally for more up for graft, they were far less whingey (partly maybe as they were doing well), and they seemed to have a more go for it type attitude.
Thats probably a lot to do with the times, if you living in a time when things seem to be improving maybe its easier to be swept up in that environment.

They had hope.

We have none.

 

[Mercenary Keyboard Warrior]

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.

Odd.

Cap what can be borrowed, by who and with what metrics. House prices have never been equal nationally, regionally, hell even within miles in some places.
A 10% deposit in London would buy outright in a decently high proportion of the UK!
You would be designating normal people to never be able to buy within London.

And limiting lending would lead to more dodgy stuff that happens when you try to control supply and demand.
People will find other ways.
One of the issues now is that for many affordability is low so they get forced into renting.
If your limiting borrowing and making it harder for people to get the funds together then your potentially pushing more people who could buy that way.

The simple and only realistic way to solve housing costs long term is to force the supply curve to intersect the demand curve at a lower point.
These things are relative, not just to each other but many other factors.
If there is a limited amount of say nice 4 bed detached houses. And you make a group relatively better off that supply remains the same, you just make it that they can suck up more of a limited resource.

You touch on this with your comment about who can borrow more vs who has more. Its the same thing, just the other side of the coin.
You seem to be striving to give everyone equal chance to own the same property. Unless you went to a lottery its never going to happen.
In fact it would likely move us more towards old money and less about your skills.

They had hope.

We have none.

Which is what I was alluding to.

We seem to have lost some of that drive for success in our self deprecating society we now seem to strive for.

Compared to the majority of the globe we still have it good.

 

[Richie]

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.

What do you expect. Ever since Big Brother and all the other reality shows that followed, it has indoctrinated the population to believe that they are the lead role in the film of "My Life" and everyone else is simply a supporting role who are disposable and a means to get them "living their best life"

 

[Jono8]

Odd.

Cap what can be borrowed, by who and with what metrics. House prices have never been equal nationally, regionally, hell even within miles in some places.
A 10% deposit in London would buy outright in a decently high proportion of the UK!
You would be designating normal people to never be able to buy within London.

And limiting lending would lead to more dodgy stuff that happens when you try to control supply and demand.
People will find other ways.
One of the issues now is that for many affordability is low so they get forced into renting.
If your limiting borrowing and making it harder for people to get the funds together then your potentially pushing more people who could buy that way.

The simple and only realistic way to solve housing costs long term is to force the supply curve to intersect the demand curve at a lower point.
These things are relative, not just to each other but many other factors.
If there is a limited amount of say nice 4 bed detached houses. And you make a group relatively better off that supply remains the same, you just make it that they can suck up more of a limited resource.

You touch on this with your comment about who can borrow more vs who has more. Its the same thing, just the other side of the coin.
You seem to be striving to give everyone equal chance to own the same property. Unless you went to a lottery its never going to happen.
In fact it would likely move us more towards old money and less about your skills.

What i was getting at is that, the only reason house prices just keep going up and and up, and why they became so expensive in the first place, is due to the fact that people can borrow money to pay those prices.

If that was limited or impossible, the prices would not be that high.

Anything like I proposed is impossible to implement now.

However, my point was that it has always been the plan from the start, for wealthy people and bank owners etc to ensure that house prices stay inflated, so they can make a fortune lending money to buy them.

The whole thing is a gigantic con, when you really step back and look at it. My house cost about a quarter of what it is worth to actually build in material/labour, therefore the rest (or i guess land cost) is an intangible figure based purely on how much people are willing to spend (and by extension how much they can borrow).

 

[413x]

Your going to need to me more specific I am afraid.
I am not far off the next generation myself.

I work with people who were lucky enough to have worked from a younger age at the company I do now. They are getting pension pots of £1M plus from basically not especially high paying jobs.
And starting to retire 10 years early. I don't know many boomers who retired early at all.

IMO the biggest issue remains wealth inequality and I just get annoyed by the waah waah look at the boomers constantly. The world was different, it will be different again in 20 years time.

The one thing I will say for the boomers from my experience is they were generally for more up for graft, they were far less whingey (partly maybe as they were doing well), and they seemed to have a more go for it type attitude.
Thats probably a lot to do with the times, if you living in a time when things seem to be improving maybe its easier to be swept up in that environment.

I only have quite anecdotal evidence, as I don't know many boomers outside my family.


I agree that work ethic seemed better. My step dad was a work-a-holic. But his main income and absolutely amazing pension came from just working a lifetime job and progressing. He got one of those sweet final salary pensions too. One can dream


I think what you said about not seeing the benefits of Working hard is absolutely true. It very much rings true for me.

