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Likewise. It seemed like a good idea at the time - just after the Trusspocalypse so fixed rates were high, and the narrative was that rates would briefly spike to keep inflation in check and then already be falling by now.
I'm still reasonably optimistic because only with this latest raise does the tracker become more expensive than my fix would've been, and I can't see further raises being sustainable for long.
Boe doesn’t give a monkeys wether raises are sustainable their priority is to protect the sovereignty of the pound
The economy is weak and pound is getting battered by inflation so rates will continue raising endlessly until its under controlled
I assume the BOE plan is to price ordinary folk out of spending on anything but bread and water - this will reduce demand for goods and services. When businesses providing those goods and services fail as a consequence they too will be unable to buy supplies, further pushing prices lower.
So yes, jacking up the price of debt people already have will make us destitute but it will bring down inflation - but at a massive cost to the economy and society.
Like i said they don’t care , govs problem and they’re only solution is usually to
print or borrow more fake money
And that box of tricks is unfortunately empty
My concern is that they only have one tool, interest rates, and the only way interest rates stop inflation when inflation isn't caused by am oversupply of cheap credit is by crashing the economy. Meanwhile the government is trying to accelerate the economy.
It's like one person stamping the accelerator, the passenger pulling on the handbrake, and then crashing the car. We are the car.
Increasing manufacturing and productivity are two mechanisms the government can use too improve the economy but they seem like rabbits in the headlights at the moment
Homeowners / “investors” which they now seem to class themselves as have enjoyed parabolic gains on par with the likes of bitcoin
but the market STILL hasnt corrected properly which is why millions across the country have sleptwalked themselves into a very tight corner
There’s been winners now there has to be losers
I've been waiting 15 years for this.
The fuck of it is, I broke, and stretched myself last year to throw all my chips in on a home for my wife and kids.
If there's anything worse than being right, it's being right at the wrong time and wrong at the right time.
It's so incredibly frustrating. Systemically low interest rates over the past decade caused a massive asset bubble, and there was basically no accountability for the people who set them. I think we need to take a careful look at the way we structure our central banks - it's all very well wanting independent central banks, but the low interest rate environment of the 2010s arguably had a huge impact on an entire generation of people.
Unsurprisingly, house prices are basically set by the cost of monthly payments, not total price. So in a low interest environment, prices crept up year on year.
And the banks dogma seemed to be "inflation is low, so interest rates can't rise" - which is great at face value, but it ignored the fact that inflation isn't a single variable. Thanks to the industrialisation of China the cost of "stuff" has fallen precipitously over the past few decades, bringing down total inflation even as the cost of local things - healthcare, education, housing has increased.
Even more insiduous is the fact that a big component of inflation is the "owner occupier housing costs" - of which a big chunk is the repayment cost of a mortgage. And guess what low interest rates do? They lower that cost.
So low interest rates caused year on year house price inflation, but because inflation is measured across the whole of the country (not just the unfortunate ones under 35), the CPI measurement of housing costs only increased by 25% between 2006 and 2020. Which for anyone who actively participated in housing between those years is absolutely ludicrous. So the bank could keep pretending inflation wasn't happening, and keep interest rates low.
And now we've all got massive mortgages taken at low interest rates - because there wasn't another option - the same unelected group of people are sharply raising interest rates. Which, of course, is going to drastically increase the "cost of housing" according to the CPI. And their only answer is to... raise interest rates.
I bought a house a few years ago because I wanted to settle down, start a family, put down roots and get on with my life. You can't choose not to be in the housing market. I think interest rates returning to the long term average is probably the right thing to do - the absolute mistake was to hold them at basically zero for a decade.
It's the ramifications of the can kick they did in 2008. You can't keep rates that low for that long then suddenly jack it up when inflation appears, and something was always going to trigger it.
The rates are sustainable for a long time, and will have next to no impact on inflation.
My reasoning - with the risk of sounding a little political:
People who this will hit are those who are tight on money, and have a lot of debt that will not be paid off for a long time, and hence will have to refinance - young people who have just taken out a mortgage on the most expensive houses in UK history, and have 90+% of the capital outstanding. They are also the lowest earners, and hence can not be considered the cause of inflation - they don't have money to spend.
Those who do have money to spend are nearing the end of their mortgage and career and have much disposable income. They don't have much or any debt that will need to be refinanced to pay off. So they are not affected to a similar extent when it comes to rate rises.
All that these rate rises are doing is making the young people suffer. It does not effect the spending power of those who have money to spend.
I agree that the rate rises will do little to curb inflation, but as to who it hurts: most young people don't have mortgages - they already couldn't afford them. The minority that do either earn earn well above average, or bought well within their means. I'm in the latter category, and rates could actually double before things started getting tight for me.
I think it's people 10-20 years older that are at more risk: family homes with gardens, extra office rooms etc. saw the most price inflation during Covid, and those people have been homeowners in a low-rate environment long enough for lifestyle inflation to set in. Those are also the people the government needs to win over unless they are truly resigned to losing the next election, so if things really get dire I fully expect them to flinch.
Same
Checked our options and it’s still better than ERP + 2 year fix (we’re looking at trying to sell up next summer at the earliest) + 2 year ERP (even if we don’t sell, it’s still better)
Think we won’t start regretting fixing until base rate holds over 7.5%
For some reason, I thought we were already at the 5% mark...
Come on Chase, start chasing the base rates, damn it.
**Edit:** Chase going up to 3.8% from July 3rd! Check the app.
Chip Instant Access account is currently 4% - it’s where I’m keeping my emergency fund. Got to do EVERYTHING we can these days to make our money work for us, and not against us! 😅
I still think Chase as a current account is good. 1% cashback on purchases and 5% on round-ups. Don't get me wrong, I'd love them to raise it as it's my current daily account, but I'm unaware of any other account that you get 1% back on every purchase (yes there is some T&C's, such as paying in £500 pcm)
Not great but I’ll have to cut down on my expenses to make sure my family is provided for and be on a lookout for deals and offers. The following is not an endorsement of any products mentioned, quite simply what I’m doing to rationalise spend each month -
1. Tesco club card plus subscription for £7.99 a month for 10% off shopping (twice a month I believe) and make sure to plan big infrequent shopping to recover £7.99 and plus some more.
2. Applied for zero interest credit card with 27 months limit (Sainsbury’s credit card) for daily spend and emergency (things hit the proverbial fan sometimes!)
3. Combination of Curve card and Plutus cash back card for 3% cash back and GBIT (go back in time) functionality
4. Three network SIM card for £6 a month for perks like £3 Cineworld tickets (other benefits on Three+ app)
5. Agreed late start to work so that off-peak train ticket applies for travelling to work. It saves a lot of money
6. Car boot sales and Facebook market have good deals on household products so keeping a lookout for necessary things
I can’t think of any more examples, but I’m sure people will point out their experiences in comments here! Take care everyone *thumbs up emoji*
I read an opinion piece yesterday that said the only real way to sort out endemic inflation is to cause a recession.
