| Mortgage rates are sure looking fun 07:25 - Jun 17 with 8232 views | DanTheMan |
https://www.bbc.co.uk/news/business-65925224
Comparing the current situation with 1989, when interest rates reached almost 15%, the Resolution Foundation predicted this year's rate rises would increase the cost of a typical mortgage by 3% of a typical household income, outstripping the 2.4% increase seen then.
Excellent stuff. Once again primarily people on the younger side taking the hit and people looking to buy being priced out. Dread to think what will happen to the rent market as well.
I'm amazed this isn't being talked about more widely. The interest rates in combination with house prices just constantly ballooning doesn't make any sense. |  |
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| Mortgage rates are sure looking fun on 07:53 - Jun 17 with 3976 views | Herbivore |
They are using very old school levers to try and tackle inflation, seemingly ignoring where this inflation is coming from. It's not people borrowing and spending too much, it's people buying basics that are going up and up in cost. All the rising interest rates are doing is squeezing people further whilst benefiting those fortunate enough to have savings, and if there is demand side inflation then it is from those who benefit from higher interest rates rather than from those who will be adversely affected by rising interest rates. It's madness for the base rate to have gone up what will ultimately be 5% points in two years. It doesn't give people time to adjust to higher rates, and anyone working in a sector where pay rises are well below inflation is going to be hit especially hard. |  |
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| Mortgage rates are sure looking fun on 08:07 - Jun 17 with 3946 views | Basuco |
It does seem very strange to put interest rates up when it is supply side cost's driving inflation, any business with a loan or mortgage will need to pass those additional cost to retailers and they pass them on to consumers. |  | | |
| Mortgage rates are sure looking fun on 08:34 - Jun 17 with 3866 views | Guthrum |
| Mortgage rates are sure looking fun on 07:53 - Jun 17 by Herbivore |
They are using very old school levers to try and tackle inflation, seemingly ignoring where this inflation is coming from. It's not people borrowing and spending too much, it's people buying basics that are going up and up in cost. All the rising interest rates are doing is squeezing people further whilst benefiting those fortunate enough to have savings, and if there is demand side inflation then it is from those who benefit from higher interest rates rather than from those who will be adversely affected by rising interest rates. It's madness for the base rate to have gone up what will ultimately be 5% points in two years. It doesn't give people time to adjust to higher rates, and anyone working in a sector where pay rises are well below inflation is going to be hit especially hard. |
This.
However, the BoE is in a somewhat invidious position, in both being responsible for getting inflation down and having very limited tools to achieve that (interest rate manipulation or "printing" money, the latter being itself an inflationary measure). This is more a systemic failure, with the partially culpable Government* using the BoE's trumpeted independence to hide behind.
* Truss, Kwarteng and all that. |  |
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| Mortgage rates are sure looking fun on 08:49 - Jun 17 with 3814 views | nodge_blue |
| Mortgage rates are sure looking fun on 07:53 - Jun 17 by Herbivore |
They are using very old school levers to try and tackle inflation, seemingly ignoring where this inflation is coming from. It's not people borrowing and spending too much, it's people buying basics that are going up and up in cost. All the rising interest rates are doing is squeezing people further whilst benefiting those fortunate enough to have savings, and if there is demand side inflation then it is from those who benefit from higher interest rates rather than from those who will be adversely affected by rising interest rates. It's madness for the base rate to have gone up what will ultimately be 5% points in two years. It doesn't give people time to adjust to higher rates, and anyone working in a sector where pay rises are well below inflation is going to be hit especially hard. |
I think you are largely right in that these higher rates are a fairly blunt tool for tackling inflation.
Rates though have really returned to long term averages. The problem is everyone has got used to credit being really cheap. But if you think about it, being asked to pay 5 percent interest to borrow money isn’t unreasonable.
Really there needs to be a house price crash to balance it out. So that they become more affordable again for people trying to get on the ladder. |  |
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| Mortgage rates are sure looking fun on 08:55 - Jun 17 with 3792 views | DanTheMan |
| Mortgage rates are sure looking fun on 08:49 - Jun 17 by nodge_blue |
I think you are largely right in that these higher rates are a fairly blunt tool for tackling inflation.
Rates though have really returned to long term averages. The problem is everyone has got used to credit being really cheap. But if you think about it, being asked to pay 5 percent interest to borrow money isn’t unreasonable.
