[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?

 

[Seagull58]

i'd call it social investment

The Soviets did it throughout their Eastern European satellite states, who then paid compensation to the poor people who had had their properties stolen by the state, when the communist empire collapsed.

 

[Randy McNob]

As it happens, the rent I receive from my UK property just about covers the rent I pay on my European home, so you don't see at all.

Oh so it's changed again. The renters work hard, earn their salary to pay you rent which you use to live rent free in Europe?

Not having a pop at you but the system. I'd levy a 60% tax on any profit

 

[Seagull58]

Oh so it's changed again. The renters work hard, earn their salary to pay you rent which you use to live rent free in Europe?

Not having a pop at you but the system. I'd levy a 60% tax on any profit

wtf are you blathering on about? I own a house. I rent it out and rent elsewhere for about the same rent, not rent-free, a zero-profit situation. I used my hard-earned salary to buy my house.

 

[mile oak]

My neighbour said to me "can the government help me out with my school fees loan, car loan" and I cant even remember what the other loan was, he is a miserable g1t but has he got a point?

 

[Seagull58]

Oh so it's changed again. The renters work hard, earn their salary to pay you rent which you use to live rent free in Europe?

Not having a pop at you but the system. I'd levy a 60% tax on any profit

What profit would you tax?

 

[Uncle Spielberg]

Very bad news today with inflation. Interest rates to go up 0.25%, possibly 0.50% tomorrow. All lenders the last month have withdrawn rates with no notice and increased them once sometimes twice a week, this looks like continuing for a while. Anyone whose fixed rate ends in 2023 or even in 2024 start preparing 7-8 months before your rate ends at the best rate on the market and then compare with your present lender at the earliest time possible. I am here to offer a free consultation before any action plan is taken out. Send a PM or contact me through my website

 

[beorhthelm]

inflation stuck.

also, still have cost of living payments, billions of cash going into economy. very helpful for those in receipt, not so helpful for bringing down inflation.

 

[Herr Tubthumper]

My neighbour said to me "can the government help me out with my school fees loan, car loan" and I cant even remember what the other loan was, he is a miserable g1t but has he got a point?

If only you were a Tory cabinet member then your neighbour would be right to ask. you could furnish them with a fat contract for something he has no experience with.

 

[Paulie Gualtieri]

My neighbour said to me "can the government help me out with my school fees loan, car loan" and I cant even remember what the other loan was, he is a miserable g1t but has he got a point?

The helps wages maybe?

Also you could inform your neighbour that the charity status the school no doubt holds has indirectly helped him out financially already

 

[Horses Arse]

Oh I see, so you bought it when you had the opportunity when property was more affordable and now rent to those that don't have the same opportunites using their earnings to bolster your wealth?

Do you think it at all realistic that in a capitalist society, with the 'majority' voting in increasingly right wing 'money the most important thing' governments, that individuals will spurn the opportunity to make money or that it would make any difference to the situation we have?

Voting for Corbyn would have of course, but everyone was panicked at what that would bring. They went for the more destructive choice instead.

The country is all about capitalism, uncaring selfish extremes of capitalism. The frauds in charge over the last decade+ would never have got in if that wasn't the case.

I have full sympathy for those suffering right now that didn't vote these clowns in, I've zero sympathy for any Tory voters in that predicament. Did they really think the Tories gave a shit about them? No, of course not. They thought they might be one of the lucky few that make money out of less fortunate people.

Blame those that voted the frauds in repeatedly, they fuel all this. Stop encouraging it through votes. If folk stopped believing blatant Tory lies, encouraged opposition parties that greed was no longer acceptable, that tax was OK, investment in the state encouraged, then perhaps we would very slowly see some positive change.

Ain't going to happen though. This country is full of greedy bastards.

 

[Hotchilidog]

The use of interest rates to counter inflation that is caused by external factors and not excessive demand is idiotic economics. The inflation figures today prove it. These 'tough' decisions that will be borne by working people are being made people for whom it will mean nothing, except a possible appreciation of their asset wealth.

Wages currently running at best 4-5% behind prices at the moment and these interest rate hikes will suck even more demand out of the economy. The government needs to get on top of energy prices and make sure that the now falling unit costs are passed on to business so that they can either reduce prices or stem their price increases. of course we also have the additional costs caused by the extra red-tape of Brexit but that is unlikely to change soon.

What really frightens me is the total lack of understanding shown by those in charge of what the underlying causes of this cost of living crisis are. To use a medical analogy they are trying to fix a broken leg by putting my arm in plaster. Just clueless.

 

[beorhthelm]

The use of interest rates to counter inflation that is caused by external factors and not excessive demand is idiotic economics. The inflation figures today prove it. These 'tough' decisions that will be borne by working people are being made people for whom it will mean nothing, except a possible appreciation of their asset wealth.

Wages currently running at best 4-5% behind prices at the moment and these interest rate hikes will suck even more demand out of the economy. The government needs to get on top of energy prices and make sure that the now falling unit costs are passed on to business so that they can either reduce prices or stem their price increases. of course we also have the additional costs caused by the extra red-tape of Brexit but that is unlikely to change soon.