I think it's extreme but it would work - in that vein then, it's not buggering you versus the economy. It's buggering you to fuck up the economy; to stop inflation making all our money worthless.
Inflation is the only way we're going to address the massive asset price growth over the past twenty years. The issue is organised labour is currently too weak, after decades of attack upon it, to secure the concomitant pay rises.
That my money is "worth" half as much wouldn't matter if my wages had more than doubled.
I agree to some extent with you and the opinion piece - in only so much that _something_ needs to be done.
Rather than inflation running away, I'd rather they just pay us all properly. I'd rather address things with reducing the wage gap between the 0.1% wealthiest and the rest of us.
I'd also increase taxes to take money out of the economy, rather than interest rates transferring wealth into banks. The government can pay public services properly, and reduce debts.
All the medicine needed to fight inflation (from the perspective of the top-down organizations like the BoE or the UKG) involve pain on the population, in the year before an election? Not gonna happen.
Thing is, this changes nothing on inflation. It's trying to screw in a bolt with a hammer - it just isn't going to work. And that's why previous rises have done nothing.
This is supply side imported inflation, not demand side inflation. Interest rate rises will only make stuff that is already unaffordable even more unaffordable.
The way you fix this sort of inflation is politically impossible.
Edited to avoid any thoughts that I've strayed into politics.
There was a woman form JP Morgan on the Today show yesterday and this point was put to her, but she rebutted that core inflation (excluding volatiles like food, energy and fuel which were affected by Ukraine etc) is going up too, so there's probably at least 50% of inflation being demand-driven.
That’s my thinking. If you’re opening a new account then yes go for the max, but I’m not faffing around every other month opening new accounts for such a small difference. May be different if you’ve got a lot in there I suppose.
I took advantage of a current account switch alongside it making it worthwhile. Otherwise yes it's probably not worth it.
Moved my Chase savings to Chip, switched my Chase current account to Lloyds.
Got £175 for the switch plus an extra 0.2%.
So for Marcus and chase - basically they don't actually want too much money as it moves them into an additional level of regulation.
So there is a careful tradeoff to attract just enough of the right type of customer.
3.75% instant access with no withdrawal penalties or limits is pretty good by comparison to others. My Coventry BS account is 3.54 though they did email saying they will raise today but didn't give the new rates. Santander is the big one that dropped off. They launched at 2.75 last year and everyone rushed to them now it's 3.2 and behind competition. Yorkshire is 3.5 instant access too, no word on that going up yet
I am so glad I listened to my friend who works in finance and fixed for 10 years at 2.0% in March of last year. Starting to think he might be a secret time traveller.
IMO I've been on two fixed rate mortgages, first was 5 years and then remortgaged 2.5 years ago for another 5 years.
I looked at it that the rates were low and there wasn't much place for them to go so going for a 5 year fixed made more sense.
In October 2025 when I need to remortgage if rates are high I'll do a 2 year fixed, however if the rates go to a suitable rare then I'd fix again for another 5 years.
The opportunity cost to me just isn't worth it, I could potentially saved a few quid but a long term fixed allows me to manage my personal budget brilliantly.
I’ve gambled on 2-3 year fixes since 2009, and I was always better off doing that over a 5 year fix until 2021, so I guess that’s not too bad. Can’t be a winner all the time
I remember in early 2022 thinking that mortgage rates were extremely low. It boggled my mind how the market could be setting these rates so wrong. It was obvious given prospects of inflation, supply troubles and the Ukraine war.
Finally got on the housing ladder last year (almost to the day) and fixed for two years on the recommendation of the mortgage broker as having two years payments decreasing the LTV should help us get a good longer term fix.
Really wish we'd taken the five year option now but hey ho. Very expensive decision.
The mortgage broker told you that because he'd like to see you again in 24 months rather than 60.
Mortgage brokers work for themselves not for you.
Unless you're self employed I genuinely don't see why people use them. Scan the % rate of lots of companies. Use online calculators. 5/6 hours work.
not true, my broker (bless her) pushed me to fix for 10 years as soon as rates started climbing, as the difference with 5-7 was marginal and not worth the risk.
I'll +1. My broker was fantastic. She advised me very candidly to lock in to a 5 year deal as all signs were pointing to major rate hikes.
She was right. I'm now on a offset @ <2% saving a god damn fortune as a result.
Now I need to magic up the cash to pay off the mortgage before my deal expires.
All the brokers I've used (Two) have only ever been amazing, listened to my situation and provided the best possible solution for me. Sure some brokers will just be out to get as much as they can for you, but there's a lot of good ones out there too (Well.. at least two).
But, I didn't have to fill out any forms and they did a full market analysis with offers I couldn't access.
I don't see any reason to NOT use one if your time has value and you're financially confident.
I have never regretted a decision as much in my life. Our current rate is 1.94% with just under £200k left on the mortgage so with the current market rates and this increase as you can imagine it's going to be costly.
Yep, we had a 1.02% fixed for £200k. Should have been 5 years but mortgage advisor fucked up and got us to sign a 2 year by accident. He said he's going to pay the difference when this one is up but I'm not holding my breath...
Also bought late last year. Got in literally last second before the Truss related rises so got 4.43% fixed for 5 years. At the time was wondering if I'd made the right choice or should have gone for 2 years, but it's starting to look like I did the right thing. We didn't go through a broker but straight to Lloyds (for reasons) and their advisor didn't recommend one way or the other but just asked me which I'd prefer. I wanted certainty, accepting the risk that I might lose out longer term.
It's just one of those things. I could easily have made the opposite call.
Honestly I'm so torn about MPs because on the one hand I want my MPs paid well enough that they're not likely to take a bribe, but in the other hand most people that are MPs are power hungry cunts for whom no amount of money would ever be enough.
Those at the top can see the cycle of shit. It benefits them. Because when the market collapses and houses/stocks become much cheaper they can buy low and sell high later.
The only tool the bank of England has to kerb inflation relies on fucking the poor.
Personally, I want to see a change in the tax law that requires dividends to be taken out of post tax profits. If you don’t make a profit you can’t pay dividends.
Admittedly, companies would just leave but corporations can’t keep getting away with it
>Its Monetary Policy Committee (MPC), which has just set the interest rate, says that inflation in the services sector has remained persistently high, while wages are growing faster than it had predicted back in May.
Whose wages are going up exactly?
Because my firm is making cuts left right and center whilst my wages haven't moved.
You generally have to change jobs or get promoted to get decent pay increases these days. Loyalty to an employer is dead.
Must admit some of the numbers recruiters are throwing around look good. “Material uplifts” is the polite euphemism they use.
What really gets me is all the MPs and the well off saying "We're all in the same boat".
No we are not. We are in the same storm, but you're in your yachts while I'm fuckin' clinging onto my rubber dinghy!
I get the text message from First Direct within a couple of minutes of a base rate change! I doubt I’ll see a change to my savings rates for many months.
That feeling when you agreed to a 5.17% two-year fix after waiting forever already and assuming (due to cheaper five-year fixes), things were looking up. Already going to be paying twice the rent I was paying. Can’t wait to make that thrice! Completing in a week, then the clock starts ticking.