Really there needs to be a house price crash to balance it out. So that they become more affordable again for people trying to get on the ladder. |
Agree with this. The issue isn't so much that rates are returning to normal but that rates are going back to normal in combination with house prices that have increased completely out of step with earnings.
Going back to early 90s and they're at roughly 4x average earnings. They're now approach 10x average earnings. As far as I can tell that level of disparity has been seen since the late 1800s.
It's absolutely mental. | |
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| Mortgage rates are sure looking fun on 08:56 - Jun 17 with 3791 views | BanksterDebtSlave |
| Mortgage rates are sure looking fun on 07:53 - Jun 17 by Herbivore |
They are using very old school levers to try and tackle inflation, seemingly ignoring where this inflation is coming from. It's not people borrowing and spending too much, it's people buying basics that are going up and up in cost. All the rising interest rates are doing is squeezing people further whilst benefiting those fortunate enough to have savings, and if there is demand side inflation then it is from those who benefit from higher interest rates rather than from those who will be adversely affected by rising interest rates. It's madness for the base rate to have gone up what will ultimately be 5% points in two years. It doesn't give people time to adjust to higher rates, and anyone working in a sector where pay rises are well below inflation is going to be hit especially hard. |
Weren't perhaps the years of post 2008 zero/negative interest rates alongside QE the real madness?
This on the current situation today made me smile...
“The moron premium is back,” said David Blanchflower, a former member of the Bank’s rate-setting monetary policy committee. “It seems to me the government and the Bank are in very deep trouble. The reason is because inflation is higher in the UK, and the markets don’t believe they are getting it down. They’re completely and utterly lost.” |  |
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| Mortgage rates are sure looking fun on 08:58 - Jun 17 with 3774 views | BanksterDebtSlave |
House prices have started to come down as have and will rents. Hopefully the Lib Democrats proposed support for distressed mortgage payers won't get any traction as it would further support the bubble. | |
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| Mortgage rates are sure looking fun on 09:02 - Jun 17 with 3770 views | Dubtractor |
I wouldn't want to be someone who took out a tracker mortgage in December 2022, in a calculated gamble that rates would soon top out and come down again.
Oh....... |  |
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| Mortgage rates are sure looking fun on 09:02 - Jun 17 with 3763 views | BanksterDebtSlave |
| Mortgage rates are sure looking fun on 08:55 - Jun 17 by DanTheMan |
Agree with this. The issue isn't so much that rates are returning to normal but that rates are going back to normal in combination with house prices that have increased completely out of step with earnings.
Going back to early 90s and they're at roughly 4x average earnings. They're now approach 10x average earnings. As far as I can tell that level of disparity has been seen since the late 1800s.
It's absolutely mental. |
That's right isn't it. People banging on about coping with high interest rates back in the day were paying nowhere near the same percentage of disposable income. | |
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| Mortgage rates are sure looking fun on 09:02 - Jun 17 with 3761 views | DanTheMan |
| Mortgage rates are sure looking fun on 08:58 - Jun 17 by BanksterDebtSlave |
House prices have started to come down as have and will rents. Hopefully the Lib Democrats proposed support for distressed mortgage payers won't get any traction as it would further support the bubble. |
They'd need to drop a good 50% to go back to average which I just cannot see happening. | |
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| Mortgage rates are sure looking fun on 09:02 - Jun 17 with 3761 views | Guthrum |
| Mortgage rates are sure looking fun on 08:49 - Jun 17 by nodge_blue |
I think you are largely right in that these higher rates are a fairly blunt tool for tackling inflation.
Rates though have really returned to long term averages. The problem is everyone has got used to credit being really cheap. But if you think about it, being asked to pay 5 percent interest to borrow money isn’t unreasonable.
Really there needs to be a house price crash to balance it out. So that they become more affordable again for people trying to get on the ladder. |
Problem is, continually increasing house prices have for too long been used to prop up household wealth, as being the only reasonably secure way of growing ordinary people's money (albeit tied up for most of a lifetime).
A house price crash would leave severe problems of negative equity. People could not afford to move, thus depressing the mortgage and sales markets, too. The banks would take a massive hit from the devaluation of their portfolios. Nasty mess, lots of angry people. | |
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| Mortgage rates are sure looking fun on 09:03 - Jun 17 with 3758 views | DanTheMan |
| Mortgage rates are sure looking fun on 09:02 - Jun 17 by Dubtractor |
I wouldn't want to be someone who took out a tracker mortgage in December 2022, in a calculated gamble that rates would soon top out and come down again.
