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For those with a few years of a fixed rate left, are you overpaying the mortgage (if circumstances allow), or specifically saving elsewhere with a view to paying a chunk off at the end of the fixed rate, as savings rates have improved?
Just wondering how others are using the time cushion, in case things don't come down fast. Not sure which approach looks the better bet, but doing neither seems a risk right now.
I had planned to overpay when our rate went up slightly last year (on a 5 year fix) however energy prices + general cost of living have largely put paid to that plan.
This country’s housing situation is absolutely disgusting, friends on the continent can’t comprehend our rental market, it’s been decades of failed policies that have got us here. I can only see a major shake up turning this around… although getting the self serving bunch of grifters we call a government out would be a good place to start
It's not much better in some of Europe, I have friends in Hamburg, Munich and Paris and they're all looking an now need €1m+ to get a dooer upper in a decent(ish) area and are currently spending €€€€ a month on rent. They're only saving grace is cheaper childcare, stable rent once in and cheap public transport/good infrastructure.
Our government seems to only focus on directly comparable numbers without looking at the bigger picture.
But not everyone is coming out of 2 year deals at the same time.
No, but given that a 2 year fixed is the most popular option, there is still a lag (mean value probably around 1 year) for interest rate hikes to have the desired affect.
Which probably means they go up too high before they start dampening the economy...
We have 2 amounts on our mortgage, the smaller loft conversion amount is happily fixed for another 4 years,but the main bit will come off the fixed rate in July next year.
We bought the house 8 years ago when we were both fairly junior at work and have had promotions and payrises since and resisted the temptation to buy a big expensive house in favour of doing this one up. I guess that risk mgmt will pay off in a year when we can still afford the increased payments.
Will continue to make overpayments in the mean time so when the actual payments go up we can drop the overpayment and it will feel the same from a monthly cash flow perspective.
You are right that not everyone is about to come off a 2 year fixed deal, but there will be a peak of numbers as 2 years back there was a big uptake due to the help / scheme the Govt. Introduced to help during COVID.
Personally ok - 4 years into a 10 year fix at low 2s. Overpaying and should be done well ahead of maturity.
Professionally concerned - work in finance for large SMEs / corporate borrowers and I think there will be a lot of pain here. Like in the resi mortgage market, many businesses have borrowed on variable rates having never seen anything other than near zero base rates. Banks will always stress test loans but doubtful that’s been sufficiently rigorous for the current environment given the other inflationary pressures. Already seeing clients cut back on investment and in some cases headcount, which will have ripple effects into the supply chain and wider economy. Challenging year / years ahead.
I really feel for those caught by the big interest rate hikes on top of energy price rises and the overall cost of living.
I keep banging the drum but the biggest factor in all this is a lack of afffordable social housing by all flavours of government, which has driven the private rented sector, increased housing benefit costs, and pushed prices to crazy levels.
That and a lack of financial education in schools which seems to have impacted both birrowers and lenders.
- used my mortgage to lend money to my sister
Is that technically legal?
Why not?
4 yrs left at just under 2%.
Over paying an extra 30% of monthly payment too.
Should be able to wipe out a reasonable amount of any remaining mortgage in 2027
Why not?
I suspect the lender doesn’t care, but if you’re unable to repay because of your sister’s circumstances they won’t care then either and any of the consequences will be on you.
a lack of financial education in schools which seems to have impacted both birrowers and lenders
And spellers! Not sure I see what schools have done wrong, certainly kids now get far more life skills training than when I was at school in 80's.
Still, it's the teachers fault...usually is
Just double checked and it’s actually fixed until 2027 not 2025. I had planned to substantially over pay as I’d been used to quite a high rate, but that has dropped to £100 per month overpayment due to the cost of living increase.
Ours is up for renewal soon. We're going to get absolutely shafted. Some finance things are finishing soon so we won't have to sell up but we'll be paying, at a minimum, an extra £600 a month. Unsure how long to tie in for. Go for 2 year again or longer?
We came off a 5 year 1.89% fix in November last year.
