Increasing the interest rate to 5%, is this really the fairest way to slow inflation?

Creating jobs in which service industries, GSM?? Financial services? What else?

Do you remember when Canary Wharf and the City were empty during covid Maizie? Everyone working from home. All the sandwich shops, restaurants, bars, barbers and hairdressers used by people working in the financial sector closed?

maddyone

I remember the 100% mortgages specifically because I remember Mr M complaining vociferously that it was irresponsible of the lenders because rates can go up and down, and because people could easily end up in negative equity.

But we go back to the point that many even most didn't Maddy. In the end, you can only make decisions for yourself and offer an opinion to those that ask for help.

Are there now suggestions that it is those who took out 100% and 100%+ are the cause of inflation or have I misunderstood the reason for it being raised?

MaizieD

Creating jobs in which service industries, GSM?? Financial services? What else?

Food shops, food delivery people, couriers, meeting drivers, bars, restaurants, dreaded nail bars, hair salons, dry cleaners.

MaizieD

Germanshepherdsmum

Indeed. Our GDP is heavily dependent on the financial sector. He’s not going to repeat Boris’s famous remark about business. The City is extremely influential.

The City (which is actually a completely independent entity) needs to be less influential. How has it improved life for UK citizens?

We need to broaden our economy to include sectors which will provide growth in all parts of the UK, not just in a London enclave.

GDP is a meaningless measure for those who have little or no benefit from it.

I agree Maisie. It would be interesting to know how many in the country as a whole agree. I appreciate the parties have policies on such things but the answer to a simple question could be quite instructive.

I didn’t raise the point about 100% mortgages DaisyAnne but I was responding to the other post. I don’t think anyone, including myself, is saying that people who took out these mortgages are responsible for inflation, either now or in the past. It was actually some time ago anyway. I think it was grossly irresponsible of the lenders though.

The cause of inflation in my humble opinion is that the energy crisis has caused the inflation we see now. I’m concerned too that supermarkets may be profiteering by raising prices rather more than necessary. Whilst I think the British government have given a lot of help to the British public, I also believe they could have done more, not by giving higher handouts, but by regulating the prices that the energy companies charge. I also believe that the drive to net zero is a vanity project by the government and that whilst long term it is a worthwhile aim, now is not the time to be loading a further £170 on to the bills of our hard hit citizens. Rishi Sunak is not the man to be leading the country through this crisis in my opinion. He has not the first idea about the need to budget for most people, he is simply too rich, and whilst pretty much all of our Prime Ministers have been extremely rich (can you think of one who wasn’t?) I really think he is out of touch to such an extent that he simply has no comprehension.

The City is a big contributor to our wealth. The expertise of the finance sector is vital to the growth of other industries.

Doodledog Something needs to be done about the housing situation; but I'm not sure that keeping interest rates low is the answer. Building more houses and controls on rents seem to me to be more sensible approaches.

I tend to agree with building more housing, I believe rental payment based on what the market will bear typically works well.

I wish that someone could produce a simple guide (for the likes of me) who can't understand why raising mortgage rates, so people have less money to spend, is going to get a handle on inflation. Surely, if people spend less, then companies will go bankrupt due to lack of sales? My knowledge of economics is only slightly more than not a lot, so can someone please explain?

I suppose that not everyone has a mortgage. There are renters, those who can't afford mortgages and those who have paid theirs off. Also, those at the end of a mortgage term will be less affected than those at the beginning. If they all get more returns on savings and have the confidence to spend, maybe that is more of a boost to the economy than mortgage holders doing so.

OurKid1

I wish that someone could produce a simple guide (for the likes of me) who can't understand why raising mortgage rates, so people have less money to spend, is going to get a handle on inflation. Surely, if people spend less, then companies will go bankrupt due to lack of sales? My knowledge of economics is only slightly more than not a lot, so can someone please explain?

OurKid1 the Bank of England has an online guide…. Something about the consumer price index….. clear as mud!

Thanks Ronib. I'll take a look.

Doodledog

I suppose that not everyone has a mortgage. There are renters, those who can't afford mortgages and those who have paid theirs off. Also, those at the end of a mortgage term will be less affected than those at the beginning. If they all get more returns on savings and have the confidence to spend, maybe that is more of a boost to the economy than mortgage holders doing so.

It's a divided country and mortgage holders (and renters whose landlords will put up rents) are considered to be collateral.

Yes, I dare say. I've been there, and it was grim.

I don't know the answers - it's galling to think that inflation is at least in part caused by something I vehemently didn't want, and I wish could be reversed, too. It's wrong that any group should be expected to pay a disproportionate proportion of the cost of that.

It was ever thus Doodledog. You will remember when people with mortgages were hit before, not to mention when people with mortgages weren’t allowed to get a second mortgage (not a second home, just to move home) which made life almost impossible for people like myself when we had to relocate to another area for work but weren’t allowed a mortgage, only first time buyers were allowed to borrow. I thought it was very unfair at the time, we had to get a mortgage from a French bank which we were lucky enough to do, but my point is it always seems to be the people with mortgages who are hit. I don’t agree with it. I believe it to be unfair on one group of people.

