Mortgage Rate Rises
- Thread starter glenimp617
- Start date
I guess if people are that price insensitive at seemingly quite a large scale, then the bucket that core inflation is measured on must be trivial.
We should do a poll of users who have just bought stuff that has been most affected by inflation and ask how they are affording it
Interesting figures.Can't trust banks with the numbers.
The editors calculations
Average wage in 1980 was ~ £5k knock off 1k for 20% tax, NI etc so ~4k disposable income = ~ 50% of income assuming you can trust any other numbers.
That would make the current 6.5% approx equal to 15% back in the day
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Soldato
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I was just examining the data. I hadn't realised that what the ONS calls core inflation is not what I thought it was. 'Core' to me sounds like it should measure the essentials, food energy etc. But what they call core is everything excluding food, energy. Don't really understand why they would do this but it seems quite misleading to me, because I would think most people would assume core meant what I thought it meant.
Ive recently bought some DIY stuff. Bags of sand, cement, some wood, paint etc. The only thing I thought expensive which I was able to notice was different to the past was the wood, everything else seemed fairly normal price to me.
But I can't see how spending on stuff like this is really driving inflation. Its normal stuff, being consumed at the rate its always been consumed at.
It feels to me like we are in an inflation spiral, but one driven by an increased desire for profit rather than any real supply shortages or demand changes. This may be because of the energy issues - they have triggered everyone to go after as much profit/wage increases as they can to protect themselves.
For that to be true, companies would have to be making absolutely record unprecedented profits though.
Permabanned
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you can hide profits .. for a while ...
Yes. It was a /s
Well someone, somewhere in the chain is making more money....
I will call them in the morning .why? I can tell them I made an error and do a manual payment but it's unlikely to be needed as I should be completing with the new lender
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I paid my dad board when I got my first job after uni, about 20% of my take home. He didn't need the money but it seemed like the right thing to do as a grown adult. He gave us £10k towards the deposit on our first house but it wasn't directly related to what I'd been paying him (which I guess totalled about £8k by that point).
Covid meant spending on travel (both commuting and holidays) was reduced. Maybe some people liquidated their investments in early 2020 also (remember the FTSE went under 5000 at one point).
Disposable income would've been less than that in 1980. Income tax was 25% on the first £750 then 30% up to £10k. So on £5k you'd have about £3.5k disposable.Can't trust banks with the numbers.
The editors calculations
Average wage in 1980 was ~ £5k knock off 1k for 20% tax, NI etc so ~4k disposable income = ~ 50% of income assuming you can trust any other numbers.
That would make the current 6.5% approx equal to 15% back in the day
Note it says household disposable income though. So presumably it would be more than £3.5k due to some households having more than one earner.
Ultimately therefore the percentage I'd expect to be below 50% but definitely more than 11%.
It's Game Over For The UK Housing Market! (UK House Price Crash 2023)
UK House Prices are CRASHING and it's TOO LATE for anyone to STOP IT! The housing market crash is already well underway and the second half of 2023 is going ...youtu.be
This commentator absolutely loves a good crash.
Comments on that video are quite funny. People so happy for a crash so they can get on the housing ladder.
Its difficult to gauge really.
We might get more of a softening/stagnation. People will likely just sit tight, and many will still be on good fixed rates for a few years yet.
Supply is still an issue, and building and material costs are still high so....
It's unlikely we will see prices rise in the near term. A large crash?? I think that would go in tandem with economic meltdown everywhere else/across the world.
Not sure people wishing for a 40% crash are aware of what they are wishing for......not a society you are going to feel safe in.
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Soldato
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TBH I think thats seriously misleading when you consider
"The average weekly wage in 1980 was £124.50 for men and £78.80 for women"
Yeah it's nonsense, no idea where they got £18k disposable household income from. Maybe they asked the Queen or something.
Houses cost £21k, they have £18k disposable income, and they pay £2k a year on their mortgage. Well OK....