Due to a number of complicated factors, I held back from remortgaging until yesterday, and have seen my payments rise from £444 to £1252 / m.
2 year fix will bring that down by £365/m, but it's still quite a jump from last year.
Coupled with huge expense unavoidable on 2 children from September, we'll be looking at just under £5,000 per month on the children and mortgage.
My mortgage is mostly IO - a quirk of my marginal tax rate means I've been piling the max into pensions for the last decade and not paying off the mortgage. It will all come good when I can access my 25% PCLS (tax free lump sum) to take big bites out of the outstanding capital, up to the max overpayment allowed each year without penalty.
I've gone from 9.5% to 7.5% to 5.5% to 1.89% over the last 29 years, and I fully expect this current level of rates to remain stubbornly persistent at around the 5-6% level.
Fixed last year for five years paying a small penalty to end early. 1.91
Made the choice to buy a house well within our means 12 years ago. During this time income has risen and I’ve considered upsizing a few times but it is times like this I’m so glad we didn’t.
For those with a few years of a fixed rate left, are you overpaying the mortgage (if circumstances allow), or specifically saving elsewhere with a view to paying a chunk off at the end of the fixed rate, as savings rates have improved
@OwenP - we spent a year overpaying the mortgage as interest rates were crap and our S&S ISA's were struggling. We've now swapped to a combination of a regular savings account at 5.5% and back savings into the ISA.
Depending on the next couple of years of my wife's health I'm hoping we can increase this again.
We are in the midst of selling & buying. Numbers are small compared to others mentioned here but worked out as percentage they are still fairly big. We put our house on the market just as Liz and Kwasi decided it would be fun to play Monopoly with the country's finances.
Our mortgage was fixed until January, at this point we were going through the searches/surveys stages of buying and had a buyer in place for our property. To avoid early repayment charges I decided to switch to a tracker, current payments are now around 24% higher than they were when fixed (£330pm to £409pm). We had a mortgage offer in place in February from Nationwide, the same mortgage now is around £140 more per month.
Since then everything went to pot, our buyer dropped out, we lost the property we were looking at and are only today back at the stage of accepting an offer on our house. An offer that is 5-6% lower than we previously had. I expect if we were selling at the higher end of the market this would be around 10-15%.
We haven't found a place to buy yet but our estate agent expects there to be quite a few properties coming to market as people exit fixed rate deals and suddenly find out they can no longer afford their repayments. As we are looking we are seeing properties come to market and within weeks be reduced by around 5-8%, some even more, especially if they continue to stay unsold.
£450k mortgage coming out of a deal next Spring, fuel cost has gone from £1500 to £4500 in the past few years, everything else has gone up like people say. We can cope, but do I want to just cope?
I am so worried about the wider economy and couldnt give a stuff about us, we can cope as we can sell up and go elsewhere and be mortgage free. I am scared for the wider economy, jobs, businesses etc when it really bites
I suspect the lender doesn’t care, but if you’re unable to repay because of your sister’s circumstances they won’t care then either and any of the consequences will be on you.
Indeed
Hiya,
In the past I had a miserable time with mortgages. Four years ago, when we moved here I chose to keep the term the same and overpaid. Six months left. Total sympathy, for those struggling, I've been there. Hope all OK and keep fighting.
As for interest rates to control inflation I firmly believe in this case it will stoke the flames of inflation, else will lunge us into a massive recession, as there isn't much to really bring us out of this mess, sorry ;-(
I personally hope it brings this government down, with little chance for the tossers to return, hate the lot of them.
JeZ
I really feel for anyone looking for a deal at the moment. The housing market is so overinflated and unaffordable too. With 2 kids flying the nest in the next few years I really worry.
Personally, with 8 years left to go on the mortgage, we are fixed at 2% until 2029 on a 10yr deal, having always previously had rolling 2 yr deals.
We did this due to the pain of mortgage revaluations rather than any intuition about the direction of travel, but very glad we did.
Bought our house in 2022 with a 1.68 % 2yr fixed rate as we wanted to take some equity out for an extension, thought it was a good idea at the time. It ends in Jan 2024 and currently looking at an increase of around £600pcm.
