That’s a Straw Man argument. When every choice is significantly constrained by outside factors and ultimately results in potentially substantial negative consequences – there’s not much of a choice.
So why have we followed a path which has dealt so many bad results to so many people? Why do we keep doing it over and over?
Yes it's priorities - but can't you see a million things that the government could fix or begin to fix ? How would that not benefit the biggest group of people?
It's been the other way around for long enough - it's pretty easy to see how you can re-orientate the way we do things.
(I'm defintely not saying there aren't downsides - but switch the downsides to the billionaires for once.)
Here’s an alternative as far as mortgages and housing.
Stop people having 2nd and 3rd amd 4th houses. That would force the sale of lots of houses, reducing the PRICE – which will ease life for anyone who buys another house, or 1st time buyers. And force landlords to not be so greed
What happens with ideas like this is it punishes accidental landlords or people with one property,any of whom yes may be above average but are quite often no out of the ordinary mega earners but does nothing for all the companies that own residential properties. All these extra sale will quite possibly be bought by these companies.
Unfortunately lots of these ideas end up penalising people are a little better off quite often just PAYE workers or maybe small one two man bands but help the larger companies. With respect to a large amount of the changes that have happened to private rentals over the past few years that is exactly what has happened.
In addition a collapse in house prices will hurt many who have recently got on the housing ladder or just moved, quite often trapping them in. Their house if they need to move. Property prices are too expensive but a collapse would cause big issue the safest way is prolonged stagnation of the market.
Regarding rent there obviously needs to be more social housing and probably some form or rent control/ omnibusman but it would need to be take into account the location
And what about people who don’t fit into that “most” category? Just hope they’re not evicted?
That's why i said negotiation. Most mortgage lenders allowed negotiation, holidays, etc during the pandemic. they could do so again now. This means additional debt, but short term relief. Allow people to switch to interest only for 6m, a year, etc. Allow people to take a 3 month payment holiday - that then gives them 9 months of reduced payments if the save the 3 months and split over the next 6m. All of these options were available during the pandemic. The banks are going to be raking in money over the next 12-36m - get the government to state that a windfall tax WILL be levied against them if they break certain thresholds - this will incentivise negotiation on debt.
Simple fact is that the Bank MPC has a target - even a sole target at this time - to get inflation down to <2%. The way they think seems to be that interest rates is the lever to do that.
Arguments over whether it does in this situation or whether other approaches would be better on this and wider monetary policy are all valid and true, but not as far as i can see part of their discussion today.
Hence it'll be up, just by how much.
Edit - and just how shit was Cleverly on R4 earlier.
USA style long-term fixed rates?
Simple fact is that the Bank MPC has a target – even a sole target at this time – to get inflation down to <2%. The way they think seems to be that interest rates is the lever to do that.
Our government sets that target of course.
Little is said about that. We have become attuned to hate inflation but everyone's inflation is actually different. So the whole thing is a bit of a mess as a concept.
Wages not keeping up with inflation is more of a problem than the inflation itself.
Part of the reason for the massively distorted unsustainable housing situation
Most of the reason is that we're not building enough [publicly or privately owned] affordable housing, and the reason for that is simple. Housebuilders operate in the free market and like everything else, the scarcer their products the more valuable it is and the higher their profits. There's a reason they donate massively to political parties. While on an individual level, transferring ownership of housing stock from the public to the private sector (Right to Buy) may have benefitted people, on the national level it's been an utter failure of policy for the last 40 years, with successive govts unwilling to release councils from the bits of law that don't allow them to build more, and obviously the revenues from those original sales long gone to fund other things. I doubt any correction in the short term will be popular, too much of the public wealth is tied to the price of their house, but it's the only way we're going to do anything to correct what we have now.
