Mortgage Rate Rises

[Bald-Eagle22]

Especially as minimum wage went up in April by 10%. Most people only just getting their pay rises too.

Causing issues in the the transport industry,

No one In pay tiers slightly above for unskilled or semi skilled labour are getting anywhere near the minimum wage rise and wages are now getting compressed . Not sure how this is effecting other Industries but the misses is telling me its even harder to employ drivers and warehouse staff than its ever been!

 

[Bald-Eagle22]

Because headline inflation was always going to fall, underlying inflation e.g services which the BoE are looking at is actually climbing.

Just a quick take from bloomberg.



As always though, the next data and it can all swing back

Yep I saw this myself . Looks like no one is going to get ahead this year .

Only thing I can see that will make a rate cut happen next month is pressure from the Goverment , although ( cough cough )the BOE are ment to be independent . Richi needs a rate cut before he goes to the ballot box , although he'll loose damage limitation will be the name of the game.

 

[FBi7]

Rates should be cut to 3.5% by end of 2025, IMF says

The international body upgrades its UK growth forecast and says rates could fall to 4.5% by the end of 2024.

www.bbc.co.uk

I meant to post this yesterday. I do hope so, as I'm due to remortgage in Jan 2026.

 

[adam cool dude]

Causing issues in the the transport industry,

No one In pay tiers slightly above for unskilled or semi skilled labour are getting anywhere near the minimum wage rise and wages are now getting compressed . Not sure how this is effecting other Industries but the misses is telling me its even harder to employ drivers and warehouse staff than its ever been!

I was speaking to my friend in my old place. A lot of the shop floor staff that I used to manage have been used to stagnant wage growth for over a decade. A lot of them were hovering around the minimum wage. Now Sunak has put it up by 10%. Companies are really dragging their heels to match that with the vast majority of their workers. It is all a bit of a mess because the workforce would much rather work in say a Tesco's than in some fast paced cold environment as they would get paid the same.

It wouldn't surprise me if we don't see another spike in food inflation again although maybe the reduction in energy bills might help prevent that.

 

[Hagar]

As has been posted it is the bank of England who have responsibility for inflation and hence the UK interest rates. Also since when has the IMF been correct about its prediction making?

 

[Hagar]

Causing issues in the the transport industry,

No one In pay tiers slightly above for unskilled or semi skilled labour are getting anywhere near the minimum wage rise and wages are now getting compressed . Not sure how this is effecting other Industries but the misses is telling me its even harder to employ drivers and warehouse staff than its ever been!

Before the pandemic and changes at our borders much food was transported by cheap eastern European hauliers driving a coach and horses through the minimum wage legislation in the UK. Many decided not to return and subsequently costs to supermarkets and other importers rose as UK haulage companies quite rightly increased wages. A man (plus van) is worth his hire.

We can be a cheap wage economy but I would rather not.

 

[Mercenary Keyboard Warrior]

As has been posted it is the bank of England who have responsibility for inflation and hence the UK interest rates. Also since when has the IMF been correct about its prediction making?

Generally the IMF are as good as the likes of the OBR. You cannot predict the unpredictable.

You comment sounds dangerously close to a pop at experts.
Even mystic meg got it wrong sometimes

Maybe we should never plan anything, never forecast anything, just see what happens and be reactionary.

 

[200sols]

The thing with IMF forecasts and others, they are fine when everything is stable but when things are stable few people care. When things are not stable the forecasts are just not a good indicator of much at all. One thing is certain the BOE wont be swayed by them anyway, the data is what matters which is why things move fast in the markets when its released.

 

[Hagar]

Generally the IMF are as good as the likes of the OBR. You cannot predict the unpredictable.

You comment sounds dangerously close to a pop at experts.
Even mystic meg got it wrong sometimes

Maybe we should never plan anything, never forecast anything, just see what happens and be reactionary.

Maybe I did sound a little bit like that. It is just that the BBC tends to produce these forecasts as gospel without disclaimers like your experience may vary. This time they did so in the last paragraph stating that these forecasts are not always right for which I commend them.

Generally we get things right, occasionally we are trussed by events but I do rely on the bank and the treasury to perform responsibly in the main as they should and are well paid to do.

 

[Mercenary Keyboard Warrior]

The thing with IMF forecasts and others, they are fine when everything is stable but when things are stable few people care. When things are not stable the forecasts are just not a good indicator of much at all. One thing is certain the BOE wont be swayed by them anyway, the data is what matters which is why things move fast in the markets when its released.

The opposite actually, when things are stable forecasts allow far better and consistent investment and planning in businesses, with far less projects canned due to risk.
If everyone is predicting stability and (ignoring completely unexpected things), then business confidence goes up.
Businesses rely on these sorts of forecast to get an understanding of the macro. You can of course more directly engage with some of the professional companies for more info, but many businesses will take an economic outlook from eg the IMF.

The treasury and BOE etc are pretty professional yeah, but they are still led by politicians ultimately.
Eg Hunt should really not have cut NI and should have been trying to eat into the massive debt we have built up.
The suns not exactly been shining but things could be a lot worse as well. But you know, politics.

 

[tamzzy]

occasionally we are trussed by events

i see what you did there

 

[dl8860]

Just heard a guy on Jeremy Vine complaining that his mortgage is going up £800/month as he fixed in 2020 at rock bottom and now he won't be able to afford it and is looking at downsizing - and it's Liz Truss's fault 100%.

It's not like rates are up at 15%, people like that deserve no sympathy. Totally unaware that he's actually benefitted hugely from 4.5 years of dirt cheap borrowing and should have used that benefit to put some money away instead of flying by the seat of his pants twice over (both in borrowing at the limit of affordability and not saving in the meantime).