In that time both me and the mrs have had a pay decrease to only work term time to reduce childcare costs...with our current salaries we barely qualify for what's left on the mortgage...not looking forward to it and I really need the Mrs to start taking it seriously cause if she doesn't, she's going to lose her dream house when we have to sell it.
When we moved here in 2015 we bought well within our means. The bank offered us around 100k more. I was comfortable buying this place as I ran through the calcs on interest rate rises as I was aware they could only go up.
Our previous house we over paid a lot but my wife took a career break to look after our boys until school nursery kicks in (next march).
We are seeing a rise coming but it should be affordable but very worrying for a lot of society
First time buyers, got a right doer upper and managed to fix at 5 years for 4.34% which we are happy with. Mortgage ended up being the same as renting so we know we can afford it.
Interesting to see everyone's situation. We have a £160k mortgage, split into 3 products (2 ported from previous properties). About 2/3 of it is due for renewal next Feb, it is currently at 1.59%. Then the other 1/3 is due in Sept 2024 which is currently at 3.9%. Some quick calcs suggest we will see around £250-£300 increase overall which is about a 30% increase in our mortgage. It will certainly be a big hit to take on the disposable income. And I also just started paying into my pension, so double whammy.
We have 2 years left on a 5 year fix. So a little bit of breathing space, not that I epxect it to get better in those 2 years.
Only slight saving grace was, when we moved I was quite cautious and borrowed a lot less than offered at the time. We moved to a 3 bed in 2020 (funtimes in a pandemic), so had some equity from the older house sale. I could have borrowed another 50k or more (can't remeber the exact details), but had a niggle in the back of mind, what if rates go up. So my monthly payments look like going up £300ish, but could have been double that.
It is depressing. Just hit with one thing after another. You feel like you try and do the right thing, provide a home for the family, work hard and keep getting kicked. Such is life eh...
Over paying an extra 30% of monthly payment too.
Aren't early repayment fees a bit of a killer on this?
Aren’t early repayment fees a bit of a killer on this?
I assume it depends on the product.
Mine will rise £436 in December, we're on 1.3% now, rising to 5.8% IF we can get the deal we're applying for at the moment. I can't believe what I'm typing, but an extra £436 a month for absolutely nothing in return is the best case for us at the moment.
The good news is that we were pretty prudent last time around, our rate went from 3.5% (which was horrific for the time, but we were FTBers) to the 1.3% and rather than reduce payments, we shortened the term, meaning we can draw it out to the orginal term this time around and at least mitigate some of the pain. We've both managed to get decent payrises recently which is also helped a lot.
The bad news, I don't like excuses, but we came incredibly close to seperating a while back, and have both been dealing with depression, we've been over-spending a lot, much of the extra £436 is to refinance debt.
I was tempted by a variable rate this time, risk a bit on a (hopefully) falling rate early next year, Broker said I was being a bit silly, not only have I proved I don't have the best track record with financial acumen, it's a poor gamble. I could win a bit, but lose a lot. I said the opposite 18 months ago when we last refinanced. I could have taken 10 years fixed at 2% or something, I forget exactly. I thought "rates are as low as they can possible go, it's a no lose gamble" but no, I had to go for two years...
So *apparently* the UK is 500bn underinvested a according to the Institute for Public Policy Research.
No shit.
What have we been saying for ages?
The economy starts with government spend to do the things we need to do to make society better, and put money into the private sector.
Until a government grabs hold of this - things will get worse.
It's about time policy makers and advisors had their heads banged together. Hegemony not doing anyone any favours.
Back to the Cameron/Osborne period and the idea of shrinking the state - this is the net result.
Remember this:
Government spending adds new cash to the economy.
Taxes drain money from the economy.
The housing market is so overinflated and unaffordable too. With 2 kids flying the nest in the next few years I really worry.
It's certainly a bit of a dilemma. On the one hand, it's nice to think that the value of my property is increasing as, when we downsize, there could be enough money freed up to give my daughter a decent leg-up on the property ladder. On the other hand, she'll never get there on her own if prices keep rising. It's a shit system but I can only do as best as I can within it.