Invest heavily in more state owned property (like to post-war house building boom levels)
Build more private to drive down the price
re-align the council tax bands to more up-to date valuation to generate income to replace lost from council home rent
Probably something tax wise about passing housing stock as inheritance
Renting reform to offer more security
Mortgage reform (fixed interests rates for the duration of the term)
It's just another nail in the coffin marked "The Market will correct" If Brexit gives us one thing, it allows future govts to intervene heavily with long term policies. We should at least take advantage of it. (I doubt the next Labour govt will)
Reading with interest and horror at the same time.
My 5-year fix comes to an end in December so I am looking at a hike of around 4-4.5% if I fix for another 2 years. (about 250Pcm)
I started again at 37 after a clean break up and brought a standard 3-bed terraced that's big enough for me and my son nothing fancy usual run-of-the-mill family home.
I have been fortunate enough with work to have been overpaying the Morgage by 100% for the last 2 years and standard repayments would be circa 20% of my take home and have a chunk put away for a rainy day.
I was hoping to move up and had a MIP in place but was gazumped on an offer in Jan this year.
I think now I will be riding it out continuing to overpay as much as I can and banking cash.
I am very fortunate with my income I know, its not a humble brag - what with energy and food pricing my monthly costs will go up by around 500 pcm -- Thats madness
Our government sets that target of course.
Agreed, but as i said the discussion today isn't on setting Gov policy or whatever - the Gov has told BoE to keep / get inflation under 2%, the MPC seems to think interest rates is the lever at their disposal, ergo they will increase rates.
To do otherwise - 'we made a decision to not try to get interest rates down because we don't think that's where the problem really lies' - just goes beyond their remit, so they won't.
It's easy to point at the MPC and they need to be discussing alternatives with Gov, but unless/until Gov decides to change tack, rates rises will keep coming.
[edit] and as one of the key pledges - to halve inflation this year - Gov won't change tack.
It’s easy to point at the MPC and they need to be discussing alternatives with Gov, but unless/until Gov decides to change tack, rates rises will keep coming.
It's f****** idiotic. The govt are running the country on the basis of outdated GCSE economics, and the BoE are saying 'sorry we're only allowed to change interest rates, there's nothing more we can do'. Total abdication of responsbility on both sides, and they're completely comfortable with that because it benefits the one sector of the economy which must be protected at all costs - the banks.
As I've said before, it's daylight robbery, plain and simple.
and they’re completely comfortable with that because it benefits the one sector of the economy which must be protected at all costs – the banks.
Not really what you expect from the former Goldman Sachs banker Rishi Sunak, is it?
As for the chancellor, I asked before if he had bought a whole street, as I seem to recall something like that in the press. I've just had a google and found this from the Evening Standard
Hunt and his wife Lucia Geo own seven flats in the waterside Ocean Village development in Southampton through their Mare Pond Properties vehicle.
Although it isn’t known how much Mare Pond paid for the seven high-end apartments, one flat in the Ocean Village complex sold for £925,000 this summer according to Rightmove
Back to the OPs question. We now owe about £75k on our house that we bought for £174k 12ish years back. Fixed for 3 years just before rates spiked at about 1.6%ish. One of the neighbours sold in a week recently it went on for £300k, but had lots of people in to view so not sure of the final sale price, their house is tider than ours, but we also have a garage plus small storage room/office out back of it.
We are very lucky in that my salary easily covers our mortgage and when we re-mortgaged last time I set the repayment rate to an amount that reflects an increase in rates so we get used to it, as it stands it's just a regular overpayment. My wife was made redundant at the end of May and as yet has no new job, the markets ok but not great around Cambridge for someone in her position. However, her salary was 50% of mine anyway so the impact is lessened.
If I lose my job, it's going to get serious.
When every choice is significantly constrained by outside factors and ultimately results in potentially substantial negative consequences – there’s not much of a choice.
Contrlled rents and secure tenancies have minor downsides for rich folk. Huge benefits for the rest.
Increasing wages fir the lower paid and taxes on the higher paid is a win for society
Much of the issues are down to deliberate givernment choices
Contrlled rents and secure tenancies have minor downsides for rich folk. Huge benefits for the rest.
