Interest Rates

[vickster]

I'm doing the same, probably just a one year bond though, don't want to tie it up for too long.

Ditto. I’ve got a chunk sitting in instant access savings to be locked away. Probably a short bond/better instant access savings once things have gone up a bit.
I’ll stick with the PBs, as doing ok at the mo

 

[SpokeyDokey]

I'll depoliticise this by saying that one Party is calling for the Chancellor to address the HoC about how he intends to support people with mortgages facing interest rate rises.

Seriously?

If people have not factored in rate rises then how is that a State responsibility.

Furlough has unleashed a swathe of expectations...

Imo mortgage suppliers need to be looking at much longer terms to reduce monthly payments.

 

[wafter]

I'll depoliticise this by saying that one Party is calling for the Chancellor to address the Hoc about how he intends to support people with mortgages facing interest rate rises.

Seriously?

If people have not factored in rate rises then how is that a State responsibility.

Furlough has unleashed a swathe of expectations...

Imo mortgage suppliers need to be looking at much longer terms to reduce monthly payments.

Problem is, our overlords have painted themselved into a corner through their gross mis-management of the economy over the past two decades. They kicked the can down the road in 2007 to avoid the unpopularity of the necessary recession by printing money, slashing rates and bailing out those responsible; which has led to asset bubbles and now the inevitable rampant inflation.

So now they're faced with the choice of pushing rates up to curb the ridiculous inflation and stabilise the value of the pound, or bailing out all those who've massively over-borrowed against over-valued assets (namely housing).

Typically governement policy always favours the home "owner", however I think it's getting to the point now where any more props will represent an existential threat to the entire economy (which is already-circling-the-drain) while thanks to the prevailing conditions home owners / the proportion of the population with any significant wealth is shrinking - and along with it their core voting demographic.

You can see how they're dragging their heels on this already - inflation at what, 10% published, probably double this in reality and rates are still dragging along at ballpark 2%. The country is in so much debt (both privately and publicly) that it seems their intention is to keep inflation as high as they can stomach to inflate this debt away.. rewarding those who've irrisponisbly borrowed (including themselves) while yet again punishing those who've been pragmatic and saved.

As someone who's been saving forever for a property while being consistantly priced out of the housing market (as well as being able to see how socially damaging all this house price inflation is) I'm hoping for rates get raised to values that at least are appropriate to reign in the inflation (at least 6-8%) and we get a significant house price correction that brings them back into line with historic earnings multiples, and hence allows the little man to have somewhere to live again without having to take on staggering amounts of debt or be subject to a lifetime's toil to pay for someone else's retirement.

Proper collapse-of-empires / end-stage capitalism stuff going on currently I think - interesting if highly anxiety-fuelling times.

 

[SpokeyDokey]

And +0.75% to 3% it is.

@wafter you talk some good sense there.

QE was a bad move imo - at least they are not creating any more money at the moment. At least they have finally just started unwinding it.

I too think interest rates of around 6% seemed to maintain a reasonable equilibrium.

On the mortgage repayment front the mortgage lenders must take responsibility for any possible 'over-lending' - they cannot possibly say that they do not understand the long-term ebbs and flows of interest rates.

Maybe some people need to be shutting down some of the crazy amounts they pay for contract phones, Broadband/streaming services and car PCP's to fund the mortgage hikes.

 

[wafter]

And +0.75% to 3% it is.

@wafter you talk some good sense there.

QE was a bad move imo - at least they are not creating any more money at the moment. At least they have finally just started unwinding it.

I too think interest rates of around 6% seemed to maintain a reasonable equilibrium.

On the mortgage repayment front the mortgage lenders must take responsibility for any possible 'over-lending' - they cannot possibly say that they do not understand the long-term ebbs and flows of interest rates.

Maybe some people need to be shutting down some of the crazy amounts they pay for contract phones, Broadband/streaming services and car PCP's to fund the mortgage hikes.