On the one hand, it’s nice to think that the value of my property is increasing as, when we downsize, there could be enough money freed up to give my daughter a decent leg-up on the property ladder. On the other hand, she’ll never get there on her own if prices keep rising. It’s a shit system but I can only do as best as I can within it.
Yeah that one is a dilemma (and I guess it depends on how old you are compared to your kids - older first-time parents will have less life to fund into their old age than younger ones). Part of me thinks 'downsize when they have left home' and have some spare money to spend on ourselves and the kids but that means their eventual inheritance will be smaller. On the other hand we keep our exiting property and when we die, our two will get a very sizable sum each that would see both of them able to afford a home outright. But does that teach them anything – I started with absolutely nothing (I had already bailed my parents out of debt when I bought my first home and filled it with second-hand furniture). Should our kids at least learn to understand things aren't always easy to come by and if they want things they need to work for them?
On the other hand we keep our exiting property and when we die, our two will get a very sizable sum each that would see both of them able to afford a home outright.
my wife's grandmother just died. She was 96 and her youngest kid is 62. I don't think a sizable sum of money at that age is particularly useful
Johndoh - when we all bought our first properties it was easily achievable though. Now the multiples required are crazy. The options we had simply don't exist any more.
She was 96 and her youngest kid is 62. I don’t think a sizable sum of money at that age is particularly useful
That's a comfortable retirement and hopefully 20 to 30 years of quality living left, many people have little to no real pension or savings. Or it could support the next generation trying to get on the ladder.
I'm lucky / prudent in that order. 18 months off paying off the mortgage so little capital left, didn't over stretch when we bought, haven't moved again although we could have had a much bigger mortgage, moved to a variable rate at 0.79% above BoE just before the crash.
On the one hand, what did people expect, on the other what choice did they have. A combination of lack of housing coupled with effectively under controlled lending just pushed prices to many multiples of peoples annual salary although there was also an element of being overly picky about where people live. We choose to live at the wrong end of the borough high up on the moors, we love it and the house was cheap for what it was, the same size house 5 miles away is £200k more for a nicer post code and 10 minutes off the journey to the motorway.
But does that teach them anything – I started with absolutely nothing (I had already bailed my parents out of debt when I bought my first home and filled it with second-hand furniture). Should our kids at least learn to understand things aren’t always easy to come by and if they want things they need to work for them?
I got nowt (but love and kindness) from my parents but times were different. I don't think "learn from the school of hard knocks" is the best parenting and while we live in an unfair society I'm happy to help my daughter where I can. There's no reason for me to see her miserable and me comfortable.
Johndoh – when we all bought our first properties it was easily achievable though. Now the multiples required are crazy. The options we had simply don’t exist any more.
Fair point - and (unless we both end up in care homes) one way or the other our kids will get something to help them along.
I don’t think “learn from the school of hard knocks” is the best parenting and while we live in an unfair society I’m happy to help my daughter where I can. There’s no reason for me to see her miserable and me comfortable.
Yeah I get that and I wasn't being entirely serious about not helping our kids, it was more a discussion point (my wife thinks we should do absolutely anything we can to give our kids as much as possible whereas I think we should at least get to enjoy our retirement a bit as they *should* end up with something).
Aye, there's a balance to be reached but I reckon our retirement income will see us ok, so a lump of capital won't be missed.
Of course, there's an argument that it should go to charity or be taken in tax but while the mega rich are all feathering their own families nests then I'll continue to selfishly look after mine.
Fair point – and (unless we both end up in care homes) one way or the other our kids will get something to help them along.
It will be a bit late for them by then.
The vast majority of inherited wealth passes to (not from, to!) rich homeowners about 60 years old.
That sort of trickle-down isn't helping anyone get on the property ladder.
Remember this:
Government spending adds new cash to the economy.
Taxes drain money from the economy.
You do realise that they are the same thing?
The vast majority of inherited wealth passes to (not from, to!) rich homeowners about 60 years old.