There are downside for folks living in controlled rent areas as well, Berlin and some other major cities for instance experienced (to a greater or lesser degree) an almost total stop of new "for let" building within the controlled area, reluctance of landlords to maintain existing building, sharp increase in rent outside the controlled area. None of these are not insurmountable, but like any mitigation, they do bring their own issues that need to be tackled.
A bit off topic but.....Another way to free up housing for renters (and maybe buyers if landlords sell up) is somehow control Air b'Nb. This has taken huge amounts of properties out the market. There was a radio report on this the other day and it mentioned a town that had zero properties to rent but over 50 listed on Air bnb. Lots of landlords are shifting away from private rentals and all the regulation that comes with it into this short term lease model and making more money.
Nickc. I mean controlled rentals full stop not regional or limited. Goes along with other regulation
This used to be the case on the uk. No shortage of good quality rentals available.
Us renters have long since just acknowledged that as far as the government is concerned, we simply don’t exist. The financial interests of buy-to-let landlords however? Thats very, very important.
That's how I feel, no real help whatsoever. Although I am incredibly lucky in that my landlord has never put the tent up in the 10 years I've lived in my current place. Other flats in the block are being advertised for nearly double what I'm paying. The downside to my luck is that I'm trapped where I am, there's just no way I can afford to move to a new place. Social mobility is non-existent now and that's really going to hurt in the future. A broken housing market will hurt the economy massively but there's also no way we can continue with double digit house price increases fuelling out 'growth'.
I fear that a big crash and all the immense pain that will come with it are the only way to reset the system. There's too many vested interests to allow a gradually cooling down. Either way the idea of me ever owning my own place is non-existent with either direction.
We fundamentally need housing costs to come down to a sensible multiple of peoples earnings, something like 3 to 4 times, not 7 or 8 or more.
Our house prices are comparable to Germany as is the average wage, as is the rate of employment, they even have higher taxes.
In France, average wages are lower, but so are house prices, but in both cases, the average house 150m2 is the same 7-10 times a joint income at average wages.
This isn't a UK problem, it's a capitalist world problem - you'll never get the level of change you're seeking. No government will limit banks lending as they're the main driver of the economy. That ship has sadly sailed through continual deregulation.
Our house prices are comparable to Germany as is the average wage, as is the rate of employment, they even have higher taxes.
Its not really relevant as most people in Germany rent at affordable prices, as thats how their economy is set up
+ 0.5% to 5%, is it gonna cut spending, was at the airport on friday it was rammed
A bit off topic but…..Another way to free up housing for renters (and maybe buyers if landlords sell up) is somehow control Air b’Nb. This has taken huge amounts of properties out the market. There was a radio report on this the other day and it mentioned a town that had zero properties to rent but over 50 listed on Air bnb. Lots of landlords are shifting away from private rentals and all the regulation that comes with it into this short term lease model and making more money.
I guess the problem is finding ways to disincentivise property owners from wanting to do Air B'n'B rental. but it's tricky, As it stands they'll either own the place outright or have a buy to let mortgage. but short term lets give them more flexibility in terms of not needing tenant's contracts, notice periods deposit schemes to consider, along with the benefit of still covering costs while the place accrues equity.
TBH if I owned or inherited a spare house, I'd certainly consider putting it on Air B'n'B before flogging it as things stand today, thus holding more housing stock back from the market and helping drive prices up through scarcity of supply. Mine, and most other people's instinct would be to hold on to and exploit such an asset.
I suppose some new form of tax would have to be dreamt up to make short-term rentals a less profitable option, doubt that would be a popular suggestion though.
+ 0.5% to 5%, is it gonna cut spending, was at the airport on friday it was rammed
Not immediately, because
1/ some of this is committed cost - holidays that were booked months ago, leases on cars that we're committed, etc., that folk will continue to pay.
2/ allied to above - culturally we've grown used to buy now pay later, cheap credit, and away from rainy day funds. So even now as rates rise, it knocks the least well off first that are struggling to eat and heat, but those above the line aren't changing their habits particularly quickly until finally they can't actually afford it.
