[Finance] What should the government do about the coming base rate mortgage hike time bomb?

[Mustafa II]

800,000 people up for renewal next year.

I personally know people who simply won't be able to afford the increase. They're ones of many I'm sure.

Tax breaks? Government subsidies? Or should they just allow the crisis to play out?

 

[Bodian]

I can see there is a problem with homes being used for holidays, but banning or restricting holidays isn't the answer. Build more houses for the locals, and prices will drop.

Why do they never talk about banning hotels and using those properties as housing?

Because in general hotels aren't empty for c.10 months of the year - as the houses around me are. My neighbours are actually here for five days right now. Only their second trip up here in 2023 - so for the rest of the time the house has been empty.

 

[Horses Arse]

I had a mortgage in the early 80s at 15% !!

Yep, remember my brother suffering that, then selling at negative equity.

What government caused that? Can't remember now. Surely not the party of exonomic prudence.

 

[CheeseRolls]

we are self sufficent for energy (compared to neighbours) except we killed coal first for cost then for environment. noly used for emergency use now. most our electic comes from our gas, wind (upto 50% on a good day) and nuclear. a small % is imported, mostly because we dont want to burn so much gas or any coal. the energy price problem is due to a synthetic market to promote wind and solar when that was not economical against gas. make the market pay for the price of the most expensive marginal production, wind, otherwise no one would buy it. they never considered what happend if this relation was inverted. thats what happens with manufactured markets, they fudge up when conditions change.

what do we reckon might happen if they start meddleing around in mortgage market? if mortgages are fixed at 3% and rates are 4%, who will lend to home buyers?

back to the inflation, the country least affected by energy inflation was France with their massive fleet of nuclear power. government told them to keep prices flat and could as they didnt need to buy in the raw material. we bought gas from the producers. unless you nationalise all the producers, state would still have to rise or subsdise prices. even then you still put the higher market price on the books so affected by price rise elsewhere. unless you live in country cut off from international market forces, you will alwasy be affected by international market forces.

I saw a claim on twitter that 15 year fixed mortgages were available in France at 1.8%

 

[Westdene Seagull]

Thing is though - its the only tool in their toolbox. The BoE was made independent by Gordon Brown with the remit to set interest rates to keep inflation at or below 2%. Whether it works or not - its all they have.

Agreed to it's all they have. BUT if I want to cut a plank of wood and when I open my toolbox all I have is a hammer, I don't go ahead and use the hammer because it won't do what I want to achieve.

 

[Si Gull]

The current answer to the OP's question, according to Sunak's statement this morning, would appear to be 'NOTHING'.

 

[Herr Tubthumper]

The current answer to the OP's question, according to Sunak's statement this morning, would appear to be 'NOTHING'.

I guess his wife does not have any shares in banks or building societies.

 

[CheeseRolls]

Inflation is one of the best tools for reducing the relative size of government long term debt. This isn't some new conspiracy theory by the way. I think this is going to lose the government even more support.

Inflation can be both demand driven and supply driven.

Demand driven inflation can be controlled by increasing interest rates, which reduces consumer expenditure and by limiting pay increases

Supply side inflation, seems to be impacting the UK more than our near neighbours. What steps could a government take to address this and is anyone worried about Chaos with Ed Milliband anymore?

 

[Berty23]

I had a tenner on Rory to win the golf last night. He didn’t hole a putt from more than 5 foot. Annoying. I speculated on the golf but I would like government support to cover my loss.

Obviously only a tenner. Had it been 10k then it would have been significant loss. I gambled and lost. People who speculate on property price increases are gambling as well.

 

[mejonaNO12 aka riskit]

It's terrifying how many people still use the rates from the 80's as an argument.

It's BASIC maths and they still don't get it.

 

[Bakero]

From the Telegraph's story about how the mortgage crisis is affecting Britain's middle class :

 

[drew]

I had a tenner on Rory to win the golf last night. He didn’t hole a putt from more than 5 foot. Annoying. I speculated on the golf but I would like government support to cover my loss.