We are observing this. When you are wealthy enough you can plan for things and help out at a much earlier stage than those less wealthy. And the defining difference financially now seems to be inherited wealth (has it always been so?), which is re-invested in the growing housing market/bubble, and has been subject to cheap and easily available loans should you have the aforementioned gift of a deposit etc. I posted a thing a few weeks back on a thread about the largest lender in the UK being the Bank of Mum and Dad - and that over half of first time buyers were being given their deposit.
I do wonder as the cheaper credit dries up whether we will see a radical change in the market and attitudes. I cannot see in my lifetime that borrowing costs are going to be back to what we have seen for the last 15-20 years.
It is, as scotroutes says, a really shit system but you have to do what you can.
@matt_outandabout - it also helps if you tie a knot in it after the first one 😉😂
it also helps if you tie a knot in it after the first one
Indeed. And mrs_oab wanted a 4th... 😲😲😲😲
You do realise that they are the same thing?
Don't be ridiculous.
Your taxes are deleted money once they get to the HMRC account (at day end) within the consolidated fund account at the BoE - Never to be used again. HMRC funds are used as off-sets for day end DMO. But are never part of the spending cycle.
You've clearly missed pages and pages of analysis on our threads.
why I am I seeing stories on the bbc about peoples deals going from £289pcm to £1150pcm, appreciate circumstances are different and all that but those seem to be absolutely huge increases???
checked on MSE, looks like we could get deals around the 4.5% mark for 50% LTV. we have just under a year so fingers crossed things improve
Can't see the tories helping. when do we get to vote them out?
"why I am I seeing stories on the bbc about peoples deals going from £289pcm to £1150pcm"
It's a very worst case, someone on an interest only, sub 2% mortgage going onto their banks SVR. If all you're paying is interest, then triple the rate, triple the payment.
"Can’t see the tories helping. when do we get to vote them out?"
583 Days until the last day they can call an election, but I suspect it will come a lot sooner than that. A Government on the ropes might hold off, hoping things will improve, but it can't be long before they declare the next election unwinable and Tory HQ puts pressure on Sunak to call one now and let Labour face the worst of it.
Cheery thought eh?
The thing is. despite the BOE calling the shots, it the Government who hold sway over the 2% inflation target, the BOE have few tools and don't get to pick and choose who feels what pain.
The only really solution is to accept higher inflation over a long term... but then they might have to at least accept Brexit is a major cause.
Can’t see the tories helping. when do we get to vote them out?
I don't think either party would want to do anything. The high cost of loans is needed to reduce inflation. if you gave everyone 30% off their mortgage you'd just have to bump the rate even higher till the cost is the same. The "pinch" is basically intentional (and a-political).
Don’t be ridiculous.
Your taxes are deleted money once they get to the HMRC account (at day end) within the consolidated fund account at the BoE – Never to be used again. HMRC funds are used as off-sets for day end DMO. But are never part of the spending cycle.
You’ve clearly missed pages and pages of analysis on our threads.
if anyone's confused, this is the marginal theory of people who subscribe to mmt, and not actually the case. government debt is tracked in an account and managed through (mostly) government bonds.
Interest rates are rising across the Western world - for 3 x reasons:
- printing of money in Covid to fund furlough etc
- Inflationary pressure of covid on supply chains (which take a very long time to work through due to long term contracts - typically 12-18 month lead time)
- War cost / 10 fold increase in energy due to Ukraine conflict that has then compounded supply chain cost issue - with reductions in the cost of products / raw materials for consumers still 6-12 months away (the longer the supply chain the longer it takes for cost changes to work through).
One of the key problems is that pretty much all of the international / national economic forecasters got it wrong and continue to do so. Take the doomsday scenario by the IMF for the UK last autumn in which it suggested the UK would be one of the worst performing economies and entering a long recession by Q1 this year. Same for the OBR - remember their forecast at the time of the Truss / Kwarteng budget?
At the time the IMF forecast for the UK resulted in weeks of constant panic filled reports in the media - all of which turned out to be misplaced. The UK economy has since then proven to be much more resilient than other economies - currently enjoying growth whilst Germany amongst others are now in recession - and that's even with a couple of additional bank holidays related to the royal death / coronation.