Thanks - IMO that's great news about the interest rate, although I suspect many who've unquestioningly bought into the establishment's "all the debt for everyone" narrative might feel differently..

IMO the way the entire thing was handles was unforgiveable; maybe some short-term cutting of rates to take the edge off, but once they'd started they obviously decided to leave them there to allow the housing market to run away with itself and make their core voting demographic feel rich while pushing up the value of the assets they / their cronies owned.

It's certainly good news that they're unwiding the QE somewhat; although I suspect it's reached such ridiculous levels that there will be no way of painlessly restoring the balance - the only way the system will correct being a massive crash.

I agree to an extent about the mortgages, however again the government ultimately sets the framework within which the lenders have to operate. The 2007 crisis was partially due to irresponsible lending (100% + mortgages, self-certification etc) so affordability criteria were tightened afterwards. Since then the government have undone all of this regulation, as well as introducing a host of other crap like "help to buy" (help to funnel taxpayers' money into the pockets of property billionaires; banrupting FTBs in the process); allowing people to "afford" ridiculously inflated properties when of course the core issue is that prices were simply too high.. fuelled largely by the cheap cost of credit.

You make a good point about phones etc - we've passed through that "golden age" of consumption, to a point where the only way people will keep spending is if you provide them with the ability to spend beyond their means. As such everything is on credit now; a sad indication of how unsustainable our consumption-led economy has become.

Personally I find it all abhorrent and welcome the day it all collapses and we return to some sense of "normality"..

 

[Buck]

If “it” collapses then we won’t have normality for many years/decades.

A big part of the current issue is that some people have not known anything but cheap borrowing and now, the new reality is very difficult.

People have borrowed beyond their true means as they have been brainwashed by the false narrative of big house / new cars / expensive holidays as they believe this is what success looks like.

A few years of higher interest rates are ahead of us although the BofE today said they expect the peak to be 4.5% base rate.

 

[Bonefish Blues]

If “it” collapses then we won’t have normality for many years/decades.

A big part of the current issue is that some people have not known anything but cheap borrowing and now, the new reality is very difficult.

People have borrowed beyond their true means as they have been brainwashed by the false narrative of big house / new cars / expensive holidays as they believe this is what success looks like.

A few years of higher interest rates are ahead of us although the BofE today said they expect the peak to be 4.5% base rate. increase to be another 50% on today's rate.

Context is contextual 😠

Miserable times are here again. I think we peaked at mid-teens in the 80s, but there again our mortgage then was £4.50 and a bag of...

Cheerfully ours etc

 

[wafter]

If “it” collapses then we won’t have normality for many years/decades.

A big part of the current issue is that some people have not known anything but cheap borrowing and now, the new reality is very difficult.

People have borrowed beyond their true means as they have been brainwashed by the false narrative of big house / new cars / expensive holidays as they believe this is what success looks like.

A few years of higher interest rates are ahead of us although the BofE today said they expect the peak to be 4.5% base rate.

Indeed, however it's not been "normal" for the past two decades either; looking at interest rates, house prices as a function of wages etc. It's all been distorted by irresponsible / corrupt / politically motivated fiscal policy and it needs to stop.. for some that's going to be a hard pill to swallow.

It's weird to think, but a totally legitimate point that for some (maybe in their '30s now) all they've known in their adult lives is cheap credit and debt-led consumption.

You say "higher" interest rates, but of course until recently the rates have been historically low, with a typical mean being circa 6% I believe. It's a sad state of affairs, however ultimately there's no such thing as a free lunch and the music has to stop some time.

While it's going to be miserable for many with a lot of debt, equally the past 15 years have been utterly miserable for those of us who refused to embrace this irresponsible and unsustainable model; I think it's about time we got a bite of the pie.

 

[BoldonLad]

Problem is, our overlords have painted themselved into a corner through their gross mis-management of the economy over the past two decades. They kicked the can down the road in 2007 to avoid the unpopularity of the necessary recession by printing money, slashing rates and bailing out those responsible; which has led to asset bubbles and now the inevitable rampant inflation.

