Viewing 40 posts - 41 through 80 (of 207 total)
  • Interest Rates up again
  • DT78
    Free Member

    I’m really concerned, we are on a low rate fixed for another 4 years so luckier than many, but our mortgage is big so we are really going to be hit when we remortgage, like many of our friends. If you wanted a house in the last 10yeara on the south coast, you just had to suck it up and pay.

    No other debts, but as above we will be cutting back as much as we can. Tbh we had already cut back a good deal to cover the energy price increases

    I’m also trying to come up with ways to earn more. As a paye, psudeo civil service I have little opportunity to increase my income. Thinking about trying to find a contracting side gig from a different time zone. Not sure how I would go about it though (IT)

    argee
    Full Member

    rone
    Free Member

    Long thread.

    Yeah, that Richard Murphy tweet(s) basically says in way more detail what i was concerned about, the BoE are thinking conventionally about interest rates at a time when it’s no longer the valid, this out of control inflation isn’t due to people spending on new stuff like household goods, cars, etc, they’re spending all their income and savings on basics and necessities, raising interest rates is just squeezing them now at both ends.

    As he says, only one group will do well out of this, and that group also make huge profits through recessions and downturns, stressed markets are how they build their portfolios.

    julians
    Full Member

    If the boe hadn’t put interest rates up over the last few months ,the GBP would be much weaker against the dollar (and other major currencies ) than it currently is, leading to even higher prices when converted to Gbp for gas and oil,leading to even higher inflation.

    And your summer hols abroad would have cost more…..

    Tallpaul
    Full Member

    Disaster capitalism, innit?

    rone
    Full Member

    If the boe hadn’t put interest rates up over the last few months ,the GBP would be much weaker against the dollar (and other major currencies ) than it currently is, leading to even higher prices when converted to Gbp for gas and oil,leading to even higher inflation

    Who told you that?

    Pound has been dropping against the dollar almost at the same time as the interests rate cuts.

    So that works then.

    BoE are knackering the economy up – not improving it.

    rone
    Full Member

    And your summer hols abroad would have cost more…..

    They did.

    Fuel, insurance, food, clothes.

    And for people who flew. They did on top.

    And my £ is worth give or take double digits less than last year due to inflation.

    Any credit card usage will cost more etc.

    I can’t see the benefits you’re talking about.

    julians
    Full Member

    Pound has been dropping against the dollar almost at the same time as the interests rate cuts.

    Imagine how much more it would have dropped if they hadn’t raised rates

    I can’t see the benefits you’re talking about.

    Not benefits in the absolute sense,but not as bad as it could have been.

    prettygreenparrot
    Full Member

    Glad I have a bunch of US-based shares. The weak pound slightly offset the stockmarket plunges when I needed to sell a few to buy a new hob.

    High interest rates? It’s nowhere near the 1990s yet. Credit-card-like rates on mortgages seriously dent your disposable income.

    prettygreenparrot
    Full Member

    Raising interest rates is an interesting plan to combat inflation that is not spending related.

    ‘I have a hammer, let me whack whatever it is’

    squirrelking
    Free Member

    Of course I could also suggest that this is the risk that so many people take – borrow more, ‘upgrade’ the house, play the house price rise game and hope for low interest rates to fuel that…

    Whilst for many others, a mortgage was a “cheap” way out of rented housing and the ridiculous rates you’re expected to pay (but for some reason a lower mortgage is considered unaffordable by underwriters).

    As others have said, we’re not at early 90s levels yet, not even close.

    rone
    Full Member

    Imagine how much more it would have dropped if they hadn’t raised rates

    Imagine how a recession might have been adverted if interest rates were at zero?

    Only the asset class benefit from high interest rates.

    daveylad
    Free Member

    Hopefully good news for us savers. Rates on savings have been abysmal for 10 years or so.

    tthew
    Full Member

    majority of folk with a private pension will have bp and shell shares indirectly, increased divs and share price is good for us.

    Sorry, I know this part of the thread is old now, but Manchester Guardian quoted yesterday that only 0.2% of Shell and BP shares are owned by pensions investors, so you can’t really claim that’s a benefit of high fuel inflation.

    theotherjonv
    Full Member

    IANA Economist but something I can’t quite follow.

    Is this really ‘inflation’ though as we normally perceive it? The major changes are driven by the oil and gas price which has been some would say artificially low for several years. Now it’s been reset* and it as well as everything affected by it has spiked, making prices 10 or 15% or whatever the headline number (and/or this mythical basket of goods is) higher than this time last year, which was also pretty much the same as the year before and the year before that. So what is measured by inflation is actually what would have been spread over the last say 3 years.