This 13th consecutive month to get to 5% is like boiling a frog. A minor cutback here, another one there, a below inflation payrise but it's a bit more money and i can still just about afford the holiday or night out - are we even really noticing...... If they'd said that this is where we need to get to and shoved 4% on 12 months ago and everyone suddenly felt the heat, it might have been different.
the trouble is AirBnB tends to bring money into a local economy, by bringing visitors in. With a couple of young kids I wouldn't entertain the thought of a long break in a hotel (unless its all-inc I guess, but that's another level of pricing), but airbnb suits us great.
Airbnb opposite us. Every group arrives fully loaded up with supplies. As far as the local economy is concerned, they're on holiday in a bubble. Can't blame them, a nice way to get away without spending too much.
Wales is getting tough with homes that aren't occupied enough:
From 1 April 2023, the maximum level at which local authorities can set council tax premiums will increase to 300%. The powers given to local authorities are discretionary so whether to charge a premium on long-term empty properties or second homes (or both) is, therefore a decision to be made by each local authority.
https://www.gov.wales/council-tax-empty-and-second-homes-html
the trouble is AirBnB tends to bring money into a local economy, by bringing visitors in. With a couple of young kids I wouldn’t entertain the thought of a long break in a hotel (unless its all-inc I guess, but that’s another level of pricing), but airbnb suits us great.
This is exactly my POV - when we go on holiday we will always go self catering and AirBnB is a brilliant aggregator of self catering accommodation. Once our son goes to bed at 7, we could either share the same room and sit quietly 'till our bed time in a hotel room or get a airbnb cottage / house and we can enjoy the garden / terrace / living room depending on time of year.
No brainer what the preferred option is.
In France, average wages are lower, but so are house prices, but in both cases, the average house 150m2 is the same 7-10 times a joint income at average wages.
7-10…? Are you sure…? I accept that this might be happening in some extreme cases, but there’s lots of people out there like me and my GF that live in a house worth 2.25x our combined wages too (which became 4.5x of course when I was off work sick for a few months last year, and became squeaky bum time all of a sudden!).
5 was my guess. I wonder how much inflation is being driven by commitments to things that were already established before the rates rose. Holidays, solar, cars, building projects, etc and now there's no real way out. It would seem like increase spending, but in reality is just a long tail blip.
The other worry is the more house prices increase, and mortgage rates go up, the longer the terms of those mortgages will be, and so less equity over time for house buyers, we're definitely handing the next generation the framework for long term misery and retirement or home ownership being a dream for the majority.
21% inflation on glastonbury tickets, damn middle classes. ;0)
21% inflation on glastonbury tickets, damn middle classes. ;0)
its actually all my fault for paying £47 on a computer game last month
https://www.telegraph.co.uk/money/consumer-affairs/legend-of-zelda-computer-game-driving-inflation/
7-10…? Are you sure…? I accept that this might be happening in some extreme cases, but there’s lots of people out there like me and my GF that live in a house worth 2.25x our combined wages too (which became 4.5x of course when I was off work sick for a few months last year, and became squeaky bum time all of a sudden!).
There was a spate of first time buyers getting longer deals, guarantors, etc, which got them on the ladder, or others into bigger houses, i know a few who did this, or had 'loans' from their parents to make a bigger deposit, it's a double edged sword, they went bigger due to raising a family and increasing their outgoings, so increased mortgages isn't something that's going to sit well with a lot of homeowners.
Still struggling to work out how this interest rate hike will combat inflation if the basis of the increase in inflation is essentials, such as food, heating and fuel, i guess another increase in food banks, heating areas and charities will help in some way, guessing the banks are on for record bonuses this year as well.
21% inflation on glastonbury tickets, damn middle classes. ;0)
Kiss have been advertising 2 for 1 tickets on Facebook for their upcoming shows - so bargains to be had! 🙂
Legislating to control landlords is a tough one and often has unintended consequences. For example landlords now can't offset mortgage payments against income tax paid on rent, this seems like a sensible decision and should control people snapping up cheap houses to rent out.