Obviously only a tenner. Had it been 10k then it would have been significant loss. I gambled and lost. People who speculate on property price increases are gambling as well.

You need to learn to differentiate between speculation and buying a family a home.

 

[mejonaNO12 aka riskit]

You need to learn to differentiate between speculation and buying a family a home.

This is one of the things that drives me mad.

Say for example you DREAMT of having a home. I know, it's mad to dare to want to own the place you live in.

Anyway, Based on the MENTAL costs of homes you may find something extremely reasonable for say 300k. Now, to get the 10% deposit you need to save 30K. SOMEHOW without the help of the bank of mum and dad, you get there, despite being caught in a mad situation where your rent is going up and up and is more than a mortgage would cost you anyway.

Then, after all that, all that hard work to save 30 THOUSAND POUNDS, the rates go up and you get the people who bought their house for 12.50 feel the need to inform you that you overstretched yourself and you shouldn't have gambled.

still, as long as they are ok.

 

[Herr Tubthumper]

It's terrifying how many people still use the rates from the 80's as an argument.

It's BASIC maths and they still don't get it.

It's a very British response. Same with the hardship brought on by Brexit...some were saying we'd got through far worse after the war.

 

[nicko31]

I can see there is a problem with homes being used for holidays, but banning or restricting holidays isn't the answer. Build more houses for the locals, and prices will drop.

Why do they never talk about banning hotels and using those properties as housing?

I would restrict the number of AirBNB's in places like West Cornwall via some kind of licencing scheme, they destroy local communities.

The worse offenders of all are the rich who want their "country bolt hole" and use it for just a few weeks a year.

As for the mortgage market, I'd be surprised if we don't see a 6% base rate, inflation feels well sticky.

 

[beorhthelm]

I saw a claim on twitter that 15 year fixed mortgages were available in France at 1.8%

that seems an extraordinary claim when euro base rates are 3.5%.

 

[Herr Tubthumper]

that seems an extraordinary claim when euro base rates are 3.5%.

by way of comparison a 13 year fix in Germany is currently 3.99%

 

[Horses Arse]

I had a tenner on Rory to win the golf last night. He didn’t hole a putt from more than 5 foot. Annoying. I speculated on the golf but I would like government support to cover my loss.

Obviously only a tenner. Had it been 10k then it would have been significant loss. I gambled and lost. People who speculate on property price increases are gambling as well.

Not sure we are talking about property speculators. I'm not anyway. My focus is on those recently on the housing market to avoid obscene rents. They will be suffering, landlords just hike to rent to cover their costs, easy.

We're renting my MILs house to assist with her care home fees of £2k per week. (Can't find anywhere significantly cheaper that does t look like a prison/mental hospital.)

We get £2.8k per month for a 3 bed modern house. Obscene. Totally obscene. Went up £400 a few months ago due to inflation, part of the contract conditions.

Who wouldn't want to buy rather than shelling that out each month?

As an aside, despite paying over £8k per month on her care fees, we get taxed on the house rent. Unbelievable.

 

[Herr Tubthumper]

I can see there is a problem with homes being used for holidays

I presume this isnt an issue in Burnley?

 

[Horses Arse]

Or ban second/third homes and holiday homes. In my avenue of 14 houses - when I moved here 20 years ago 13 were lived in full-time. Now only seven are. That's six houses that could have been bought by people to live in taken out of the market. So, those that are available in the area to still live in have gone up in price.

Yep, holiday homes are a scurge of communities. I like the idea of the 3x council tax they apply in Wales.

Where abouts are you?

 

[BBassic]

It's a very British response. Same with the hardship brought on by Brexit...some were saying we'd got through far worse after the war.

Quite.

People don't give two shits about how I'm Alright Jack dealt with a gajillion-% rate in the 80s when they're trying to keep a roof over their head and feed their families in the here and now.