So now they're faced with the choice of pushing rates up to curb the ridiculous inflation and stabilise the value of the pound, or bailing out all those who've massively over-borrowed against over-valued assets (namely housing).

Typically governement policy always favours the home "owner", however I think it's getting to the point now where any more props will represent an existential threat to the entire economy (which is already-circling-the-drain) while thanks to the prevailing conditions home owners / the proportion of the population with any significant wealth is shrinking - and along with it their core voting demographic.

You can see how they're dragging their heels on this already - inflation at what, 10% published, probably double this in reality and rates are still dragging along at ballpark 2%. The country is in so much debt (both privately and publicly) that it seems their intention is to keep inflation as high as they can stomach to inflate this debt away.. rewarding those who've irrisponisbly borrowed (including themselves) while yet again punishing those who've been pragmatic and saved.

As someone who's been saving forever for a property while being consistantly priced out of the housing market (as well as being able to see how socially damaging all this house price inflation is) I'm hoping for rates get raised to values that at least are appropriate to reign in the inflation (at least 6-8%) and we get a significant house price correction that brings them back into line with historic earnings multiples, and hence allows the little man to have somewhere to live again without having to take on staggering amounts of debt or be subject to a lifetime's toil to pay for someone else's retirement.

Proper collapse-of-empires / end-stage capitalism stuff going on currently I think - interesting if highly anxiety-fuelling times.

Was the current Government in power in 2007?, I know my memory is not what it was, but, I thought “Prudent Gordon” was in power then, and, responsible for saving the Financial System single-handed?

 

[Alex321]

Personally I find it all abhorrent and welcome the day it all collapses and we return to some sense of "normality"..

If it all collapses, most of us will not see anything like "normality" in our lifetimes.

With millions in this country plunged into poverty and homelessness (and I mean real poverty, not the artificial "poverty" as used when talking about people being below the "poverty line"), and many more millions across the world.

You really won't welcome that happening.

 

[BoldonLad]

Context is contextual 😠

Miserable times are here again. I think we peaked at mid-teens in the 80s, but there again our mortgage then was £4.50 and a bag of...

Cheerfully ours etc

It is all relative. Your mortgage may have been £4.50 and a bag of…., but, relatively speaking, no doubt, so was your income.

 

[Bonefish Blues]

It is all relative. Your mortgage may have been £4.50 and a bag of…., but, relatively speaking, no doubt, so was your income.

Pretty much that, but we got through it - because mortgages with big % rates were the norm, of course.

 

[Alex321]

It is all relative. Your mortgage may have been £4.50 and a bag of…., but, relatively speaking, no doubt, so was your income.

But in those days, you wouldn't get a mortgage which was more than 3+1 (three times the main earner's salary plus 1 times the second earner), whereas in more recent times, it has been possible to get up to 5+5.

At interest rates as the were in the 80's, a 3+1 mortgage would eat up about half the household take home pay. If we return to those interest rates, the people on 5+5 mortgages will have no take home pay left at all.

 

[Jameshow]

But in those days, you wouldn't get a mortgage which was more than 3+1 (three times the main earner's salary plus 1 times the second earner), whereas in more recent times, it has been possible to get up to 5+5.

At interest rates as the were in the 80's, a 3+1 mortgage would eat up about half the household take home pay. If we return to those interest rates, the people on 5+5 mortgages will have no take home pay left at all.

5+5 not recently??

 

[BoldonLad]

But in those days, you wouldn't get a mortgage which was more than 3+1 (three times the main earner's salary plus 1 times the second earner), whereas in more recent times, it has been possible to get up to 5+5.

At interest rates as the were in the 80's, a 3+1 mortgage would eat up about half the household take home pay. If we return to those interest rates, the people on 5+5 mortgages will have no take home pay left at all.

Yes, I was there (in the 70's, and 80's etc etc).