The reality is a lot of landlords have decided it is no longer worth their while, especially with mortgage rates going up, so are selling up. This means there is less rental stock and therefore prices have shot up.
So is this a good or bad thing for those who don't already own a house? I'd argue it is bad as it's costing people more in rent and if they would like to own at some point then it makes saving for a deposit ever harder. This would be fine if sale prices were dropping due to all the rental properties being up for sale but this doesn't appear to be the case.
Kiss have been advertising 2 for 1 tickets on Facebook for their upcoming shows – so bargains to be had!
Which brings the ticket price down to about what I would have been prepared to pay. I looked at getting tickets when the Ozzy tour was cancelled but I wasn't going to pay £125 to see them, not a chance in Hotter than Hell.
Just looked on Ticketmaster and there are loads of tickets left too – it doesn't surprise me, the last time I saw them (Sheffield Arena) they curtained off a huge part of the venue to hide all the unsold seats so clearly not the demand.
Nickc. I mean controlled rentals full stop not regional or limited. Goes along with other regulation
As a former Rent Officer, I'm all in favour of rent control - though it doesn’t solve the underlying issue of a shortage of accommodation, which has prompted it each time it's been introduced.
Short term lets destroy local economies. No housing for the service workers needed for a tourist economy little year round spending so local shops cannot survive. Etcetc
Here in France, I think it's fairly standard (if not the only option? I don't know) when you arrange a mortgage you walk out with a list of all the payment dates and amounts for the duration of the mortgage: i.e. the interest rate is fixed for the duration. It's also normally a requirement that your income gets paid into a current account with the same bank as your mortgage.
Wow did they really just do that? I'm genuinely shocked but then Hunt has been making very supportive noises of this approach.
Upside - there will be very very few people left justifying voting Tory now when it all falls apart, completely.
What a system.
Is going to be a bad Winter . Just in time to pass the controls to Labour.
Just received the ..going up to 5% text message.
I think this will mean my mrotgage payment will be over a grand, first time since paying it solo and getting a £20k wage drop after being made redundant. Joys.
I just bought an ebike... YOLO an all that eh.
Still struggling to work out how this interest rate hike will combat inflation if the basis of the increase in inflation is essentials, such as food, heating and fuel, i guess another increase in food banks, heating areas and charities will help in some way, guessing the banks are on for record bonuses this year as well.
All of the recent inflation figures were CPI, not RPI, so food and energy increases were already stripped out. This is predominantly goods and services. But this stupid measure assumes that you're just spending more on goods and services, it doesn't analyse if more goods and services are being bought or if they're just increasing in price. it also doesn't then track WHY those goods and services are changing price. Digital services are a good example. Last year, chips and energy were in short supply, so new equipment (servers, etc) were more expensive and the power to run them was equally more expensive, so now Disney/Netflix etc are charging more. The theory goes that if those goods are more expensive because of fluctuating inputs (energy and chips), they should decrease over time, but in reality, prices rarely go down.
and thisYOLO an all that eh
are inextricably linked.Just received the ..going up to 5% text message
If there are lots of people doing this, this might be why spending on goods is driving inflation.
Its not really relevant as most people in Germany rent at affordable prices, as thats how their economy is set up
That might've been true once, but isn't as true these days. I've got plenty of friends in Munich and Berlin who've had to move around for work and are paying absolutely ludicrous rents. €2300 for a 2 bed place within 3km of the city.
Just received the ..going up to 5% text message.
I've not received one to say my savings rate is going up instantly. Funny that. 🙂
You've got to trawl the various banks and lock yourself in for 2/3 years to get their 'best' rate. And they're doing you a favour mate.
The two should be linked by law - stick one up the other should follow bu default.
Ouch 5%. Didn't expect it. Haven't seen the minutes yet, have they said how many for / against?
Have a horrible feeling its going up again next month. Its really not going to pull down inflation quickly given most of inflation is on essentials people can't really do without