    Next year – we’re post spike. Inflation won’t continue to run at this rate unless O&G etc. is that much higher again?

    So is inflation really 15%, or is it really 3 years of 3.5% that has compounded to look like 15%?

    * not saying it’s all due to the reset, Ukraine and its impact on raw prices of foodstiuffs is also a contributor but the energy cap etc. was a problem before Putin went crackers, etc.

    nickc
    Full Member

    If only some-one had said something at the time

    rone
    Full Member

    Although Brexit is in there somewhere plenty of economies have got inflationary problems that don’t have a real connection.

    I think that Germany are about to have big problem related to Russian gas too.

    The fact of the matter is we have several black-swan events all grabbing at once.

    And the only way out it appears globally is to de-grow economies.

    rone
    Full Member

    Sorry, I know this part of the thread is old now, but Manchester Guardian quoted yesterday that only 0.2% of Shell and BP shares are owned by pensions investors, so you can’t really claim that’s a benefit of high fuel inflation.

    Yes it’s bollocks. ‘They’ use this also to make it seem like we’re killing all these share-holding grannies if we nationalised varies industries.

    Pensions shouldn’t be structured like this anyway.

    The only people defending the asset-class are the asset-class.

    kelvin
    Full Member

    The fact of the matter is we have several black-swan events all grabbing at once.

    We do. But we also have a series of poor political decisions that have been made in the knowledge that they will be inflationary. It’s no good putting holes in your ship’s hull, asking everyone to get bailing out as fast as they can (or to drink faster if they’re on the lowest decks) and then acting all surprised when the storms come. Our government has put us in a very poor position to deal with events, and they’re doing next to nothing to try improve our position now, leaving it to the BofE to use a hammer to knock in nails.

    Interest rates need to be lowered, not raised. The government needs to be fixing the hull. Using other means to prevent devaluation and reducing costs for businesses and working people alike. If inflation is high partly because of demand (I have serious doubts that it is), why are we not increasing taxes on those individuals with higher disposable income? If fund holders don’t want to invest their money in the UK, why is that? How do we reverse that trend? Regaining free access to the market that surrounds us is part of that, even if it is a hard political message for politicians to deliver.

    rone
    Full Member

    Hopefully good news for us savers. Rates on savings have been abysmal for 10 years or so.

    Well unless they’re double-digits then you’re still on a massive downer unfortunately.

    We really have got a messed up situation.

    dti
    Full Member

    Construction industry has seen around a. 50% increase in costs over the last few years. Input prices have increased but my impression is that there has been massive profiteering from suppliers , merchants and contractors.
    The industry has changed over the last 20 years from a myriad of small suppliers and merchants to bigger and bigger companies, verging on monopolies in some cases.

    intheborders
    Free Member

    Only the asset class benefit from high interest rates.

    “And inflation paid for my house”

    A quote from my Dad. They bought in the very late 60’s (paid £3k) and by the early 80’s were paying their annual mortgage in a lump sum.

    Inflation hits those on a fixed income the hardest, and for those of us who’s wages/income will rise it’ll just cause cashflow issues now & again. Depreciating assets work out cheaper though 🙂

    Interest rates (and inflation TBH) will be an issue until folk get a handle on them – I talk from experience as someone who had a mortgage from 1985. Rates had risen from 7% to 10% in late 80’s/early 90’s and then we fell out of the ERM… Often got double digit pay rises too, mainly due to inflation.

    Hopefully good news for us savers. Rates on savings have been abysmal for 10 years or so.

    There’ll be big winners and big losers – pretty much what happens IME when you elect Tories. The pain is not shared.

    singletrackmind
    Full Member

    BofE predictions are for double digit inflation next quarter. I think we are there already. Think about what you spend every week. The essential items, not discretionary spending, like a new lazeee bike. Petrol, gas, elec, water, foodstuffs etc. 50% on all of the above this year. This is a guess and a nice round number but, if you look at pump prices, all your bills, your weekly food shop. Tesco seem to add a penny here and there, but its every week
    All the millenials who don’t remember double digit mtg rates, who i believe think house prices only go up, are in debt with a £250k mtg, 2 fancy rented cars, 2 kids etc are royally screwed.
    The mtg they could afford at 1.9% will be an anchor at 10%.

    rone
    Full Member

    We do. But we also have a series of poor political decisions that have been made in the knowledge that they will be inflationary

    Well the pandemic leads the way, and I don’t think any economy understood exactly what would happen next.

    And you could go further back and say any country/administration that operates short term capitalism was also massively part of the problem.

    So the last 40 years then.

    We only have tools to deal with stuff whilst its working.