In reality there's very little that the Bank of England or the Govt can do to bring down inflation other than increase the cost of money - the drivers of inflation will be around for a while yet and are largely external.
There's also a point on interest rates - many of us have forgotten that "normal" interest rates are typically in the 4-5% range. The current rate is therefore a slight increment on "normal" with the low rates of the last 13 years being a massive outlier.
That people are feeling the pain of mortgages in the 5-8% rage can't be disputed (and mine's gone up more than £2K a month so far - self employed / interest only and can't move to fixed rate repayment as a result) but the drivers of inflation and the government's inability to mitigate the social impact without making it worse need to be recognised.
Some of the mortgage payments mentioned on this thread are, to me, quite staggering. Many are more than the wife and mines joint monthly take home pay alone and we're not badly paid - never mind all other living/car/energy expenses that people have to pay.
I can't help thinking a lot of this borrowing is lifestyle/speculatively led, not just to buy a house that suits your needs.
I can’t help thinking a lot of this borrowing is lifestyle/speculatively led, not just to buy a house that suits your needs.
a lot of people live in expensive parts of the world. A 3-bed semi around here is £600k-£1mm - if you want to live in a leafy part of london you could be looking at double that. If you bought a cheaper one of those with a 20% deposit on a 2 year fix in 2021, your mortgage payment would be going up from £1600 to £3000.
I can’t help thinking a lot of this borrowing is lifestyle/speculatively led, not just to buy a house that suits your needs.
Surely you need a house that suits your lifestyle?
Surely you need a house that suits your lifestyle?
Surely you need would like to have a house that suits your lifestyle?
Our mortgage is currently 20% of our after tax income - it will increase to 30% if mortgage rates hit 7%. Our remaining household bills are around another 20% with food, council tax, childcare, utilities, cars (owned, not leased), insurance, digital services, etc. We can just survive on a single income at 7% rates if required. Any more will require use of savings or a reduction in pension contributions. I also have a small bonus every year which is usually used for overpayment/savings, but this could also be requisitioned. We'll be okay - others won't.
I don't think the government should directly help with peoples mortgages, but perhaps they could encourage the banks (which were bailed out by the tax payer) to allow people in need to reduce payments to interest only (without affecting credit) and not force people to be locked into bad deals for long periods.
Surely you need would like to have a house that suits your lifestyle?
You have a lifestyle, it might not be what you aspire to, but it is what it is.
siscott85
“why I am I seeing stories on the bbc about peoples deals going from £289pcm to £1150pcm”
It’s a very worst case, someone on an interest only, sub 2% mortgage going onto their banks SVR. If all you’re paying is interest, then triple the rate, triple the payment.
Thanks for the explanation. I was wondering this myself - saw an article a week or so ago where a young couple were complaining that their mortgage payments had gone from £400 - £1200. They had a nice place in London and I did wonder how on Earth they were only paying £400 for the mortgage - didn't occur to me that is the interest payment only! Eek.
I couldn't see how this was possible, but I was thinking of repayment mortgages not interest-only.
Would a VAT increase be a fairer way of reducing money supply? Many aren't affected by interest rate rises but many of those that have mortgages start to really suffer; renters could also be affected with owners wanting to increase their rental income - though they can only do what the market will bear.
I suppose the other way of looking at it, is they were paying £400 pcm on interest only, what would the alternative be? probably paying a lot more in rent. So they were probably paying less overall, and hoping that the equity would keep increasing to help pay off the mortgage. I know a few who are doing this. So they will probably loose their homes, overall they will probably still be financially better off for taking the risk. Not that that will be a happy thought.
We are hovering at 34% of net takehome on mortgage, other essential outgoings have increase massively to just under 40% of take home (corners could be shaved here, like no heating, change shopping from tesco to lidl etc,,)
So without the mortgage bump 75% of our takehome goes on essentials. At a mortgage rate of 7% that'll be around 90%.