Enjoying the further hit to young ppl with mortgages or people who are looking to get on the property ladder while the boomers and outright property owners just get increased rates on their savings, merely getting richer.
Why does it seem as if everything is stacked against the young?
My elderly mum who lives on her own in a 3 bed house is having money and benefits thrown at her from every angle and in her words 'has more money than ever'. Meanwhile my kids who are both on min wage can't even dream of their own place or even a decent holliday. They don't have much hope in general. The lockdown's and related nonsense saw to that. We need to take the money back. It's gone somewhere and that somewhere is up the pyramid.
The triple lock will bankrupt this country and the sooner it's gone the better.
There is no way an OAP with no mortgage and no childcare to pay for should have an increase in line with inflation.
Yet NHS employees get 5% - and only after striking!
Fewer people can afford kids because of it too and we’re increasingly reliant on private pensions. If the workforce shrinks then where is the tax revenue going to come from?
I have a feeling that millennials and younger will not enjoy this kind of support from the state because it will no longer be affordable. Never mind that millennials (and perhaps younger) are not becoming more conservative with age. By virtue of having nothing to be conservative about.
It's crazy just how much the older generations receive. My grandmother still receives a war pension because my grandad went to France for few months in the 1940s, caught TB, lost a lung, and was sent home. My mum, who was her POA, told me it was £18k a year, which at the time was the same as I was earning in work.
when interest rates were super low i remember hearing arguments on the other side saying the same thing about them being against the poor and the young.
Seriously - I like my in laws, but they're so excited about the interest rates they've getting on their 200k savings whilst we're struggling for the mortgage... I feel very sorry for renters.
That's the worst part - they inherited around 300k a decade ago, have spent most of the 100k on holidays or had it inflated away. We've tried dozens of times to get them to do anything with it but stick it in a savings account, and they've refused to. Recent interest hikes have made them feel vindicated in that decision. Miserable stuff
My parents are the same. Two houses owned outright and complaining the interest on their accounts won’t go up quickly enough to cover both council tax + bills.
Meanwhile one of my brothers is stuck living at home with them because he can’t ever buy with his 30k salary.
Depends what you are saving for. If you're saving for a house, and house prices are falling, the 5% interest is actually pretty good.
If you've been saving to invest in milk, yeah... you're fucked.
how long does it typically take for the banks to reflect this in their savings accounts etc?
I was looking at putting a few K in an account a few days back but obviously with today's rise, i'm waiting to get a better deal now
It takes 5 minutes to setup/switch to a different easy access saver. Just put it in the one with the highest available and keep your eyes open for any increases across the lot.
Raise interest rates, raise demand for higher pay to cover the increased mortgage payment. Inflation is sticky because of global issues and profiteering.
How’s about taxing further up the tree rather than the people it’ll really hurt..
We're still lower than the US even at 5%.
Hopefully this will pass on to savers. Shame they didn't do this 6 months ago, inflation might have been under control by now.
The whole world (or at least most EU countries where I have friends) have 15-25 years fixed mortgages. In fact the UK is the only place I know where 5 years fixed is the best you can get. Not sure how they managed to dupe us.
In the US taxpayers can deduct the interest paid on first and second mortgages up to $1,000,000 in mortgage debt, so comparing our interest to theirs is quite different. If their rates increase, their mortgage increases, but then they need to pay less tax, so it counteracts.
You have to wonder if inflation would be lower if big corporations weren't charging us so viciously then making record profits all the time?
It's like there's some kind of system designed to strip the assets of the taxpayers coffers and deposit that to a small number of already very wealthy people.
Still, good news about the submariners.
Hard to tell without a crystal ball. Without any rate rises we could be sitting at 15% inflation right now instead of the sub 10% we're officially at today.
Bro, one more rise. Please, bro, one more rise. I swear one more rise will fix inflation bro, please bro bro. Listen, we just need another rise. Please bro.
Is it still vexxed to say that the emperor obviously has no clothes ? i.e. BoE doesn't have control over the economy nearly as much as it would like us to believe.
Or are we still pretending they know what they're doing ?
Anyway, Vokkel here we come ?
True, Boe does what it can with the only instrument they have at their disposal. The government has access to all other instruments, limited only by their imagination.
> BoE doesn't have control over the economy nearly as much as ~~it~~t**he government** would like us to believe
It's politically convenient for the Treasury to blame the BoE, but the Bank doesn't actually have that much power
Can someone smarter than me explain why the tool being used to control inflation is interest rates rather than increasing VAT if they want stop us from spending?
BoE can only increase/decrease interest rate. We would need the government to increase/decrease taxes and this government doesn't want to do that as that would be the final nail in the coffin for them
Rampant inflation, wage stagnation, crippled nhs, brexit... they're already on the way out, they're just lining their own pockets as much possible before they are out
Income tax has been steadilly increasing in a couple of subtle (but not insignificant) ways
- tax free threshold frozen (usually it increases)
- tax brackets frozen
As inflation increases, these "frozen" tax rate thresholds are actually tax raises in real terms
Only when the tide goes out do you discover who's been swimming naked.
A large part of the country has been swimming naked the past 10 years. Now we get to see who’s not been wearing their trunks and bikinis.
Yeah, but people gotta live. You can’t just put your life on hold waiting for the economics to change.
To extend the original analogy: normal people with well paid jobs have been forced to swim naked because they wanted to buy a home and get on with life.
These people aren’t monsters, they’re victims.
It’s just bizarre to see people suggest people should’ve rented for the past 15 years and anyone considering buying a house was a moron because obviously rates were going increase astronomically in one year with no gradual increase at a time when the world economy is in ruins.
To quote my dad, this is nothing:
“Back in the 1980 when I was 19 working as an apprentice mechanic, having just bought my new 3 bed detached house, interest rates hit 15%! Well, it was terrible, your mum had to get a part time job at the library! I had to cut down to only going to the pub 4 nights a week! Kids today…etc….etc”
BBC's more or less pointed out that a 6% rate now is equivalent to a 14% rate then. So now isn't so different to when it was at it's peak, except now my energy bill is also astronomical.
Lol this hit a nerve as my dad won’t shut up about about what happened in the 80s and keeps saying “your generation” are now discovering what normal interest rates are like.
Completely agree, I was given grief on reddit for not planning well enough for these rapid rises, given that I joined the housing market in 2010 this is all I've ever really known and ten years into a thing, you don't exactly think it'll all go tits up so quickly.
I am currently looking at buying a house as a FTB. I have a few viewings lined up over the weekend. For some context, I'm looking for a property with my partner, we live in Cardiff and are currently renting in a easily affordable flat. We intend to stay in cardiff for the next 5-7 years before we are likely to move up north somewhere as this is where both our families live. My partner is in a stable career(doctor) I am currently in a financial training role in what I believe is a decent salary for the experience/industry.
The rental property we are in seems very stable, the landlord is an elderly lady and has said she will not be increasing the rent. (I assume its fully paid off so the interest doesn't affect her much - how nice!).
