keitha
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2024, hopefully the year I get out of P2P
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Post by keitha on Jan 3, 2022 22:35:47 GMT
I am pretty sure there is a recognised high level definition of this, but I think it is when the government makes rules that indirectly get it out of trouble at the cost of taxpayers. Giving below inflation pay rises to public sector works which encourages the private sector to do the same for example. One that is currently relevant, is keeping saving interest rates artificially low whilst letting inflation run high as public debt can be eroded quickly this way. Unfortunately, this means rewarding the sinners and punishing the virtuous (if you think saving is virtuous). having had below inflation pay increase since 1990 in a hidden part of the public sector - they've created massive reduction in the standard of living in those people. Also, I can see a different manipulation here. Give 1% max to the people who will make the least noise, and 5% to the parts of the public sector which are noted in the press. As ex Public sector, I saw the anomaly of votes for industrial action often being lead and heavily influenced by certain groups ( Eg Social Workers ) who would then ask to be exempted from the strikes as they couldn't let their clients down. Again over the 20 years from the early 90's I saw a policy pushed by the unions of bigger rises at the bottom less for the higher grades, resulting in the differentials between grades being eroded. over that period senior professional staff (IT Accountants ETC ETC ) who were seen as worth 4 times what the guy that delivered post in the early 90's were seen at the end as not worth 3 times as much. IMHO Nurses are a group who are under paid, and in my opinion for the simple reason that the Government know they are so dedicated they will not strike.
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Post by Ton ⓉⓞⓃ on Feb 16, 2022 20:56:13 GMT
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agent69
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Post by agent69 on Feb 16, 2022 21:11:40 GMT
The Bank will, however, ignore depressed economic growth and lift rates to 1.75 per cent by November, sending them to the highest level since 2008, Goldman said.
Doesn't sound too disastrous
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tallsuk
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Post by tallsuk on Feb 16, 2022 22:38:31 GMT
The Bank will, however, ignore depressed economic growth and lift rates to 1.75 per cent by November, sending them to the highest level since 2008, Goldman said. Doesn't sound too disastrous
Using those maths a rise to 1.75% will cost an average family an additional £1750 per year. That's before you take into account rising costs of everything else. I dont think there are many people who will think that is anything other than disastrous. The most worrying this is that, as the graphs on the first page show, ( p2pindependentforum.com/attachment/download/4100 ) interest rates have always been higher than inflation with the exception of two world wars and a short time in the 70s when inflation hit 25% whilst interest rates were only 18%.
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Post by Ton ⓉⓞⓃ on Feb 16, 2022 22:40:32 GMT
The Bank will, however, ignore depressed economic growth and lift rates to 1.75 per cent by November, sending them to the highest level since 2008, Goldman said.
Doesn't sound too disastrous
Just, will that drive failures - yes to some extent.
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keitha
Member of DD Central
2024, hopefully the year I get out of P2P
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Post by keitha on Feb 16, 2022 23:25:56 GMT
Using those maths a rise to 1.75% will cost an average family an additional £1750 per year. That's before you take into account rising costs of everything else. I dont think there are many people who will think that is anything other than disastrous. The most worrying this is that, as the graphs on the first page show, ( p2pindependentforum.com/attachment/download/4100 ) interest rates have always been higher than inflation with the exception of two world wars and a short time in the 70s when inflation hit 25% whilst interest rates were only 18%. then you have the millennials in London with £600K mortgages that £5250 a year Someone I know has calculated his Electricity bill will go up £75 a month with the rise in the cap ( All electric house ) and a 1.25% increase in NI
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easynow
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Popcorn anyone?
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Post by easynow on Feb 17, 2022 8:45:08 GMT
And there you have it, long awaited property price correction.
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agent69
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Post by agent69 on Feb 17, 2022 12:04:03 GMT
The Bank will, however, ignore depressed economic growth and lift rates to 1.75 per cent by November, sending them to the highest level since 2008, Goldman said. Doesn't sound too disastrous
. That's before you take into account rising costs of everything else. I dont think there are many people who will think that is anything other than disastrous. The most worrying this is that, as the graphs on the first page show, ( p2pindependentforum.com/attachment/download/4100 ) interest rates have always been higher than inflation with the exception of two world wars and a short time in the 70s when inflation hit 25% whilst interest rates were only 18%. According to the graph you linked to, prior to the 2009 financial crisis interest rates hadn't been below 5% for the best part of 50 years. I would have thought that anyone taking out a mortgage while rates were at a historic low level would have factored in the possibility that they may return to 'normal' levels in the short or medium term.