 

[200sols]

The opposite actually, when things are stable forecasts allow far better and consistent investment and planning in businesses, with far less projects canned due to risk.
If everyone is predicting stability and (ignoring completely unexpected things), then business confidence goes up.
Businesses rely on these sorts of forecast to get an understanding of the macro. You can of course more directly engage with some of the professional companies for more info, but many businesses will take an economic outlook from eg the IMF.

I just meant normal people really, I really dont or didnt notice people quoting IMF forecasts in normal times, its only in hard times I see it going mainstream bit like this thread.

 

[Mercenary Keyboard Warrior]

I just meant normal people really, I really dont or didnt notice people quoting IMF forecasts in normal times, its only in hard times I see it going mainstream bit like this thread.

Right gotcha yeah I mean depends on your focus I guess.
When times are good agree its more about buying stuff, doing things etc
When times are bad people are looking for that coming to an end

 

[danlightbulb]

Just heard a guy on Jeremy Vine complaining that his mortgage is going up £800/month as he fixed in 2020 at rock bottom and now he won't be able to afford it and is looking at downsizing - and it's Liz Truss's fault 100%.

It's not like rates are up at 15%, people like that deserve no sympathy. Totally unaware that he's actually benefitted hugely from 4.5 years of dirt cheap borrowing and should have used that benefit to put some money away instead of flying by the seat of his pants twice over (both in borrowing at the limit of affordability and not saving in the meantime).

Completely disagree.

Buying a house is a huge financial stretch and the high prices extract the maximum possible from most buyers. Interest rates and house prices coexist so if one is lower the other tends to be higher. Any headroom created by one variable is eroded by the other variable.

We've then had huge cost of living inflation as well as interest rate rises - do those affordability testing scenarios consider concurrent effects?

As has been said multiple times, house price to income multipliers are such nowadays that we are at the equivalent of 15% rates seen in the 90s.

And finally the economy relies on all of us spending money, if people decided to squirrel it all away then we'd have even less growth than we have now.

In a mature economy like ours we should not be having huge swings in interest rates that mean a person who is perfectly financially healthy one week can be in absolute dire straits the next.

 

[Hagar]

In a mature economy like ours we should not be having huge swings in interest rates that mean a person who is perfectly financially healthy one week can be in absolute dire straits the next.

In a mature economy the bank rates should allow savers to maintain an equity with modest inflation in the economy. 1% rates should have been disposed of after a year or two, not a decade. There are two sides to the coin. 0.1% interest is ridiculous.

 

[matt100]

In a mature economy the bank rates should allow savers to maintain an equity with modest inflation in the economy. 1% rates should have been disposed of after a year or two, not a decade. There are two sides to the coin. 0.1% interest is ridiculous.

Yes and that is still his point. The speed of the swing.

I guess the only difference being suddenly getting a poor rate on your savings makes no meaningful difference to you in terms of adjustment.

Suddenly having your mortgage balloon really does.

We can debate until the cows come how how much you should borrow but the simple facts are people get used to anything, house prices have shot up because of the low rates and you tend to not be able to relocate halfway across the country or choose not to live somewhere. It's entirely possible this was the best/least worst option for the person in question.

 

[Hagar]

Yes and that is still his point. The speed of the swing.

I guess the only difference being suddenly getting a poor rate on your savings makes no meaningful difference to you in terms of adjustment.

Suddenly having your mortgage balloon really does.

We can debate until the cows come how how much you should borrow but the simple facts are people get used to anything, house prices have shot up because of the low rates and you tend to not be able to relocate halfway across the country or choose not to live somewhere. It's entirely possible this was the best/least worst option for the person in question.

If you are living on a low income and this is supplemented by savings interest, it is absolutely as bad to have your income halved or more overnight. I am thinking pensioners without supplementary pensions, but others also on fixed incomes.

As for the speed of change. It should not have happened if a gradual transition to a more normal situation had been finessed by the banks. It would also, probably, not have caused such a rise in the house market price and the short termism of two year fixed rates forever chasing the elusive bargain. Only the mortgage providers and banks have gained I feel.

 

[Mercenary Keyboard Warrior]

The drop to silly low rates was rather fast as well, in fact probably faster than the rise has been.
I don't remember people complaining then about fast rate changes, in fact I seem to remember most people gloating about cheaper mortgages

But yeah pensioners with some savings relying on the interest for a few extras have been well screwed over the last practically 15 years!

Some peasants get screwed when rates go up, others when they go down.

 

[dl8860]

Completely disagree.

Buying a house is a huge financial stretch and the high prices extract the maximum possible from most buyers. Interest rates and house prices coexist so if one is lower the other tends to be higher. Any headroom created by one variable is eroded by the other variable.

We've then had huge cost of living inflation as well as interest rate rises - do those affordability testing scenarios consider concurrent effects?

As has been said multiple times, house price to income multipliers are such nowadays that we are at the equivalent of 15% rates seen in the 90s.

And finally the economy relies on all of us spending money, if people decided to squirrel it all away then we'd have even less growth than we have now.

In a mature economy like ours we should not be having huge swings in interest rates that mean a person who is perfectly financially healthy one week can be in absolute dire straits the next.

The fact that he mentioned now considering downsizing suggests he bit off more than he could chew. I would argue that a decent numbers of buyers buy within their means both in terms of not borrowing the max they are offered based on income, and also not lying to pass the affordability criteria. This guy probably did both. He's ridden the benefits of recent house price rises moreso than someone buying more modestly (as it's a % gain) and like I said, benefited from half a decade of very low rates, having been shielded at a time when others have been paying more. To now act like he's a special sympathy case makes no sense at all. He's finally emerged into the real world having over-borrowed and previously locked in an unrealistically low rate.