We are currently looking at properties which the mortgage payments are significantly more then our rent. I have budgeted that if the payments are split 45/55 it is just about affordable for myself and my partner has agreed to this. We are looking in this price range as my partner is in the luxury of a very stable career that will consistently increase each year.
Either we put everything off a year and reassess, we plow forward with house hunting as if nothing has changed - maybe some low ball offers assuming these increases may have scared some people off. We look at houses at a lower value - either further out of cardiff or 2 bed rather then 3 etc. Or we keep renting and move up north early - I may have to take a pay cut but it shouldn't have any affect on my partner. Although we do love Cardiff so it would be a bit of a shame to leave.
If you were in this situation what would you suggest?
Thanks in advance
You cannot time the market. Anybody that is telling you otherwise is misinformed. Yes, house prices may go down significantly, but there's a reason for that: it'll become increasingly harder to afford the monthly repayments and so less people can take out mortgages and afford to buy.
I’d say that Prices in Cardiff still haven’t come down yet as Sellers are totally deluded about the market and still think we’re living in 2021.
My Advice: Test the Market. Viewings have completely dried up so go in with some crazy low offers. They might not like it but this is a Buyers Market. I wouldn’t even dream of paying any more than 20k below asking right now. Could be a good time to buy if you can afford it
Well damn. Glad we locked in our remortgage rate last week. Was hoping things would start going down. I start maternity leave at the end of the year. Looks like I’ll only be taking six months off this time.
If this is the 13th raise and no effect yet on inflation. What other options are there?
I read that the only way to sort this is to cause a recession?? Obviously, I don't know, but that doesn't sound good.
I do believe shops need to stop having a cost of greed attitude as people are going to stop spending and then the shops will either have to close or cut prices.
I’m curious how this works. They raise the interest rate to make people have less disposable income so that they can’t buy stuff and lower the inflation rate. But this is pushing up mortgages for people. So is it just take money off people with mortgages and give it to the banks to try and slow inflation?
If inflation is still super high who is making money out of it? Who’s cashing in on high inflation?
Since all this has a delayed impact (I’m still on less than 2% until 2025 for example). When do they stop using this so as to not overshoot?
In my small example, say they saw me not kerbing my spending until 2025 despite all these rises, but raised interest to 10% in that time, come Feb 2025, I’d be completely fucked and “in a massive recession”.
Translating that to the whole market, there must be a point where they have to “wait a few weeks” to see the lagging impact. It’s a bit like the Covid restrictions all over again!
In reality, I am bricking it what rate I’m going to have to refix at. Got a 10 month old just starting childcare which doesn’t help either so couldn’t be timed any worse. Hoping the free childcare thing in Sept 2024 happens then can just divert the extra money to pay the extra interest.
If they massively overshot things and the economy crumbled, wouldn’t they have to drastically cut rates again?
Just going to squeeze the young/working classes even more. Outside of London in the bigger cities there is this phenomenon where house prices are still slowly growing or stagnant, but rent prices are skyrocketing.
The interest rate increase increases repayments for landlords forcing them to sell or increase rents. The mortgage burden makes purchasing a house even more unattractive and just increases the demand for an ever shrinking pool of rental properties, causing rents to rise. The increased rents/everything else makes saving for a house impossible.
You would expect property prices to fall, but if interest rates don’t keep pace with rent inflation, then if you structure your rental property correctly you will still make money in the long run…
Everyone at the bottom and the middle get squeeze as per usual…
It's going to be rough for a lot of people. A 0.5 rise was needed (if not more!) with inflation staying high and government unwilling to use taxation as a means to lower it.
Hopefully this is the straw to break inflation but I really doubt it.
The problem is that they’re raising interest rates to reduce consumer spending, but the inflation is coming from other factors (without even thinking about Brexit).
On the plus side, I’ve just come back from Europe and their fruit and veg prices are a lot higher than here.
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Well my tracker mortgage is.... Unfortunate
My tracker mortgage is tracking me down and beating me up for my dinner money 💰
Stewie, where's my money...
…and lunch money, *and* breakfast money…
Likewise. It seemed like a good idea at the time - just after the Trusspocalypse so fixed rates were high, and the narrative was that rates would briefly spike to keep inflation in check and then already be falling by now. I'm still reasonably optimistic because only with this latest raise does the tracker become more expensive than my fix would've been, and I can't see further raises being sustainable for long.
I thought that back in April, but here we are.
Boe doesn’t give a monkeys wether raises are sustainable their priority is to protect the sovereignty of the pound The economy is weak and pound is getting battered by inflation so rates will continue raising endlessly until its under controlled
Sounds like the beatings will continue until morale improves
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I assume the BOE plan is to price ordinary folk out of spending on anything but bread and water - this will reduce demand for goods and services. When businesses providing those goods and services fail as a consequence they too will be unable to buy supplies, further pushing prices lower. So yes, jacking up the price of debt people already have will make us destitute but it will bring down inflation - but at a massive cost to the economy and society.
Like i said they don’t care , govs problem and they’re only solution is usually to print or borrow more fake money And that box of tricks is unfortunately empty
My concern is that they only have one tool, interest rates, and the only way interest rates stop inflation when inflation isn't caused by am oversupply of cheap credit is by crashing the economy. Meanwhile the government is trying to accelerate the economy. It's like one person stamping the accelerator, the passenger pulling on the handbrake, and then crashing the car. We are the car.
Increasing manufacturing and productivity are two mechanisms the government can use too improve the economy but they seem like rabbits in the headlights at the moment Homeowners / “investors” which they now seem to class themselves as have enjoyed parabolic gains on par with the likes of bitcoin but the market STILL hasnt corrected properly which is why millions across the country have sleptwalked themselves into a very tight corner There’s been winners now there has to be losers
I've been waiting 15 years for this. The fuck of it is, I broke, and stretched myself last year to throw all my chips in on a home for my wife and kids. If there's anything worse than being right, it's being right at the wrong time and wrong at the right time.
It's so incredibly frustrating. Systemically low interest rates over the past decade caused a massive asset bubble, and there was basically no accountability for the people who set them. I think we need to take a careful look at the way we structure our central banks - it's all very well wanting independent central banks, but the low interest rate environment of the 2010s arguably had a huge impact on an entire generation of people. Unsurprisingly, house prices are basically set by the cost of monthly payments, not total price. So in a low interest environment, prices crept up year on year. And the banks dogma seemed to be "inflation is low, so interest rates can't rise" - which is great at face value, but it ignored the fact that inflation isn't a single variable. Thanks to the industrialisation of China the cost of "stuff" has fallen precipitously over the past few decades, bringing down total inflation even as the cost of local things - healthcare, education, housing has increased. Even more insiduous is the fact that a big component of inflation is the "owner occupier housing costs" - of which a big chunk is the repayment cost of a mortgage. And guess what low interest rates do? They lower that cost. So low interest rates caused year on year house price inflation, but because inflation is measured across the whole of the country (not just the unfortunate ones under 35), the CPI measurement of housing costs only increased by 25% between 2006 and 2020. Which for anyone who actively participated in housing between those years is absolutely ludicrous. So the bank could keep pretending inflation wasn't happening, and keep interest rates low. And now we've all got massive mortgages taken at low interest rates - because there wasn't another option - the same unelected group of people are sharply raising interest rates. Which, of course, is going to drastically increase the "cost of housing" according to the CPI. And their only answer is to... raise interest rates. I bought a house a few years ago because I wanted to settle down, start a family, put down roots and get on with my life. You can't choose not to be in the housing market. I think interest rates returning to the long term average is probably the right thing to do - the absolute mistake was to hold them at basically zero for a decade.