Oh....... |
My fixed runs out in April next year. Can't wait to pay an extra 3+ grand a year. | |
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| Mortgage rates are sure looking fun on 09:04 - Jun 17 with 3759 views | BanksterDebtSlave |
| Mortgage rates are sure looking fun on 09:02 - Jun 17 by Dubtractor |
I wouldn't want to be someone who took out a tracker mortgage in December 2022, in a calculated gamble that rates would soon top out and come down again.
Oh....... |
I had been wondering about what your situation might be Dubbers. But you will always have your ride on mower.
Don't go all irresponsible and ask for a decent payrise though btw!! | |
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| Mortgage rates are sure looking fun on 09:13 - Jun 17 with 3712 views | BanksterDebtSlave |
| Mortgage rates are sure looking fun on 09:02 - Jun 17 by Guthrum |
Problem is, continually increasing house prices have for too long been used to prop up household wealth, as being the only reasonably secure way of growing ordinary people's money (albeit tied up for most of a lifetime).
A house price crash would leave severe problems of negative equity. People could not afford to move, thus depressing the mortgage and sales markets, too. The banks would take a massive hit from the devaluation of their portfolios. Nasty mess, lots of angry people. |
You can only push on a rope for so long. Delaying the inevitable is just making the consequences of that collapse when it comes all the worse. | |
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| Mortgage rates are sure looking fun on 09:21 - Jun 17 with 3682 views | Guthrum |
| Mortgage rates are sure looking fun on 09:13 - Jun 17 by BanksterDebtSlave |
You can only push on a rope for so long. Delaying the inevitable is just making the consequences of that collapse when it comes all the worse. |
We're already way past that point, have been for 20 years or more. It's just a case of how many times "very" appears before the word "bad". | |
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| Mortgage rates are sure looking fun on 09:24 - Jun 17 with 3671 views | Dubtractor |
| Mortgage rates are sure looking fun on 09:04 - Jun 17 by BanksterDebtSlave |
I had been wondering about what your situation might be Dubbers. But you will always have your ride on mower.
Don't go all irresponsible and ask for a decent payrise though btw!! |
We're OK to be honest, I made sure we had enough headroom to allow for much worse than this as I'm not a financial risk taker, but I'm still not enjoying the monthly increases!
I can imagine that there a lot of people in a very precarious position right now though. As Dan says, I'm surprised more isn't being made of it.
Edit: just to clarify, not for one minute suggesting people struggling are risk takers, more referring to my own situation where we took a choice to upsize, as we have the luxury of being able to. [Post edited 17 Jun 2023 9:40]
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| Mortgage rates are sure looking fun on 09:28 - Jun 17 with 3618 views | BanksterDebtSlave |
| Mortgage rates are sure looking fun on 09:21 - Jun 17 by Guthrum |
We're already way past that point, have been for 20 years or more. It's just a case of how many times "very" appears before the word "bad". |
In the long term are we heading to a situation where the majority of properties are in the hands of financial institutions as people take equity to fund social care costs and we are left with the pleasure of paying them rent do you think? | |
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| Mortgage rates are sure looking fun on 09:34 - Jun 17 with 3587 views | BanksterDebtSlave |
| Mortgage rates are sure looking fun on 09:24 - Jun 17 by Dubtractor |
We're OK to be honest, I made sure we had enough headroom to allow for much worse than this as I'm not a financial risk taker, but I'm still not enjoying the monthly increases!
I can imagine that there a lot of people in a very precarious position right now though. As Dan says, I'm surprised more isn't being made of it.
Edit: just to clarify, not for one minute suggesting people struggling are risk takers, more referring to my own situation where we took a choice to upsize, as we have the luxury of being able to. [Post edited 17 Jun 2023 9:40]
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Bizarre isn't it that in these technologically connected days people have never before been so isolated in trying to keep their heads above water. More and more people up this way are having to leave rented properties and unable to find/afford alternatives.....trailer parks here we come! | |
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| Mortgage rates are sure looking fun on 09:37 - Jun 17 with 3570 views | DanTheMan |
| Mortgage rates are sure looking fun on 09:02 - Jun 17 by BanksterDebtSlave |
That's right isn't it. People banging on about coping with high interest rates back in the day were paying nowhere near the same percentage of disposable income. |
Agreed, although it was of course still bad then but not as bad as the increases today statistically. And we're not at the worst of yet.
Feel very bad for people who are already stretched and this just piles more pain on top.