What really frightens me is the total lack of understanding shown by those in charge of what the underlying causes of this cost of living crisis are. To use a medical analogy they are trying to fix a broken leg by putting my arm in plaster. Just clueless.

wage inflation at 7.2%. this is contributing to the BoE decision to increase rates, removing demand is exactly their intent.

just heard an analyst say they "should" increase 0.5% for credibility but will probably rise 0.25%. this is indicative of underlying problem, difference between what economist and their models say should be done and the reality of how that effects people. can only hope they come to realise the target inflation needs to be ignored for a while, but no other government or central bank is doing that, so would be brave play.

 

[Hotchilidog]

wage inflation at 7.2%. this is contributing to the BoE decision to increase rates, removing demand is exactly their intent.

Inflation is in double digits. These are below inflation wage increases (hence pay cuts in real terms) they are not pushing up prices. In my own case I got 6% which is my biggest raise in well over a decade, it makes a dent in the increases in my day to day spending but it doesn't cover it.

Wages have been stagnant or worse for most workers since 2010, people need to get paid for the work they do so can afford the roof over their head. I do not see how getting a real terms pay cut puts up inflation.

 

[sparkie]

What is a pay rise ? I think I've vague memories of one in the distant past but it seems such a fantastical phenomenon that I was probably dreaming.

 

[Hotchilidog]

What is a pay rise ? I think I've vague memories of one in the distant past but it seems such a fantastical phenomenon that I was probably dreaming.

Exactly.

 

[luge]

This is not inflation caused by rampant spending and traditional supply/demand economics. Our economy is constantly on the edge of recession yet suffering inflation. It is not running in high single figures - therefore interest rates only make matters worse - most people are not spending rampantly, and wages are not increasing in line with inflation.

In normal circumstances high inflation reduces government debt, but because of the lack of productivity in the economy, we are adding to the debt with handouts.

Brexit is a major cause, but not the only cause to this. There are alot of people who are older, but who are in working age, not working as a result of benefiting from high asset worth. The mortgaged households as a percentage are low - c. 30% of houses have mortgages - but these are increasing high value and held by the under 50's - with a very high proportion of under 35s renting (between 25-30% own a property in this bracket).

So the people who struggle are the ones with the most burdens.

Solving this crisis is multi faceted - but the first sensible step is to stop raising interest rates. The second step - which is politically volatile, although increasingly less so - is to agree to renegotiate a deal with the EU that would curb the costs of our imports/exports and get our economy moving again in all sorts of ways.

I doubt that the asset classes are going to be convinced back into working full time, that is a longer term rebalancing that may come from house prices readjustments (sharp) or stagnation (over c.5 years or so) which will reduce the effective debt pile of most households (although the debt obviously doesn't change - just that everyone earns more and it seems less).

 

[TomandJerry]

The UK's debt pile reached more than 100% of economic output for the first time since 1961 as government borrowing more than doubled in May, official figures show.

The Office for National Statistics (ONS) says net debt reached £2.6 trillion as of the end of May, estimated at 100.1% of gross domestic product (GDP).

 

[luge]

The UK's debt pile reached more than 100% of economic output for the first time since 1961 as government borrowing more than doubled in May, official figures show.

The Office for National Statistics (ONS) says net debt reached £2.6 trillion as of the end of May, estimated at 100.1% of gross domestic product (GDP).

Its almost as if something absolutely ginormous completely halted our competitiveness on an international scale.

 

[beorhthelm]

This is not inflation caused by rampant spending and traditional supply/demand economics. Our economy is constantly on the edge of recession yet suffering inflation. It is not running in high single figures - therefore interest rates only make matters worse - most people are not spending rampantly, and wages are not increasing in line with inflation.

In normal circumstances high inflation reduces government debt, but because of the lack of productivity in the economy, we are adding to the debt with handouts.

Brexit is a major cause, but not the only cause to this. There are alot of people who are older, but who are in working age, not working as a result of benefiting from high asset worth. The mortgaged households as a percentage are low - c. 30% of houses have mortgages - but these are increasing high value and held by the under 50's - with a very high proportion of under 35s renting (between 25-30% own a property in this bracket).

So the people who struggle are the ones with the most burdens.

Solving this crisis is multi faceted - but the first sensible step is to stop raising interest rates. The second step - which is politically volatile, although increasingly less so - is to agree to renegotiate a deal with the EU that would curb the costs of our imports/exports and get our economy moving again in all sorts of ways.

I doubt that the asset classes are going to be convinced back into working full time, that is a longer term rebalancing that may come from house prices readjustments (sharp) or stagnation (over c.5 years or so) which will reduce the effective debt pile of most households (although the debt obviously doesn't change - just that everyone earns more and it seems less).

this is touching on something underreported, a very large part of the population not impacted directly by interest rates, with a lot of spending power that is consumption only without much productivity.

 

[Bold Seagull]

wage inflation at 7.2%. this is contributing to the BoE decision to increase rates, removing demand is exactly their intent.

just heard an analyst say they "should" increase 0.5% for credibility but will probably rise 0.25%. this is indicative of underlying problem, difference between what economist and their models say should be done and the reality of how that effects people. can only hope they come to realise the target inflation needs to be ignored for a while, but no other government or central bank is doing that, so would be brave play.

If wage inflation is below inflation it's a wage deflation in real terms isn't it? And you previously suggested cost of living payments contributing to millions going into the economy - these are absorbed by a fraction of the increased energy costs?

Is the reality that energy costs, supply chain costs, have all contributed toward rising prices, if anything dropping demand contributing more than an increase demand or spending. Interest rate rises are then a double whammy because not only do people have less money to spend, less spending and higher borrowing costs for businesses will mean their prices will continue to rise.