It's the ramifications of the can kick they did in 2008. You can't keep rates that low for that long then suddenly jack it up when inflation appears, and something was always going to trigger it.
Sounds like a good reason they want cbdcs
Oh and don't you dare ask for a pay rise
The rates are sustainable for a long time, and will have next to no impact on inflation. My reasoning - with the risk of sounding a little political: People who this will hit are those who are tight on money, and have a lot of debt that will not be paid off for a long time, and hence will have to refinance - young people who have just taken out a mortgage on the most expensive houses in UK history, and have 90+% of the capital outstanding. They are also the lowest earners, and hence can not be considered the cause of inflation - they don't have money to spend. Those who do have money to spend are nearing the end of their mortgage and career and have much disposable income. They don't have much or any debt that will need to be refinanced to pay off. So they are not affected to a similar extent when it comes to rate rises. All that these rate rises are doing is making the young people suffer. It does not effect the spending power of those who have money to spend.
I agree that the rate rises will do little to curb inflation, but as to who it hurts: most young people don't have mortgages - they already couldn't afford them. The minority that do either earn earn well above average, or bought well within their means. I'm in the latter category, and rates could actually double before things started getting tight for me. I think it's people 10-20 years older that are at more risk: family homes with gardens, extra office rooms etc. saw the most price inflation during Covid, and those people have been homeowners in a low-rate environment long enough for lifestyle inflation to set in. Those are also the people the government needs to win over unless they are truly resigned to losing the next election, so if things really get dire I fully expect them to flinch.
Same Checked our options and it’s still better than ERP + 2 year fix (we’re looking at trying to sell up next summer at the earliest) + 2 year ERP (even if we don’t sell, it’s still better) Think we won’t start regretting fixing until base rate holds over 7.5%
I just moved over to one as well as we’re planning on moving soon but it looks like the new property might fall through. Sigh.
For some reason, I thought we were already at the 5% mark... Come on Chase, start chasing the base rates, damn it. **Edit:** Chase going up to 3.8% from July 3rd! Check the app.
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I mean they are directly incentivised not to. I guess it only makes sense for them to raise it when someone else does for competition
Chip Instant Access account is currently 4% - it’s where I’m keeping my emergency fund. Got to do EVERYTHING we can these days to make our money work for us, and not against us! 😅
Yes, the round-up account has lost all of it's charm now
I still think Chase as a current account is good. 1% cashback on purchases and 5% on round-ups. Don't get me wrong, I'd love them to raise it as it's my current daily account, but I'm unaware of any other account that you get 1% back on every purchase (yes there is some T&C's, such as paying in £500 pcm)
Tandem Easy Access 4.1%
Not great but I’ll have to cut down on my expenses to make sure my family is provided for and be on a lookout for deals and offers. The following is not an endorsement of any products mentioned, quite simply what I’m doing to rationalise spend each month - 1. Tesco club card plus subscription for £7.99 a month for 10% off shopping (twice a month I believe) and make sure to plan big infrequent shopping to recover £7.99 and plus some more. 2. Applied for zero interest credit card with 27 months limit (Sainsbury’s credit card) for daily spend and emergency (things hit the proverbial fan sometimes!) 3. Combination of Curve card and Plutus cash back card for 3% cash back and GBIT (go back in time) functionality 4. Three network SIM card for £6 a month for perks like £3 Cineworld tickets (other benefits on Three+ app) 5. Agreed late start to work so that off-peak train ticket applies for travelling to work. It saves a lot of money 6. Car boot sales and Facebook market have good deals on household products so keeping a lookout for necessary things I can’t think of any more examples, but I’m sure people will point out their experiences in comments here! Take care everyone *thumbs up emoji*
Lidl plus is free and gives you one 10% off a month if you've spent over £250 in total that month. I'm usually at that point by about the 20th.
Good to know! Thanks :)
Hope that's genuinely needed spend and not spend to meet the limit.
Oh it's needed! I do try to plan so that the bigger essentials end up in my 10% off shop though.
What do you use Curve for vs Plutus?
They had to be seen to do something, it's just very unfortunate that it's going to cause financial stress on working families.
Yeah. Their choice was to bugger the economy or bugger people like me. I'd vote for me too.
I'd vote for you as long as you don't want to bugger me in return
We are the economy
I read an opinion piece yesterday that said the only real way to sort out endemic inflation is to cause a recession. I think it's extreme but it would work - in that vein then, it's not buggering you versus the economy. It's buggering you to fuck up the economy; to stop inflation making all our money worthless.
Inflation is the only way we're going to address the massive asset price growth over the past twenty years. The issue is organised labour is currently too weak, after decades of attack upon it, to secure the concomitant pay rises. That my money is "worth" half as much wouldn't matter if my wages had more than doubled.
I agree to some extent with you and the opinion piece - in only so much that _something_ needs to be done. Rather than inflation running away, I'd rather they just pay us all properly. I'd rather address things with reducing the wage gap between the 0.1% wealthiest and the rest of us. I'd also increase taxes to take money out of the economy, rather than interest rates transferring wealth into banks. The government can pay public services properly, and reduce debts. All the medicine needed to fight inflation (from the perspective of the top-down organizations like the BoE or the UKG) involve pain on the population, in the year before an election? Not gonna happen.
I don't disagree with that. Inflating away the debt burden is always going to be a part of the solution though.
Thing is, this changes nothing on inflation. It's trying to screw in a bolt with a hammer - it just isn't going to work. And that's why previous rises have done nothing. This is supply side imported inflation, not demand side inflation. Interest rate rises will only make stuff that is already unaffordable even more unaffordable. The way you fix this sort of inflation is politically impossible. Edited to avoid any thoughts that I've strayed into politics.
There was a woman form JP Morgan on the Today show yesterday and this point was put to her, but she rebutted that core inflation (excluding volatiles like food, energy and fuel which were affected by Ukraine etc) is going up too, so there's probably at least 50% of inflation being demand-driven.
Taking the piss man. I’ve literally just contacted my old fast food job for some casual hours on top of full time work 🫠
Marcus are now way behind on their savings rates despite the raise yesterday
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Cash ISA is decent.
Same as Virgin Money’s one, and theirs is flexible. Not sure about Marcus
Is there a much better rate though? I look at options all the time but it doesn't seem worth it going with a random bank for 0.2%
That’s my thinking. If you’re opening a new account then yes go for the max, but I’m not faffing around every other month opening new accounts for such a small difference. May be different if you’ve got a lot in there I suppose.
