[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?

 

[East Staffs Gull]

I'd be very surprised if any of the parties intervened at an actual give money to people level.

The Bank of England is independent but it is also not. Halting this madness of rasing interest rates is step one. MIRAS is a good shout for another step. Being more lenient with repayments another.

Indeed. I’m far from convinced that raising base rates is having anything but a minuscule effect on reducing inflation. Maybe the policy will only start to have a real effect once it has hit the mortgages of far more people, which isn’t a pleasant prospect. Can only hope that the spike in inflation isn’t prolonged.

 

[brighton_dave]

Main borrowing for us is up for renewal in a few weeks and the additional borrowing September. Renewed early April and paying an exit fee to get the additional borrowing aligned which is less than a separate fee.
Bloody glad I did it early as an extra £220pm then but would be £380 with recent rate changes.
Our first place and we didn't go to our limit to cover such risks as per whats happening now. Goes from 2.45% to 4.12%.
Landlords... I bloody hate them, back fence he is liable for smashed to bits and the tight arse never listened to his tenants and won't acknowledge us either. Dogs in garden attacking our kitten and still not a word from him. Selfish and greed living off others inability to raise mortgage deposits.
House now up for sale as probably needs cash for an apartment somewhere hot.

 

[Springal]

Any such 'hand-outs' would be available for everyone, including the wealthy?

Another concern would be a similar situation to furlough, where a plan designed to help folk out might be abused by the criminally minded for unlawful benefit.

It’s already happened with this government with PPE remember ?

 

[portslade seagull]

I am afraid that interest rates and mortgages aren't going to stop increasing unless we can stop inflation increasing and certainly recently, the Government seem to have other priorities occupying them. Even with immediate changes to the major inflation drivers, the effects won't be felt for a couple of years yet

It's shit, but I can't see anything changing for at least 18-24 months yet, and even then any improvement will be frighteningly slow

Most things are always frighteningly slow going back down as the banks, supermarkets, petro giants etc want to squeeze the last droplets b4 being shamed into action.

 

[Is it PotG?]

I am afraid that interest rates and mortgages aren't going to stop increasing unless we can stop inflation increasing and certainly recently, the Government seem to have other priorities occupying them. Even with immediate changes to the major inflation drivers, the effects won't be felt for a couple of years yet

It's shit, but I can't see anything changing for at least 18-24 months yet, and even then any improvement will be frighteningly slow

It’s already happened with this government with PPE remember ?

I don't get it?

Everyone abused the PPE they were given?

 

[WATFORD zero]

Most things are always frighteningly slow going back down as the banks, supermarkets, petro giants etc want to squeeze the last droplets b4 being shamed into action.

Sorry, I meant initially getting inflation to slow or even stop it. I believe that what we are seeing is a culmination of over 3.5 years of Government policy and there are absolutely no signs of it changing. If it took 3.5 years to get to this state, it's going to take a bloody sight longer to reverse it. They may be able to do some relatively minor things to help, but for the vast majority, I can't see an alternative to 'riding it out'

The worries you highlight will hopefully be relatively minor at the end of all this

 

[Herr Tubthumper]

I am sorry if this sounds harsh and I wish anyone facing challenging times all the best but we can’t keep expecting the govt to bail people out everytime things gets tough.

What about when things get tough due to the government’s utter incompetence/arrogance?

 

[Herr Tubthumper]

We appear to be fast heading to a world where there is no personal responsibility. As far as I can remember mortgage offers always had illustrations which showed what the payments would be at 5%, 7% , 10% kind of thing so it should be factored in at that point

I hear you, but why should I have to put up with mortgage payment increases which are due to the government’s incompetence and recklessness?

 

[Horses Arse]

I am sorry if this sounds harsh and I wish anyone facing challenging times all the best but we can’t keep expecting the govt to bail people out everytime things gets tough.

Since Covid it seems to be the go to solution, people will have to make sacrifices until the interest rates stabilise. I was too young to really understand it all but talking to my parents about interest rates in the late 80’s early 90’s they were horrendous and people found a way to deal with it. The same must happen now.

Trouble is we have a govt that has screwed the country, the economy and all of us that live here (bar the very wealthy).