Above 50k the rewards are low. The level. Of difficulty of job difficulty goes right up for me (ie managing) and tbh, it's not worth it with the tax rate.
Up to 50, 5k seems a lot for a pay rise. Now it's 10k. And it's simply not worth the impact on life.

Some of this is good. My parents are far too "work is everything" and haven't enjoyed thier later years. But this static tax banding is really not incentivising working more hours, getting a second job.

I've chosen to make a life where 50k is enough. I'm no longer really chasing career progression. As it just isn't worth the work life balance impact.


So yeah. I think that's an important factor you bring up

My wage is 55k and going from 44 to 55 I don't feel much better off. I do feel better off. But the jump from 37 to 44 was much much more real

 

[Mercenary Keyboard Warrior]

What i was getting at is that, the only reason house prices just keep going up and and up, and why they are so expensive, is due to the fact that people can borrow money to pay those prices.

If that was limited or impossible, the prices would not be that high.

Anything like I proposed is impossible to implement now.

However, my point was that it has always been the plan from the start, for wealthy people and bank owners etc to ensure that house prices stay inflated, so they can make a fortune lending money to buy them.

The whole thing is a gigantic con, when you really step back and look at it.

So now we end up with a bit if CT that there is a plan.

House prices go up due to supply and demand. Its really simple, if there is a shortage of supply for something then the point where the demand curve intersects will be higher.

Artificially controlling the point where they can intercept leads to all sorts of problematic and interesting outcomes.

People have always bid most for a rare resource with him willing to pay most securing the resource/item.
Outside corrupt areas its how it has always and likely always will work.

If there is only one perfect house in my town and there is another person after it I am going to be willing to pay £x for it. If the other guy is willing to pay £x+1 then he will get it.
Your not going to create a healthy environment if you try to break that model!
Your going to need to restrict a hell of a lot of people to stop restricting at a lower value just meaning those who are relying on future earnings being made second class citizens to those who already have the money.

If you want to push down (I would suggest trying to freeze prices is better) then you need to up supply. The sorts of houses people want, where they need them.
There are plenty of ways to do this, but successive governments shy away from that.
Not all the aspects are easy to control, as you force standards up, prices go up.

 

[Jono8]

So now we end up with a bit if CT that there is a plan.

No not at all. No CT. Just rich and greedy people getting more rich and greedy.

Also, nothing that they are currently doing is working is it? It is about time they tried something radically different because the entire western economic capitalist model is massively flawed and is completely unsustainable long term.

How is it possible for house prices to continue to go up in multiples of earnings for ever? It is not sustainable.

Honestly, just step back and properly think about where house prices would be if there were never wealthy corporations/banks willing to lend inordinate sums of money to everyone.

 

[Hagar]

Most people went from school to work. 10% went to university. Gap years were never a thing. Holidays if you could go abroad were caravan to France or fly to Spain, Italy was a bit posh. Forget long haul.
When we moved in to our own house we had no phone, no television for a year or so, no car, no freezer. Furniture was all second hand except for a bed. Relatives helped there.
I was motivated to provide all this stuff. I worked in my day job as a design draughtsman (before CAD) and at nights in a pub. We took a holiday every three years or so.

Now I am mortgage free but it took 30 years and it was grafting all along.

 

[Jono8]

Most people went from school to work. 10% went to university. Gap years were never a thing. Holidays if you could go abroad were caravan to France or fly to Spain, Italy was a bit posh. Forget long haul.
When we moved in to our own house we had no phone, no television for a year or so, no car, no freezer. Furniture was all second hand except for a bed. Relatives helped there.
I was motivated to provide all this stuff. I worked in my day job as a design draughtsman (before CAD) and at nights in a pub. We took a holiday every three years or so.

Do you want a medal?

Now think about where our economy would be right now if everyone suddenly did that. Half the population would lose their job.

 

[Hagar]

Do you want a medal?

Now think about where our economy would be right now if everyone suddenly did that. Half the population would lose their job.

Well perhaps their jobs are not too worthwhile. Perhaps we should produce less and consume less, more like one planet in this day and age.

 

[Jono8]

Well perhaps their jobs are not too worthwhile. Perhaps we should produce less and consume less, more like one planet in this day and age.

I totally agree with that.

We are on a road to nowhere on our current economic trajectory. We have a ballooning mental health crisis all over the western world and a completely unsustainable economy that primarily serves to make the rich richer.