I keep thinking I genuinely might just leave the country. I don't want to, I've got a lot of family and friends here but the outlook is just so bleak. | |
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| Mortgage rates are sure looking fun on 09:39 - Jun 17 with 3556 views | Lord_Lucan |
| Mortgage rates are sure looking fun on 07:53 - Jun 17 by Herbivore |
They are using very old school levers to try and tackle inflation, seemingly ignoring where this inflation is coming from. It's not people borrowing and spending too much, it's people buying basics that are going up and up in cost. All the rising interest rates are doing is squeezing people further whilst benefiting those fortunate enough to have savings, and if there is demand side inflation then it is from those who benefit from higher interest rates rather than from those who will be adversely affected by rising interest rates. It's madness for the base rate to have gone up what will ultimately be 5% points in two years. It doesn't give people time to adjust to higher rates, and anyone working in a sector where pay rises are well below inflation is going to be hit especially hard. |
It's not benefitting those with savings though as the rate on savings is ridiculously low. It's certainly not working both ways. |  |
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| Mortgage rates are sure looking fun on 09:42 - Jun 17 with 3540 views | DanTheMan |
| Mortgage rates are sure looking fun on 09:39 - Jun 17 by Lord_Lucan |
It's not benefitting those with savings though as the rate on savings is ridiculously low. It's certainly not working both ways. |
I did see today another story on that, saving the banks are basically profiting both ways at the moment. Taking ages to put savings rates up but making sure to immediately apply mortgage ones. | |
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| Mortgage rates are sure looking fun on 09:43 - Jun 17 with 3533 views | Plums |
| Mortgage rates are sure looking fun on 09:28 - Jun 17 by BanksterDebtSlave |
In the long term are we heading to a situation where the majority of properties are in the hands of financial institutions as people take equity to fund social care costs and we are left with the pleasure of paying them rent do you think? |
I was discussing this with a few friends last weekend. All in our 50's and we concluded that a sizeable proportion of society are working and investing to provide a cushion for what is effectively end of life care. A thoroughly depressing outcome.
The economy should work for us - not be the master we all seek to serve. There's a serious shift needed. |  |
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| Mortgage rates are sure looking fun on 09:56 - Jun 17 with 3481 views | lowhouseblue |
| Mortgage rates are sure looking fun on 07:53 - Jun 17 by Herbivore |
They are using very old school levers to try and tackle inflation, seemingly ignoring where this inflation is coming from. It's not people borrowing and spending too much, it's people buying basics that are going up and up in cost. All the rising interest rates are doing is squeezing people further whilst benefiting those fortunate enough to have savings, and if there is demand side inflation then it is from those who benefit from higher interest rates rather than from those who will be adversely affected by rising interest rates. It's madness for the base rate to have gone up what will ultimately be 5% points in two years. It doesn't give people time to adjust to higher rates, and anyone working in a sector where pay rises are well below inflation is going to be hit especially hard. |
what would your strategy be for reducing core inflation? stripping out energy and food cost rises (which came from an external shock and will drop out of the figure over time) core inflation is 6.8%. that largely reflects what's happening in the labour market. how would you get it down? |  |
| And so as the loose-bowelled pigeon of time swoops low over the unsuspecting tourist of destiny, and the flatulent skunk of fate wanders into the air-conditioning system of eternity, I notice it's the end of the show |
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| Mortgage rates are sure looking fun on 09:57 - Jun 17 with 3477 views | Herbivore |
| Mortgage rates are sure looking fun on 08:55 - Jun 17 by DanTheMan |
Agree with this. The issue isn't so much that rates are returning to normal but that rates are going back to normal in combination with house prices that have increased completely out of step with earnings.
Going back to early 90s and they're at roughly 4x average earnings. They're now approach 10x average earnings. As far as I can tell that level of disparity has been seen since the late 1800s.
It's absolutely mental. |
Indeed. Combine significantly higher prices with rates rising that sharply and quickly and it's a recipe for disaster. That 5% isn't especially high historically is somewhat irrelevant to the current situation. | |
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| Mortgage rates are sure looking fun on 09:58 - Jun 17 with 3471 views | Herbivore |
| Mortgage rates are sure looking fun on 08:58 - Jun 17 by BanksterDebtSlave |
House prices have started to come down as have and will rents. Hopefully the Lib Democrats proposed support for distressed mortgage payers won't get any traction as it would further support the bubble. |
Rent isn't going to come down whilst the cost of borrowing goes up. Quite the opposite in fact. | |
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