Anyone struggling with 1.75% has grossly overcommitted themselves
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adrianc
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Post by adrianc on Feb 17, 2022 12:19:02 GMT
I would have thought that anyone taking out a mortgage while rates were at a historic low level would have factored in the possibility that they may return to 'normal' levels in the short or medium term. I admire your optimism. Instead, many of them maxed out on 90% and 95% LtV, while whining that the lenders wouldn't lend more because of those soooooo unfair affordability tests...
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foolsgold
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Post by foolsgold on Feb 17, 2022 13:06:24 GMT
Northern Rock used to lend in excess of 100 percent on mortages...crazy
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tallsuk
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Post by tallsuk on Feb 17, 2022 13:23:28 GMT
People make offers on houses based on the amount of money they are allowed to borrow and not on the actual realistic market value of the property. 20 years ago banks would only lend a single person 2.5 times their salary and a couple would be given 3 times there joint income. Nowadays people are being given 4.5 and sometimes 5 times their salary.
Unfortunatly, homeowners feel happier when their homes go up in value and think the government are doing a good job while the banks make more money. This vicious circle should have ended with the credit crunch (this time round at least) but by reducing interest rates by so much have just allowed it to carry on an the crash is going to be so much worse as a result.
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adrianc
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Post by adrianc on Feb 17, 2022 13:39:59 GMT
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JamesFrance
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Port Grimaud 1974
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Post by JamesFrance on Feb 17, 2022 14:55:38 GMT
Gordon Brown let the housing market rise irresponsibly because it encouraged people to spend their apparent profits to make the economy look good. Unfortunately no Chancellor has since put the brakes on by restricting mortgages, so there is nothing the BOE can now do about interest rates without causing a massive housing crash. Quite how they try to control inflation now will be interesting to watch.
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keitha
Member of DD Central
2024, hopefully the year I get out of P2P
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Post by keitha on Feb 18, 2022 16:48:07 GMT
People make offers on houses based on the amount of money they are allowed to borrow and not on the actual realistic market value of the property. 20 years ago banks would only lend a single person 2.5 times their salary and a couple would be given 3 times there joint income. Nowadays people are being given 4.5 and sometimes 5 times their salary. Unfortunatly, homeowners feel happier when their homes go up in value and think the government are doing a good job while the banks make more money. This vicious circle should have ended with the credit crunch (this time round at least) but by reducing interest rates by so much have just allowed it to carry on an the crash is going to be so much worse as a result. There is a scheme called wayhome That lets you buy a property at 10 times your household income As I understand it you buy a percentage they buy the rest and you pay rent on the part you don't own, now most of these schemes are charging 3-4% of the unowned section as rent, So lets say a £550,000 property and you put down 50K and own 50% So you Pay rent on £275000 £11,000 a year Mortgage of £225,000 at 3% £6750 interest, plus £5600 a year to repay capital over 40 years, a total of £23,350 a year from a household income of £60,000. if the interest rate goes to 6% the repayments become 50% of household income. I remember paying 10% plus on mortgage and I suppose a 2% increase added <15% to payments, or some now 2% will add 30% or more to the repayments, and if the rates go back to the norm of 8 or 9% these people will be financially crippled
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tallsuk
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Post by tallsuk on Feb 18, 2022 16:57:39 GMT
People make offers on houses based on the amount of money they are allowed to borrow and not on the actual realistic market value of the property. 20 years ago banks would only lend a single person 2.5 times their salary and a couple would be given 3 times there joint income. Nowadays people are being given 4.5 and sometimes 5 times their salary. Unfortunatly, homeowners feel happier when their homes go up in value and think the government are doing a good job while the banks make more money. This vicious circle should have ended with the credit crunch (this time round at least) but by reducing interest rates by so much have just allowed it to carry on an the crash is going to be so much worse as a result. There is a scheme called wayhome That lets you buy a property at 10 times your household income As I understand it you buy a percentage they buy the rest and you pay rent on the part you don't own, now most of these schemes are charging 3-4% of the unowned section as rent, So lets say a £550,000 property and you put down 50K and own 50% So you Pay rent on £275000 £11,000 a year Mortgage of £225,000 at 3% £6750 interest, plus £5600 a year to repay capital over 40 years, a total of £23,350 a year from a household income of £60,000. if the interest rate goes to 6% the repayments become 50% of household income. I remember paying 10% plus on mortgage and I suppose a 2% increase added <15% to payments, or some now 2% will add 30% or more to the repayments, and if the rates go back to the norm of 8 or 9% these people will be financially crippled It is frightening. <ost of these schemes also expect a pro rata share of any capital uplift even though all the risk is being taken by the borrower.
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