Up until remortaging to refurb, and the shit hitting the fan we had been tracking quite closely to the 50:30:20 rule - so we were pretty comfortable
One of my mates is on interest only. Obviously hoping for his wealthy parents to pop their cloggs. His father departed last year.
Would a VAT increase be a fairer way of reducing money supply?
its a good idea but VAT disproportionately hits the poor (as a percent of income) and increasing VAT would (I think) actually increase inflation - if you put it from 20-25% most prices would rise by 5%, causing upward pressure on wages (I think) driving another cycle of inflation. I might be wrong about that though.
Interest only whilst looking after family at home, then retire and move to a small place somewhere away from heated house price areas. Need to ensure kiddies leave though!
One of my mates is on interest only. Obviously hoping for his wealthy parents to pop their cloggs. His father departed last year.
Yeah some close friends of ours have always done interest only and currently have a massive house that they are doing up (absolutely no idea what their exposure is). In fact I have posted on here before about them and the general opinion was that, if people on such mortgages are doing something with the saving (saving it, investing it etc) then it's no problem, but if they haven't then it's a very risky position to be in.
Interest only whilst looking after family at home, then retire and move to a small place somewhere away from heated house price areas.
But you'd have to hope the house you sell has increased enough in value to be able to afford to buy a smaller home as you may have very little (if any) equity.
Is anyone else frustrated with the media coverage? The figures of monthly payments rising mean nothing without more context - from the borrower though to national relevance.
https://www.bbc.co.uk/news/business-65966725
1.4 million to see interest rates rise - but only 690,000 to be hit with a 20% drop in living standards.
This from nearly 11million mortgages in the UK.
Of course 20% less to spend when you are struggling to put food on the table each month compared to the wealthier who think 'curses, that eBike will have to wait another year and I cannot afford the winter ski trip'.
(etc)
printing of money in Covid to fund furlough etc
Fail at the first hurdle.
We didn't just start printing money in Covid. It's bullshit. And neither to we print money for this process. It's money marked up in commercial banks accounts by license at the BoE.
New money creation is always used for government spending. Irrespective of Covid. It was income replacement by and large - not additional cash.
The fact that we did Q/E at the same means nothing really.
Why is the nonsense still doing the rounds?
if anyone’s confused, this is the marginal theory of people who subscribe to mmt, and not actually the case. government debt is tracked in an account and managed through (mostly) government bonds.
I can tell you exactly how it works if you want? That's why I referred to the Debt Management Office.
I'm not confused at all.
Government debt is simply a place for private money to go - it serves very little purpose other than that. it funds nothing.
Why is the nonsense still doing the rounds?
I will say it again rone, you have a particular view and theory on our economy. It is a view. Not shared by all.
And yet you state it as fact.
It is a view.
I’m explaining why things are happening the way they are – don’t be so bloody rude.
You are also coming across as rude yourself the way you describe others or the way you are 'speaking' as though others are thick and you know it all. And not just me.
(Albeit some are politicians who I have little respect for regularly.)
And I agree - you have put your point of view across, you now do not need everyone to defer to your position or justify their own views. It is an exchange of views, not a conversion to all seeing the world your way.
The thing is. despite the BOE calling the shots, it the Government who hold sway over the 2% inflation target, the BOE have few tools and don’t get to pick and choose who feels what pain.
The only really solution is to accept higher inflation over a long term… but then they might have to at least accept Brexit is a major cause.
The BoE don't call the shots.
The government could intervene under the BoE act 1998.
"19 Reserve powers.
(1)The Treasury, after consultation with the Governor of the Bank, may by order give the Bank directions with respect to monetary policy if they are satisfied that the directions are required in the public interest and by extreme economic circumstances.
(2)An order under this section may include such consequential modifications of the provisions of this Part relating to the Monetary Policy Committee as the Treasury think fit."
You are also coming across as rude yourself the way you describe others or the way you are ‘speaking’ as though others are thick and you know it all. And not just me.
My additions to this thread were definitely not any sort of personal attack. But I will correct people.