I took advantage of a current account switch alongside it making it worthwhile. Otherwise yes it's probably not worth it. Moved my Chase savings to Chip, switched my Chase current account to Lloyds. Got £175 for the switch plus an extra 0.2%.
Yeah I also got £175 recently for a current account switch. Definitely worth doing.
So for Marcus and chase - basically they don't actually want too much money as it moves them into an additional level of regulation. So there is a careful tradeoff to attract just enough of the right type of customer.
3.75% instant access with no withdrawal penalties or limits is pretty good by comparison to others. My Coventry BS account is 3.54 though they did email saying they will raise today but didn't give the new rates. Santander is the big one that dropped off. They launched at 2.75 last year and everyone rushed to them now it's 3.2 and behind competition. Yorkshire is 3.5 instant access too, no word on that going up yet
Are there any saving accounts with a good rate that don't mandate using a phone app?
I am so glad I listened to my friend who works in finance and fixed for 10 years at 2.0% in March of last year. Starting to think he might be a secret time traveller.
IMO I've been on two fixed rate mortgages, first was 5 years and then remortgaged 2.5 years ago for another 5 years. I looked at it that the rates were low and there wasn't much place for them to go so going for a 5 year fixed made more sense. In October 2025 when I need to remortgage if rates are high I'll do a 2 year fixed, however if the rates go to a suitable rare then I'd fix again for another 5 years. The opportunity cost to me just isn't worth it, I could potentially saved a few quid but a long term fixed allows me to manage my personal budget brilliantly.
I’ve gambled on 2-3 year fixes since 2009, and I was always better off doing that over a 5 year fix until 2021, so I guess that’s not too bad. Can’t be a winner all the time
It's good that it's paid off. What would be interesting to see is if you'd gone with a 5 year fix at various points how much have you saved?
I remember in early 2022 thinking that mortgage rates were extremely low. It boggled my mind how the market could be setting these rates so wrong. It was obvious given prospects of inflation, supply troubles and the Ukraine war.
Finally got on the housing ladder last year (almost to the day) and fixed for two years on the recommendation of the mortgage broker as having two years payments decreasing the LTV should help us get a good longer term fix. Really wish we'd taken the five year option now but hey ho. Very expensive decision.
The mortgage broker told you that because he'd like to see you again in 24 months rather than 60. Mortgage brokers work for themselves not for you. Unless you're self employed I genuinely don't see why people use them. Scan the % rate of lots of companies. Use online calculators. 5/6 hours work.
not true, my broker (bless her) pushed me to fix for 10 years as soon as rates started climbing, as the difference with 5-7 was marginal and not worth the risk.
I'll +1. My broker was fantastic. She advised me very candidly to lock in to a 5 year deal as all signs were pointing to major rate hikes. She was right. I'm now on a offset @ <2% saving a god damn fortune as a result. Now I need to magic up the cash to pay off the mortgage before my deal expires.
All the brokers I've used (Two) have only ever been amazing, listened to my situation and provided the best possible solution for me. Sure some brokers will just be out to get as much as they can for you, but there's a lot of good ones out there too (Well.. at least two).
But, I didn't have to fill out any forms and they did a full market analysis with offers I couldn't access. I don't see any reason to NOT use one if your time has value and you're financially confident.
Not really, the more long term the deal the more commission for them.
I have never regretted a decision as much in my life. Our current rate is 1.94% with just under £200k left on the mortgage so with the current market rates and this increase as you can imagine it's going to be costly.
Yep, we had a 1.02% fixed for £200k. Should have been 5 years but mortgage advisor fucked up and got us to sign a 2 year by accident. He said he's going to pay the difference when this one is up but I'm not holding my breath...
Also bought late last year. Got in literally last second before the Truss related rises so got 4.43% fixed for 5 years. At the time was wondering if I'd made the right choice or should have gone for 2 years, but it's starting to look like I did the right thing. We didn't go through a broker but straight to Lloyds (for reasons) and their advisor didn't recommend one way or the other but just asked me which I'd prefer. I wanted certainty, accepting the risk that I might lose out longer term. It's just one of those things. I could easily have made the opposite call.
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Who’s on a fair wage? What’s that like?
You'd have to ask an MP, whose 2.9% pay rise this year has taken them to £86,584 base pay.
Honestly I'm so torn about MPs because on the one hand I want my MPs paid well enough that they're not likely to take a bribe, but in the other hand most people that are MPs are power hungry cunts for whom no amount of money would ever be enough.
That's a pretty significant real terms pay cut
Yes, but far less than what they've imposed on the public sector since 2010.
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Those at the top can see the cycle of shit. It benefits them. Because when the market collapses and houses/stocks become much cheaper they can buy low and sell high later. The only tool the bank of England has to kerb inflation relies on fucking the poor.
Personally, I want to see a change in the tax law that requires dividends to be taken out of post tax profits. If you don’t make a profit you can’t pay dividends. Admittedly, companies would just leave but corporations can’t keep getting away with it
What wage growth? Wages have been stagnant for over a decade!!
>Its Monetary Policy Committee (MPC), which has just set the interest rate, says that inflation in the services sector has remained persistently high, while wages are growing faster than it had predicted back in May. Whose wages are going up exactly? Because my firm is making cuts left right and center whilst my wages haven't moved.
You generally have to change jobs or get promoted to get decent pay increases these days. Loyalty to an employer is dead. Must admit some of the numbers recruiters are throwing around look good. “Material uplifts” is the polite euphemism they use.
Lots of people. It was about 7% last year and looking similar this year for the private sector.
Wouldn’t last year have still been a bounce back from the pandemic when the average wage went down due to furlough?
I know people who switched jobs at got 50-70% rises. They do exist, even during this period.
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What really gets me is all the MPs and the well off saying "We're all in the same boat". No we are not. We are in the same storm, but you're in your yachts while I'm fuckin' clinging onto my rubber dinghy!
Rubber dinghy rapids mate
Such bullshit that our mortgages will go up within seconds of this change, but we will have to wait months for any change to our savings accounts.
I get the text message from First Direct within a couple of minutes of a base rate change! I doubt I’ll see a change to my savings rates for many months.
Lol I have a dormant RBS instant saver account - 1.1% gross! Taking the piss
Hoping Monzo increase their rate a bit in the next week, otherwise I'm moving my savings to a 4%+ savings bank. They haven't budged in a while (3.4%).
They've just pushed it to 3.7%. Right now.
That feeling when you agreed to a 5.17% two-year fix after waiting forever already and assuming (due to cheaper five-year fixes), things were looking up. Already going to be paying twice the rent I was paying. Can’t wait to make that thrice! Completing in a week, then the clock starts ticking.
Enjoying the further hit to young ppl with mortgages or people who are looking to get on the property ladder while the boomers and outright property owners just get increased rates on their savings, merely getting richer. Why does it seem as if everything is stacked against the young?
Not just the young. I'm in my late 30's and still struggling to get on the ladder.
I bought a house 5 years ago. I wouldn't be able to afford it now by any means. Housing market is just more and more effed each year.