 

[danlightbulb]

Most people went from school to work. 10% went to university. Gap years were never a thing. Holidays if you could go abroad were caravan to France or fly to Spain, Italy was a bit posh. Forget long haul.
When we moved in to our own house we had no phone, no television for a year or so, no car, no freezer. Furniture was all second hand except for a bed. Relatives helped there.
I was motivated to provide all this stuff. I worked in my day job as a design draughtsman (before CAD) and at nights in a pub. We took a holiday every three years or so.

Now I am mortgage free but it took 30 years and it was grafting all along.

That is not too far off what most of us do now.

The people who go on exotic holidays, have all posh furniture, are only a subset of most people. I'm certainly not like that, yet will struggle if I have to pay 6-7% interest simply because I had to pay more that what I wanted to get a house.

 

[Mercenary Keyboard Warrior]

I only have quite anecdotal evidence, as I don't know many boomers outside my family.


I agree that work ethic seemed better. My step dad was a work-a-holic. But his main income and absolutely amazing pension came from just working a lifetime job and progressing. He got one of those sweet final salary pensions too. One can dream


I think what you said about not seeing the benefits of Working hard is absolutely true. It very much rings true for me.

Above 50k the rewards are low. The level. Of difficulty of job difficulty goes right up for me (ie managing) and tbh, it's not worth it with the tax rate.
Up to 50, 5k seems a lot for a pay rise. Now it's 10k. And it's simply not worth the impact on life.

Some of this is good. My parents are far too "work is everything" and haven't enjoyed thier later years. But this static tax banding is really not incentivising working more hours, getting a second job.

I've chosen to make a life where 50k is enough. I'm no longer really chasing career progression. As it just isn't worth the work life balance impact.


So yeah. I think that's an important factor you bring up

My wage is 55k and going from 44 to 55 I don't feel much better off. I do feel better off. But the jump from 37 to 44 was much much more real

There is another factor I would say that is newer and more marked now than ever.

Thats the job inequality. As much as we have big issues with wealth inequality we also have lots of job inequality.

What do I mean?
Well some roles (and I mean no disrespect here) seem to pay far more than the barriers to entry and skills needed seem to indicate. Currently many building trade jobs fall into this. Why? well its supply and demand again!

Historically jobs paid a far closer amount to the level of difficulty and barriers to entry. Professional level jobs paid significantly more than non, they were harder to get, had harder barriers to entry etc
Hell when I left secondary school they tended to try to send the "thickies" to construction and similar type jobs, the bright but wanted to leave at 16 to office type environments and the bright but happy to carry on studying to 6th form.
The schools steered you that way, either quite strongly, such as going for a day to the local college to see the construction jobs, or having one of the 6th forms come in to discuss courses. Or sometimes just subtly.
At that time you didn't expect the guy going to learn plastering to be earning 2x the national wage, it simply didn't happen.
Going to be a nurse would be a decent job as they needed to stay in further education.

So the jobs that were typically more skilled saw better wages. That link has IMO been badly broken. Hell thats what the market will do however.
We pushed more people to become higher skilled when the jobs dont exist. We in effect created more competition for the now over subscribed previously well paying jobs which are no longer so well paying.
The jobs that were historically not great (not bad but not great) due to skills shortages now pay as well paid jobs because so few people trained to do them.

It feels like the governments have broken this with their meddling and smoke and mirrors.
"higher skilled higher paid jobs" hmm yeah right. Until the supply of people for these higher skilled jobs now exceeds the demand for these workers.

Anyway, I am done now, too much off topic

 

[Jono8]

There is another factor I would say that is newer and more marked now than ever.

Thats the job inequality. As much as we have big issues with wealth inequality we also have lots of job inequality.

What do I mean?
Well some roles (and I mean no disrespect here) seem to pay far more than the barriers to entry and skills needed seem to indicate. Currently many building trade jobs fall into this. Why? well its supply and demand again!

Historically jobs paid a far closer amount to the level of difficulty and barriers to entry. Professional level jobs paid significantly more than non, they were harder to get, had harder barriers to entry etc
Hell when I left secondary school they tended to try to send the "thickies" to construction and similar type jobs, the bright but wanted to leave at 16 to office type environments and the bright but happy to carry on studying to 6th form.
The schools steered you that way, either quite strongly, such as going for a day to the local college to see the construction jobs, or having one of the 6th forms come in to discuss courses. Or sometimes just subtly.
At that time you didn't expect the guy going to learn plastering to be earning 2x the national wage, it simply didn't happen.
Going to be a nurse would be a decent job as they needed to stay in further education.

So the jobs that were typically more skilled saw better wages. That link has IMO been badly broken. Hell thats what the market will do however.
We pushed more people to become higher skilled when the jobs dont exist. We in effect created more competition for the now over subscribed previously well paying jobs which are no longer so well paying.
The jobs that were historically not great (not bad but not great) due to skills shortages now pay as well paid jobs because so few people trained to do them.