And I agree – you have put your point of view across, you now do not need everyone to defer to your position or justify their own views. It is an exchange of views, not a conversion to all seeing the world your way
You are confusing my view of political economics with how government spending works. One is my view (left-wing etc) and the other is an accurate model of government spending. Stop the conflation and we will get on.
Please put a sock in it, adding nothing to this debate
Whereas that is just ****ing rude.
Anyway where's your counter-point?
(God knows why people are so inflammed that they've been told a Tory lie and refuse to let go of it!)
Rone. You are wedded to an economic theory. One not shared by all economists by along way. You are very shouty about it. Its tiresome
Some of what you say is mainsteam and makes sense. Some of it is very much a fringe tbeory
Rone. You are wedded to an economic theory. One not shared by all economists by along way. You are very shouty about it. Its tiresome
The government spending model as presented is not theory in that sense. It's an accurate model.
And it's more tiresome that despite all the countless examples you never take a blind bit of notice and come back time and time again with the same duff logic.
Some of it is very much a fringe tbeory
Which bit?
It's a thread about interest rates. I'm genuinely concerned where all being taken on a needless ride that doesn't have to happen. I opened my contribution with the idea that 6% base-rates are where the crunch was going to happen - this is a reasoned guess and has nothing to do with MMT.
A few posts up a posted an extract from Parliment documents to show people that the Government can over-rule the BoE because people on here blindly believe otherwise.
I’m not really that into endless politics shouting matches tbh.
But I think you set your tone with
Don’t be ridiculous.
You’ve clearly missed pages and pages of analysis on our threads.
A fascinating definitive guide no doubt.
Fail at the first hurdle.
We didn’t just start printing money in Covid. It’s bullshit.
Another welcoming debating style.
I can tell you exactly how it works if you want?
If carlsberg did mansplainers…
oh and MMT has been saying for the last couple of years lifting interest rates adds to the money supply therefore the price level and inflation.
Surely by raising rates, you're encouraging people to save and thus pay down debt resulting in less new money and less growth. Thus, a smaller economy...assuming you buy the argument that creating debt/money is actually productivity, which unless you're an economist, it really isn't.
If it's all so easy rone then I'm sure Rachel Reeves will be on the phone to the BoE on her first day and have us flooded with money within months.
I'll put down my deposit on a solid gold yacht in anticipation! 🙂
But I think you set your tone with
Well not actually I started way back - before that, but this was in response to someone saying something that was totally incorrect.
Surely by raising rates, you’re encouraging people to save and thus pay down debt resulting in less new money and less growth. Thus, a smaller economy…assuming you buy the argument that creating debt/money is actually productivity, which unless you’re an economist, it really isn’t.
Well there are more people in debt than with savings for a start. And those type of people tend to be affluent so you're effectively taxing the poorer person with a mortgage debt and giving money to those that hold assets.
If it’s all so easy rone then I’m sure Rachel Reeves will be on the phone to the BoE on her first day and have us flooded with money within months.
I’ll put down my deposit on a solid gold yacht in anticipation! 🙂
Well she's ex BoE so doubt very much she wouldn't toe the line.
I don't think any of this easy - as there are always problems in balancing the economy - but you can ask what are we prioritising? The Tories don't prioritise those struggling do they or public services etc.
With interest payments - that interest income goes somewhere (bond holders/savers etc) - in the US current it is equivilent to a large government deficit and currently powering there economy. The wrong targets perhaps.
There's a huge distinction between government 'debt' and private debt to factor in.
If carlsberg did mansplainers…
Your contribution is what to this debate?
And it’s more tiresome that despite all the countless examples you never take a blind bit of notice and come back time and time again with the same duff logic.
Thats pretty laughable considering the only comment i ever make on economics is to point out that MMT is a theory not a set of facts and that its not universally accepted
Thats pretty laughable considering the only comment i ever make on economics is to point out that MMT is a theory not a set of facts and that its not universally accepted
We call it a description. That can be what theory means.
Nothing is universally accepted is it? The thing that we currently 'accept' is sure working out well for us isn't it?
But yeah - tell me what wrong with the model/description?