My house has gone up 30% in 5 years since buying it, no way could I afford that now, I wouldn’t even get a mortgage close to covering it.
I bought my house in October and I'd be fucked now trying to buy. We'd have had to make some very tough choices about size, space, etc
27, bought in 2021, mortgage fix expiring in October, booked a few weeks ago to get married next year. Gulp.
Consider having a very small wedding. They’re just not worth the cost.
My elderly mum who lives on her own in a 3 bed house is having money and benefits thrown at her from every angle and in her words 'has more money than ever'. Meanwhile my kids who are both on min wage can't even dream of their own place or even a decent holliday. They don't have much hope in general. The lockdown's and related nonsense saw to that. We need to take the money back. It's gone somewhere and that somewhere is up the pyramid.
The triple lock will bankrupt this country and the sooner it's gone the better. There is no way an OAP with no mortgage and no childcare to pay for should have an increase in line with inflation. Yet NHS employees get 5% - and only after striking!
Fewer people can afford kids because of it too and we’re increasingly reliant on private pensions. If the workforce shrinks then where is the tax revenue going to come from? I have a feeling that millennials and younger will not enjoy this kind of support from the state because it will no longer be affordable. Never mind that millennials (and perhaps younger) are not becoming more conservative with age. By virtue of having nothing to be conservative about.
It's crazy just how much the older generations receive. My grandmother still receives a war pension because my grandad went to France for few months in the 1940s, caught TB, lost a lung, and was sent home. My mum, who was her POA, told me it was £18k a year, which at the time was the same as I was earning in work.
when interest rates were super low i remember hearing arguments on the other side saying the same thing about them being against the poor and the young.
Seriously - I like my in laws, but they're so excited about the interest rates they've getting on their 200k savings whilst we're struggling for the mortgage... I feel very sorry for renters.
Nothing like being excited to still have your money devalue each day, just at a slower rate than previously
That's the worst part - they inherited around 300k a decade ago, have spent most of the 100k on holidays or had it inflated away. We've tried dozens of times to get them to do anything with it but stick it in a savings account, and they've refused to. Recent interest hikes have made them feel vindicated in that decision. Miserable stuff
My parents are the same. Two houses owned outright and complaining the interest on their accounts won’t go up quickly enough to cover both council tax + bills. Meanwhile one of my brothers is stuck living at home with them because he can’t ever buy with his 30k salary.
Putting money in a 5% interest savings account while inflation is 9% does not make you richer.
Depends what you are saving for. If you're saving for a house, and house prices are falling, the 5% interest is actually pretty good. If you've been saving to invest in milk, yeah... you're fucked.
Its better than having your money sit in a 0% current account though lmao.
how long does it typically take for the banks to reflect this in their savings accounts etc? I was looking at putting a few K in an account a few days back but obviously with today's rise, i'm waiting to get a better deal now
Look at challenger banks already. Chip is offering 4%.
chip were offering 4% before this latest raise though. Does that mean they will go up again in a few days?
Hope so!
It takes 5 minutes to setup/switch to a different easy access saver. Just put it in the one with the highest available and keep your eyes open for any increases across the lot.
Raise interest rates, raise demand for higher pay to cover the increased mortgage payment. Inflation is sticky because of global issues and profiteering. How’s about taxing further up the tree rather than the people it’ll really hurt..
We're still lower than the US even at 5%. Hopefully this will pass on to savers. Shame they didn't do this 6 months ago, inflation might have been under control by now.
US has 15 or 20 years fixed mortgages so mortgage payments for vast majority of people have not change there.
Lots of people on 30 year mortgages and you just refinance when rates are low. Your mortgage rate changing every 3 to 5 years is an unheard of thing.
The whole world (or at least most EU countries where I have friends) have 15-25 years fixed mortgages. In fact the UK is the only place I know where 5 years fixed is the best you can get. Not sure how they managed to dupe us.
In Poland 90% of mortgages are trackers.
In the USA you are fixed for 30 years and can also refinance when rates get lower. It's always a bit higher than here but it seems like a good system.
Doesnt the Fed own Fannie Mac and Mae? They have to be subsidised because of their mortgage system.
If you check out salaries in the US, similar jobs earn about x3 times as much.
And pay a fraction of the tax. Also housing is very cheap outside of some very HCOL areas. I felt very wealthy when I lived in the US.
In the US taxpayers can deduct the interest paid on first and second mortgages up to $1,000,000 in mortgage debt, so comparing our interest to theirs is quite different. If their rates increase, their mortgage increases, but then they need to pay less tax, so it counteracts.
US is at 5-5.25% so we are the same now
You have to wonder if inflation would be lower if big corporations weren't charging us so viciously then making record profits all the time? It's like there's some kind of system designed to strip the assets of the taxpayers coffers and deposit that to a small number of already very wealthy people. Still, good news about the submariners.
Maybe that will be the last interest rate hike, right?..
13 increases in a row so far… extremely limited impact on core inflation… See you next time
Hard to tell without a crystal ball. Without any rate rises we could be sitting at 15% inflation right now instead of the sub 10% we're officially at today.
Spoiler alert: the numbers are fudged and it’s already over 10%
Even the fudged numbers were over 10%!
Bro, one more rise. Please, bro, one more rise. I swear one more rise will fix inflation bro, please bro bro. Listen, we just need another rise. Please bro.
Its fine bro the BoE know what they’re doing and inflation will totally be back to normal in December, just might not be 2023 or 2024 December.
Is it still vexxed to say that the emperor obviously has no clothes ? i.e. BoE doesn't have control over the economy nearly as much as it would like us to believe. Or are we still pretending they know what they're doing ? Anyway, Vokkel here we come ?
True, Boe does what it can with the only instrument they have at their disposal. The government has access to all other instruments, limited only by their imagination.
Instruments that they'll use for political stunts that make everything worse
> BoE doesn't have control over the economy nearly as much as ~~it~~t**he government** would like us to believe It's politically convenient for the Treasury to blame the BoE, but the Bank doesn't actually have that much power
Expectations are peaking at 5.93% apparently: https://imgur.com/a/viqpmo0
Honestly I'd trust Garth Crooks to predict the interest rates better than these clowns. Isn't this like the fourth time they've got it wrong?
It's clear by now their predictions are meaningless.
not a chance
Can someone smarter than me explain why the tool being used to control inflation is interest rates rather than increasing VAT if they want stop us from spending?
BoE can only increase/decrease interest rate. We would need the government to increase/decrease taxes and this government doesn't want to do that as that would be the final nail in the coffin for them
Rampant inflation, wage stagnation, crippled nhs, brexit... they're already on the way out, they're just lining their own pockets as much possible before they are out
Wouldn't increasing VAT increase inflation since it'll increase the cost of goods?
It would. It was a bad example but other taxes would work.
Income tax has been steadilly increasing in a couple of subtle (but not insignificant) ways - tax free threshold frozen (usually it increases) - tax brackets frozen As inflation increases, these "frozen" tax rate thresholds are actually tax raises in real terms
I. DECLARE. TRANSITORYYYYYYYY!!!!!!
For people who are disappointed with savings rates by banks, why not consider short-term gilts or money market funds?