It feels like the governments have broken this with their meddling and smoke and mirrors.
"higher skilled higher paid jobs" hmm yeah right. Until the supply of people for these higher skilled jobs now exceeds the demand for these workers.

Anyway, I am done now, too much off topic

You are right there.

The other major issue with the trade jobs being so well paid now is that pushes the prices of infrastructure up , and housing even further. I bet our government pays silly money for simple trade related jobs now which all comes out of our taxes.

I often laugh at the quotes people get from tradesman to do anything around their house, even painting.

My sister-in law apparently earns £20 an hour just sticking emulsion on walls with zero experience.

The whole system is upside down, and it makes me seriously question whether leaving things to market forces and supply and demand etc is a good way to run a sustainable economy/population.

 

[Mercenary Keyboard Warrior]

You are right there.

The other major issue with the trade jobs being so well paid now is that pushes the prices of infrastructure up , and housing even further. I bet our government pays silly money for simple trade related jobs now which all comes out of our taxes.

I often laugh at the quotes people get from tradesman to do anything around their house, even painting.

My sister-in law apparently earns £20 an hour just sticking emulsion on walls with zero experience.

The whole system is upside down, and it makes me seriously question whether leaving things to market forces and supply and demand etc is a good way to run a sustainable economy/population.

I find it very curious and as I said I believe its down to government interference. Started mainly under Blair I believe.

If I was leaving school now I would 100% go into a trade. There is massive earnings potential there.
Although I do think it may get a lot worse for many in the short term.

I keep thinking of going semi semi retired and retraining as a sparky.
Working when I fancy, doing the jobs I fancy and nothing I don't.

 

[firstborn]

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.

Is that just the interest £870 > £1700 p/m? If capital as well, then how?

 

[jaybee]

They had hope.

We have none.

I agree. I don't think it's rose tinted specs looking back. I think those times (80s, 90s) were a lovely time in the UK for too many reasons to go into. There was hope to the future. Improving not just bettering oneself but as a country. Technology and the internet hadn't changed the world yet and things were I guess more simple. We were pleased and content with less. Almost like a virus, we now consume at levels like an addict and compare ourselves to others more because "others" are in our faces as a constant reminder to how the richer live with the rise of worldwide internet/social media/tv etc. We are more well aware of influencers and youtubers living it large and it hurts more these days as we see and hear of it more.

There is another factor I would say that is newer and more marked now than ever.

Thats the job inequality. As much as we have big issues with wealth inequality we also have lots of job inequality.

What do I mean?
Well some roles (and I mean no disrespect here) seem to pay far more than the barriers to entry and skills needed seem to indicate. Currently many building trade jobs fall into this. Why? well its supply and demand again!

Historically jobs paid a far closer amount to the level of difficulty and barriers to entry. Professional level jobs paid significantly more than non, they were harder to get, had harder barriers to entry etc
Hell when I left secondary school they tended to try to send the "thickies" to construction and similar type jobs, the bright but wanted to leave at 16 to office type environments and the bright but happy to carry on studying to 6th form.
The schools steered you that way, either quite strongly, such as going for a day to the local college to see the construction jobs, or having one of the 6th forms come in to discuss courses. Or sometimes just subtly.
At that time you didn't expect the guy going to learn plastering to be earning 2x the national wage, it simply didn't happen.
Going to be a nurse would be a decent job as they needed to stay in further education.

So the jobs that were typically more skilled saw better wages. That link has IMO been badly broken. Hell thats what the market will do however.
We pushed more people to become higher skilled when the jobs dont exist. We in effect created more competition for the now over subscribed previously well paying jobs which are no longer so well paying.
The jobs that were historically not great (not bad but not great) due to skills shortages now pay as well paid jobs because so few people trained to do them.

It feels like the governments have broken this with their meddling and smoke and mirrors.
"higher skilled higher paid jobs" hmm yeah right. Until the supply of people for these higher skilled jobs now exceeds the demand for these workers.

Anyway, I am done now, too much off topic

Totally. It's why as a parent I am in a constant battle with myself mentally as to how to guide my intelligent son, who is doing well at school and could easily do A levels etc, who is talking about going down a trade route. Will trades still be a good long term selection as a career in 20 years time as they are now, or are they over inflated currently and will go back down? I would think they will if anything become even more valued since AI cannot affect human crafted jobs. Robots that can re-wire a house or crawl into a loft and do some plumbing are surely decades off and that's if we even want/trust them? iRobot anyone?