    (Micro arguments about wall-paper as I’ve always said are blown out of proportion compared to world-events.)

    rone
    Full Member

    BofE predictions are for double digit inflation next quarter. I think we are there already

    Someone said it earlier – inflation is different for everyone affecting as usual the less well off the most.

    rone
    Full Member

    We also had that MIRAS back in the day too but I wasn’t financially independent then so I can’t really put that in perspective.

    I don’t think interest rates will get that high personally. Once we start to lack growth, unemployment etc – pressure will be on to swing the other way.

    But you never know what’s coming next really.

    MoreCashThanDash
    Full Member

    Raising interest rates is an interesting plan to combat inflation that is not spending related.

    ‘I have a hammer, let me whack whatever it is’

    That’s my concern. Seems flawed, and hits the poor hardest.

    I see the French are spending (borrowing?) billions to ease inflationary pressures.

    dazh
    Full Member

    Is it just me or is the Woodstock 99 documentary on Netflix a perfect metaphor for the UK right now? I reckon we’re at the Saturday morning stage. We’ve woken up with a monumental hangover, dehydrated and surrounded by rubbish. The infrastructure is falling apart and we’re being ripped off by rapacious market traders, and the organisers are still claiming everything’s fine. Pretty soon we’ll be abusing the bands and tearing the place apart. Tomorrow maybe we’ll be burning it all down?

    rone
    Full Member

    I see the French are spending (borrowing?) billions to ease inflationary pressures

    Yeah the ECB have delivered similar packages to us.

    We put the blocks on right near the ‘end’ of the pandemic.

    Government’s will need to spend, it’s impossible to grow without it under current circumstances.

    How big the package or where it’s targeted I’m not sure.

    rone
    Full Member

    Is it just me or is the Woodstock 99 documentary on Netflix a perfect metaphor for the UK right now?

    I was going to watch that last night – any good?

    igm
    Full Member

    Someone said it earlier – inflation is different for everyone affecting as usual the less well off the most.

    Agreed.  For example, energy prices up, so the white collar types WFH avoiding travel costs and fit a sack load of solar avoiding electricity costs.
    it probably is the right thing to do anyway, but it’s a lot easier if you have the space at home and cash respectively.

    dazh
    Full Member

    any good?

    Yes very good. Especially when you start comparing the organisers to the headless chickens running for the Tory leadership. 😂

    rone
    Full Member

    Free-market economics makes a mistaken vital assumption – that lots of people have built up good savings to tide them through the downturns.

    rone
    Full Member

    Yes very good. Especially when you start comparing the organisers to the headless chickens running for the Tory leadership. 😂

    I will give it a click.

    I enjoyed the one about the Fyre festival.

    DT78
    Free Member

    on the shareholder front, I actually have a small holding in shell. whatever gains I have made are vastly outweighed by the increases in energy and the prospect of a huge mortgage increase in a few years time

    oh and we are in the middle of a building project so being stung daily with price increases. budgeting sensibly is impossible. quotes from 2 months ago are now 10-20% more when you come to pay.

    intheborders
    Free Member

    Seems flawed, and hits the poor hardest.

    Disagree. If you’re living in social housing and/or with protected rent/benefits why would it really impact you?

    igm
    Full Member

    Reading some of the more recent comments it seems to be

    – be more like the Europeans (longer term investment etc)

    – leaving the EU didn’t help

    – the pandemic was a gig for all

    – we could do without the Brexy-Trump-friend Mr Putin and is wars of conquest

    – the affluent will be less affected than the less affluent

    – lots of views on savings, pensions, shareholding and capitalism, not all of which agree

    That about right?

    dazh
    Full Member

    If you’re living in social housing and/or with protected rent/benefits why would it really impact you?

    Could you be more out of touch? Do you seriously think all the poor live in social housing? This isn’t the 1980s, there is no social housing left. Even if they do, they still have to pay bills, put food on the table etc.

    matt_outandabout
    Full Member

    Reading some of the more recent comments it seems to be

    – be more like the Europeans (longer term investment etc)

    – leaving the EU didn’t help

    – the pandemic was a gig for all

    – we could do without the Brexy-Trump-friend Mr Putin and is wars of conquest

    – the affluent will be less affected than the less affluent

    – lots of views on savings, pensions, shareholding and capitalism, not all of which agree

    That about right?

    There are many with mortgage loans based on low interest rates and rising house prices.

    rone
    Full Member

    I will be the first to say – just issuing more money into broken economies as per MMT’s prescriptive side is unlikely to fix things – without applying the correct resources to spend the money on.

    Just a warning.

    Spend the money – but spend it on the things that fix the holes in public services and infrastructure. The private sector will follow.

Viewing 40 posts - 41 through 80 (of 207 total)

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