"Around 90% of mortgages are fixed – predominantly for five years – a huge sea change compared to 10+ years ago when most were on variable rates." Curious, mortgages can't go up right now, can they?

Norah

"Around 90% of mortgages are fixed – predominantly for five years – a huge sea change compared to 10+ years ago when most were on variable rates." Curious, mortgages can't go up right now, can they?

1.4 million fixed-term mortgages set to expire in 2023. Why do you think they can't go up?

Doodledog

Yes, I dare say. I've been there, and it was grim.

I don't know the answers - it's galling to think that inflation is at least in part caused by something I vehemently didn't want, and I wish could be reversed, too. It's wrong that any group should be expected to pay a disproportionate proportion of the cost of that.

That's what makes me angry Doodledog. One sector of society is being forced to pay to (allegedly) "solve" the country's inflation.

I'm glad I'm not one of them. My landlord doesn't have a mortgage and is the best landlord ever - he's only put my rent up once (£25 a month) since I've been living here (10 years). I don't have any debts either and my meagre savings are making a few pounds interest.

Nevertheless, I am concerned about the country and this isn't a good way to bring down inflation. I'm not even sure that the house price bubble will burst without increasing the supply of housing, which won't happen while developers see house prices coming down. The state needs to intervene to build.

DaisyAnneReturns

Norah

"Around 90% of mortgages are fixed – predominantly for five years – a huge sea change compared to 10+ years ago when most were on variable rates." Curious, mortgages can't go up right now, can they?

1.4 million fixed-term mortgages set to expire in 2023. Why do you think they can't go up?

I think the relevant words are ‘right now’. It rather depends on exactly when your fixed rate will end, does it not?

DaisyAnneReturns

Norah

"Around 90% of mortgages are fixed – predominantly for five years – a huge sea change compared to 10+ years ago when most were on variable rates." Curious, mortgages can't go up right now, can they?

1.4 million fixed-term mortgages set to expire in 2023. Why do you think they can't go up?

I didn't say that.

All 5 year fixed mortgages can't go up this moment, can they?

Norah

DaisyAnneReturns

Norah

"Around 90% of mortgages are fixed – predominantly for five years – a huge sea change compared to 10+ years ago when most were on variable rates." Curious, mortgages can't go up right now, can they?

1.4 million fixed-term mortgages set to expire in 2023. Why do you think they can't go up?

I didn't say that.

All 5 year fixed mortgages can't go up this moment, can they?

I rather think this is a case of Conservatives playing smoke and mirrors in an effort to, yet again, let their incompetent government off hook. Why do you do it? These people are muppets only less cuddly.

If 1.4 million fixed mortgages are set to expire in 2023 then an average of 3,836 expired yesterday, the same today and the same tomorrow.

How much more "now" do you need it to be for those it is going to happen to, every day the interest rates are up. What difference will it make that the whole amount will not all go up at one single moment? I cannot imagine anyone ever thought they would!

A fair number would have expired and been reset during the preceding days of the year Daisy - we’re half way through it -so I don’t think your maths necessarily prove a point. Not everyone waits until the gun is held to their head. Did Norah say she is a Conservative or did you just assume that she is? I didn’t notice any such admission.

Germanshepherdsmum

A fair number would have expired and been reset during the preceding days of the year Daisy - we’re half way through it -so I don’t think your maths necessarily prove a point. Not everyone waits until the gun is held to their head. Did Norah say she is a Conservative or did you just assume that she is? I didn’t notice any such admission.

I should check the figures before making the accusation if I was you GSM. The figure I gave was the average daily amount for the whole of 2023. Of course the fixes that ended earlier are unlikely to be affected by this rise.

You can wriggle as much as you like in your support of Norah's claim that "... mortgages can't go up right now, can they?" It is simply not true. I'm not really sure why she made the claim or why you found the need to try and say black was white, in the face of an obviously erroneous statement.

I know your figure was for the whole of the year. Do you think I didn’t check? We are halfway through the year. Some fixes will have ended earlier in the year and some people will have taken a proactive approach before their fix ended. It’s abundantly clear to me that Norah was saying that all mortgage rates won’t go up right now - as they won’t. No wriggling at all, no erroneous statement and no claim that black is white.

Germanshepherdsmum

I know your figure was for the whole of the year. Do you think I didn’t check? We are halfway through the year. Some fixes will have ended earlier in the year and some people will have taken a proactive approach before their fix ended. It’s abundantly clear to me that Norah was saying that all mortgage rates won’t go up right now - as they won’t. No wriggling at all, no erroneous statement and no claim that black is white.

"Do you think I didn’t check?"

That seemed quite likely.