When they cause such mayhem for the benefit of their chums, why shouldn't the state help folk that suffer the consequences?

 

[Herr Tubthumper]

Trouble is we have a govt that has screwed the country, the economy and all of us that live here (bar the very wealthy).

When they cause such mayhem for the benefit of their chums, why shouldn't the state help folk that suffer the consequences?

This.

 

[Cheshire Cat]

I couldn't afford to buy my house if I was starting now. It's probably over three times the price I paid, based on Rightmove. Prices in mid Sussex are even more bonkers.

I have no idea how people can afford house prices these days, but anyone who borrowed and thought interest rates would stay at almost zero permanently was obviously deluding themselves

 

[Machiavelli]

Indeed. I’m far from convinced that raising base rates is having anything but a minuscule effect on reducing inflation. Maybe the policy will only start to have a real effect once it has hit the mortgages of far more people, which isn’t a pleasant prospect. Can only hope that the spike in inflation isn’t prolonged.

You'll see the effect, but it is a delayed one. Resolution Foundation are today reporting that those taking on new deals will be paying an average of 3k extra p.a -- and the figure that are renewing between now and the end of 2024 is 2.4m. That's money going into mortgages that's not going into other parts of the economy, and will impact on prices.

 

[Oh_aye]

I am sorry if this sounds harsh and I wish anyone facing challenging times all the best but we can’t keep expecting the govt to bail people out everytime things gets tough.

Since Covid it seems to be the go to solution, people will have to make sacrifices until the interest rates stabilise. I was too young to really understand it all but talking to my parents about interest rates in the late 80’s early 90’s they were horrendous and people found a way to deal with it. The same must happen now.

Or they didn't find a way and became homeless.

 

[Mancgull]

the problem is the delay in effect of rising interest rates. Inflation is sticky so BoE raise rates. However, the true effect will only be felt in the next 12 months as people come off fixed rate deals and feel the pinch meaning they spend less on other items, with the result that inflation lowers. Surely BoE should be considering this and stop the rises to see how things play out.

 

[HeaviestTed]

The whole system is a crock of shit, banks should have money and decide how much they want to set the rates at based on how competitive they want to be - interest rates private banks should have nothing to do with the central bank wankers.

 

[Reddleman]

The government are absolutely responsible, inflation was caused by the increased energy costs - the government could have slashed tax on energy which would have a hit on tax takes but would have stopped inflation before it started.

Everyone could see inflation was coming because of the increased energy costs and the government did absolutely nothing, nada, zilch.

Then why have US interest rates risen to the highest levels in 16 years - is that the Tories fault too?

 

[FatSuperman]

What an awful, callous post. "People found a way to deal with it". Really? Presumably not the thousands that had their homes repossesssed. The mortgage spike started because of Truss and Kwarteng's disastrous mini-budget. The government caused this, it's not unreasonable for some measures to be introduced to prevent people from losing their homes.

Absolutely ALL government schemes and interventions simply make the housing crisis worse. All of it simply props up the market artificially.

If they want to help, they should do means-tested subsidies for childcare, food, energy bills, that sort of thing. That way those most in need get the help. And re: housing, they should have a massive housebuilding programme. Trouble is, mostly it's homeowners who vote, and homeowners get very stroppy if their assets start to drop in value. Of course, at some point the needle will swing toward those millions of youngsters who have absolutely no hope, who are basically just paying rent to the previous generation of asset hoarders. Then you might see the morons running the country actually take action.

 

[Bob!]

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?

UBI

Paid for by a wealth tax.

 

[portlock seagull]

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?

My approach to this, and life in general, is don’t worry about when so many people in same boat. They can’t repossess every house on such a scale. They don’t have enough officers - probably be a growth industry, so maybe get a job as, it will be paying a lot of overtime and you’ll thereby be rich enough to then pay mortgage. Seriously though, if they repossess everyone’s house the market would collapse. Then they get nothing. So it pays to sustain people in debt so they can at least pay something.

 

[The Grockle]

Ours went up £300 a month which is tough as it leaves us with not much room for any unexpected costs.

The problem is that while many are struggling there still a lot of money around it's just benefiting an ever smaller proportion of society.
It seems that the working poor are getting squeezed more than ever but those who have been in a position to invest are benefitting from hefty dividends