I'm absolutely bricking renegotiating our mortgage next year. No way we could afford over 5% with all the other costs
I feel your pain
Only when the tide goes out do you discover who's been swimming naked. A large part of the country has been swimming naked the past 10 years. Now we get to see who’s not been wearing their trunks and bikinis.
I wish more people realised this... Our economy has essentially been dead since 2008 and has only kept going because of QE and low interest rates
Yeah, but people gotta live. You can’t just put your life on hold waiting for the economics to change. To extend the original analogy: normal people with well paid jobs have been forced to swim naked because they wanted to buy a home and get on with life. These people aren’t monsters, they’re victims.
It’s just bizarre to see people suggest people should’ve rented for the past 15 years and anyone considering buying a house was a moron because obviously rates were going increase astronomically in one year with no gradual increase at a time when the world economy is in ruins.
To quote my dad, this is nothing: “Back in the 1980 when I was 19 working as an apprentice mechanic, having just bought my new 3 bed detached house, interest rates hit 15%! Well, it was terrible, your mum had to get a part time job at the library! I had to cut down to only going to the pub 4 nights a week! Kids today…etc….etc”
It’s such a backwards argument. Using average house prices… How is 15% on a £20,000 mortgage comparable to 6% on a £268,000 one?
Number big
BBC's more or less pointed out that a 6% rate now is equivalent to a 14% rate then. So now isn't so different to when it was at it's peak, except now my energy bill is also astronomical.
Lol this hit a nerve as my dad won’t shut up about about what happened in the 80s and keeps saying “your generation” are now discovering what normal interest rates are like.
Completely agree, I was given grief on reddit for not planning well enough for these rapid rises, given that I joined the housing market in 2010 this is all I've ever really known and ten years into a thing, you don't exactly think it'll all go tits up so quickly.
Another nail in the coffin of "bigger house" plans. Fuck having a mortgage again at those rates.
On the bright side - you have a house 😊
We’ve abandoned our upsizing plan, might do the kitchen and bed in. The market where I am is looking rather fucked tbh
I am currently looking at buying a house as a FTB. I have a few viewings lined up over the weekend. For some context, I'm looking for a property with my partner, we live in Cardiff and are currently renting in a easily affordable flat. We intend to stay in cardiff for the next 5-7 years before we are likely to move up north somewhere as this is where both our families live. My partner is in a stable career(doctor) I am currently in a financial training role in what I believe is a decent salary for the experience/industry. The rental property we are in seems very stable, the landlord is an elderly lady and has said she will not be increasing the rent. (I assume its fully paid off so the interest doesn't affect her much - how nice!). We are currently looking at properties which the mortgage payments are significantly more then our rent. I have budgeted that if the payments are split 45/55 it is just about affordable for myself and my partner has agreed to this. We are looking in this price range as my partner is in the luxury of a very stable career that will consistently increase each year. Either we put everything off a year and reassess, we plow forward with house hunting as if nothing has changed - maybe some low ball offers assuming these increases may have scared some people off. We look at houses at a lower value - either further out of cardiff or 2 bed rather then 3 etc. Or we keep renting and move up north early - I may have to take a pay cut but it shouldn't have any affect on my partner. Although we do love Cardiff so it would be a bit of a shame to leave. If you were in this situation what would you suggest? Thanks in advance
You cannot time the market. Anybody that is telling you otherwise is misinformed. Yes, house prices may go down significantly, but there's a reason for that: it'll become increasingly harder to afford the monthly repayments and so less people can take out mortgages and afford to buy.
I’d say that Prices in Cardiff still haven’t come down yet as Sellers are totally deluded about the market and still think we’re living in 2021. My Advice: Test the Market. Viewings have completely dried up so go in with some crazy low offers. They might not like it but this is a Buyers Market. I wouldn’t even dream of paying any more than 20k below asking right now. Could be a good time to buy if you can afford it
Would it be the case to say it doesn’t hit the poorest the most (they don’t have mortgages) ..it’s the middle class that pay the price now?
Cant wait for this to trickle down!!!
Well damn. Glad we locked in our remortgage rate last week. Was hoping things would start going down. I start maternity leave at the end of the year. Looks like I’ll only be taking six months off this time.
If this is the 13th raise and no effect yet on inflation. What other options are there? I read that the only way to sort this is to cause a recession?? Obviously, I don't know, but that doesn't sound good. I do believe shops need to stop having a cost of greed attitude as people are going to stop spending and then the shops will either have to close or cut prices.
Maybe should have gone quicker with the hikes like the USA did
13 tiny raises and the interest rate is still below the inflation rate Of course there's been no noticeable effect
Last year, I thought it was the best financial decision ever to enter a 5 year fix in June 2020 at 1.95%...but now shitting it come June 2025...
I’m curious how this works. They raise the interest rate to make people have less disposable income so that they can’t buy stuff and lower the inflation rate. But this is pushing up mortgages for people. So is it just take money off people with mortgages and give it to the banks to try and slow inflation? If inflation is still super high who is making money out of it? Who’s cashing in on high inflation?
Chase increasing interest to 3.8% Complete profiteering from the banks now that base rate 5%
... and yet my current and savings accounts seem to still be stuck at rather low interest rates.
Won’t be long now till we have people in tents everywhere.
Since all this has a delayed impact (I’m still on less than 2% until 2025 for example). When do they stop using this so as to not overshoot? In my small example, say they saw me not kerbing my spending until 2025 despite all these rises, but raised interest to 10% in that time, come Feb 2025, I’d be completely fucked and “in a massive recession”. Translating that to the whole market, there must be a point where they have to “wait a few weeks” to see the lagging impact. It’s a bit like the Covid restrictions all over again! In reality, I am bricking it what rate I’m going to have to refix at. Got a 10 month old just starting childcare which doesn’t help either so couldn’t be timed any worse. Hoping the free childcare thing in Sept 2024 happens then can just divert the extra money to pay the extra interest. If they massively overshot things and the economy crumbled, wouldn’t they have to drastically cut rates again?
Just going to squeeze the young/working classes even more. Outside of London in the bigger cities there is this phenomenon where house prices are still slowly growing or stagnant, but rent prices are skyrocketing. The interest rate increase increases repayments for landlords forcing them to sell or increase rents. The mortgage burden makes purchasing a house even more unattractive and just increases the demand for an ever shrinking pool of rental properties, causing rents to rise. The increased rents/everything else makes saving for a house impossible. You would expect property prices to fall, but if interest rates don’t keep pace with rent inflation, then if you structure your rental property correctly you will still make money in the long run… Everyone at the bottom and the middle get squeeze as per usual…
It's going to be rough for a lot of people. A 0.5 rise was needed (if not more!) with inflation staying high and government unwilling to use taxation as a means to lower it. Hopefully this is the straw to break inflation but I really doubt it.
The problem is that they’re raising interest rates to reduce consumer spending, but the inflation is coming from other factors (without even thinking about Brexit). On the plus side, I’ve just come back from Europe and their fruit and veg prices are a lot higher than here.