Houses cost £21k, they have £18k disposable income, and they pay £2k a year on their mortgage. Well OK....
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Moved out in February, 32 years old on my own (with a cat!)
Small new build 2 bed semi (its still pretty empty as I'm not a things person and plenty big enough)
Cost £113k with a £38k mortgage over 14 years (north east) 4.49% 5 year plan. £303 a month mortgage payments.
Overpayment by 10% each year and plan to have it paid for in under 10 years. Already maxed my Overpayments for this year.
Come out with around about £1500-1900 each month depending on bonuses with monthly expenses coming to around £700-800 (maybe abit higher if I'm feeling naughty but I'm naturally a frugal person)
I thought to myself I've left it reeaaaaaaaly late to move out but it allowed me to have a good chunk of my house payment as a deposit (75k) by putting most my wages into savings and allowed me to keep a good chunk in savings (£13k currently) for a rainy day.
Small new build 2 bed semi (its still pretty empty as I'm not a things person and plenty big enough)
Cost £113k with a £38k mortgage over 14 years (north east) 4.49% 5 year plan. £303 a month mortgage payments.
Overpayment by 10% each year and plan to have it paid for in under 10 years. Already maxed my Overpayments for this year.
Come out with around about £1500-1900 each month depending on bonuses with monthly expenses coming to around £700-800 (maybe abit higher if I'm feeling naughty but I'm naturally a frugal person)
I thought to myself I've left it reeaaaaaaaly late to move out but it allowed me to have a good chunk of my house payment as a deposit (75k) by putting most my wages into savings and allowed me to keep a good chunk in savings (£13k currently) for a rainy day.
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If you moved out into your own home which isn't rented then at 32 is not late as you spent your 20's saving.
Unlike my friend who is nearly 40 and still lives at home with his parents.
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I guess if people are that price insensitive at seemingly quite a large scale, then the bucket that core inflation is measured on must be trivial.
We should do a poll of users who have just bought stuff that has been most affected by inflation and ask how they are affording it
Fixed Mortgage, no other debts. Still have a job. Interest rates not appealing enough to save. It's actually better to buy inflating goods and sell later.
So I'm unaffected.
I'm still of the opinion temporary vat hikes on luxuries would be better.
I'll give you an example of why this might be happening etc.
In my situation my other half and I both earn well above average, we could afford our house (not overstretched), take holidays etc.
Then 2020 rolls around, pandemic hits just as we were mid move to a more expensive house. By the time we completed (literally days before the stamp duty holiday.. thanks Rishi) we were in rolling lockdowns with no holidays. In the meantime neither of us were furloughed, we worked from home and had jobs in sales management in sectors that saw booms from lockdowns = bonuses etc.
In the meantime we couldn't spend on anything other than our house so the bathroom/garden/kitchen rework that might have taken 5 years+ took more like 1-2 years so we in return piled money into the local economy in the middle of shortages of stuff so likely paying higher prices. We've definitely fed inflation.
Now we're done with that and we fixed the mortgage last year just before trussonomics for 3 years. We have plenty of disposable income but looking at a tidal wave of mortgage cost coming at us, we'll be able to cover it but it will decimate the disposable income, that along with the observation that our ocado bill has jumped massively (and no we're not piling weight on lol) has us tightening belts. I'm suggesting we get used to paying the higher mortgage costs NOW with overpayments so wherever we go in 2025 doesn't hurt so much.
So I guess the interest rate rises are having something of the desired effect here with us... the issue is if it creates a situation where we can't move to something more suitable in 2025 or even worse just trashes house prices etc then it will have gone too far and I do worry that's happening.
I'm all for a period of very extended stagnation, having owned through 2008 etc I see no sense in ever rising prices, it stresses me out it doesn't make me feel better off. If we could just stop that trend many things would improve, but we're just not built that way and there's a chronic supply and demand problem.