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Re: The Bank of England [Re: TBM] #750860
05/08/22 09:17 AM
05/08/22 09:17 AM
Joined: Mar 2009
Posts: 9,950
Hampshire
Alistair Offline
Smile, it confuses them
Alistair  Offline
Smile, it confuses them
Needs to Get Out More!

Joined: Mar 2009
Posts: 9,950
Hampshire
Originally Posted by John V6
Well have had 20 years of low rates. We left the UK when Maggie was in and mortgage rates went over 15%. Those bunch of infighting inbred fools who make up the government need to stop slagging each other off & get back to work
I have no idea why they spend so much time climbing on each others heads when the issue is the country, the press and the global dynamic. Anyone want a guess on which is the top of the list? The comment on the further disproportionate increase in ratio of income to mortgage to cost of living is going to be horrible this winter. People mortgaged to the hilt to get something finding the cost of living, heating and mortgage all going up at the same time means that we will see a lot of sofa surfing soon.

Originally Posted by TBM
I'll remember why I don't get involved in political discussion on here :} :} :}
Oh so true, even in the Soapbox!

I have to agree with Richard re those on fixed income and looking for increase in their capital for the long term. It might not be socially trendy but it is equally fair to say those that have taken time to make money have seen it drop well behind in the last few years and they did not complain when everyone took out a cheap mortgage (using their money in effect) so if someone is always going to loose maybe a little balance is not unfair. I do feel sorry for those looking at a rough patch but lets not forget we had the same, I had a >15% mortgage for a fair time and had to weather it.


Everyone loves a Morgan. Even me, unless it's broken again.
Re: The Bank of England [Re: Alistair] #750868
05/08/22 09:36 AM
05/08/22 09:36 AM
Joined: Aug 2020
Posts: 1,260
Lytham St Annes, Lancashire
J
JohnHarris Offline
Has a lot to Say!
JohnHarris  Offline
Has a lot to Say!
J

Joined: Aug 2020
Posts: 1,260
Lytham St Annes, Lancashire
Originally Posted by Alistair
Originally Posted by John V6
Well have had 20 years of low rates. We left the UK when Maggie was in and mortgage rates went over 15%. Those bunch of infighting inbred fools who make up the government need to stop slagging each other off & get back to work
I have no idea why they spend so much time climbing on each others heads when the issue is the country, the press and the global dynamic. Anyone want a guess on which is the top of the list? The comment on the further disproportionate increase in ratio of income to mortgage to cost of living is going to be horrible this winter. People mortgaged to the hilt to get something finding the cost of living, heating and mortgage all going up at the same time means that we will see a lot of sofa surfing soon.

Originally Posted by TBM
I'll remember why I don't get involved in political discussion on here :} :} :}
Oh so true, even in the Soapbox!

I have to agree with Richard re those on fixed income and looking for increase in their capital for the long term. It might not be socially trendy but it is equally fair to say those that have taken time to make money have seen it drop well behind in the last few years and they did not complain when everyone took out a cheap mortgage (using their money in effect) so if someone is always going to loose maybe a little balance is not unfair. I do feel sorry for those looking at a rough patch but lets not forget we had the same, I had a >15% mortgage for a fair time and had to weather it.




Alistair,

Don't disagree with your comments, however low interest rates has created greater personal indebtedness with low service costs and stoked house price inflation. I don't remember having much money to spare when I bought a house in the 70's. with high PAYE taxation, high inflation and high interest rates. Many people are now asset rich and cash poor and the main asset being their house, so cant deal with the current inflationary pressures, but is that any different to what we experienced in the 60's,70's and 80's.

If high interest rates cause house prices to fall then so be it, but the last period of negative equity in the 90's was a painful time and caused a major recession in the UK..........but a realignment is due.


Last edited by JohnHarris; 05/08/22 09:38 AM.

John
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Re: The Bank of England [Re: JohnHarris] #750874
05/08/22 10:10 AM
05/08/22 10:10 AM
Joined: May 2019
Posts: 496
Hampshire, UK
I
IMHO Offline OP
Learner Plates Off!
IMHO  Offline OP
Learner Plates Off!
I

Joined: May 2019
Posts: 496
Hampshire, UK
Originally Posted by JohnHarris
Originally Posted by IMHO
So you think that foisting bans on water users is acceptable given that no new reservoirs or working desalination plants have been built in over 30 years when the population has risen by 11 million and climate change has been predicted for decades? And that somehow over rewarding people who gamble on shares justifies this?

There is a small bit of good news, a new reservoir is being built near Havant by Portsmouth water at a cost of 120million, the first new build in the south since the 70’s, seems pretty cheap to me for water security, certainly a lot less than the HS2 vanity project.


I don't disagree with your argument about more infrastructure development, not just water but also energy. Apparently network capacity of energy in the South East will curtail future housing development, as there simply isn't enough of it to increase the housing density.

Well there are several issues. eg the UK is becoming wetter thru climate change, so if in general we are experiencing more water thru rain which is more frequent why do you have to build more reservoirs unless you have increased local demand beyond local capacity. Which then goes to a wider issue of economic levelling up of the UK, stop the increased economic development in places like London and the SE and look to maximising the whole of the UK resources and infrastructure to better effect.

For local issues stop the eg increasing tarmac/impervious surfacing of green areas in inner cities (gardens, driveways etc ) which is causing heightened water run off and localised flooding and thereby improve water retention and slow release thru garden areas to improve the water table levels................its not just simply a case of building more reservoirs.....there is a much bigger issue here and water shortages are just a symptom of it.


We need reservoirs here in the south because the policy of taking it from rivers such as the Test doesn’t work in hot summers.


M3W Brooklands (2015)
Moody 41 (2013)
Re: The Bank of England [Re: IMHO] #750875
05/08/22 10:12 AM
05/08/22 10:12 AM
Joined: Aug 2020
Posts: 1,260
Lytham St Annes, Lancashire
J
JohnHarris Offline
Has a lot to Say!
JohnHarris  Offline
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J

Joined: Aug 2020
Posts: 1,260
Lytham St Annes, Lancashire
Originally Posted by +8Rich
Bring it on, at last savings rates are on the way up and investments just behind them.



Originally Posted by IMHO
Spoken like a true baby boomer. doh


Anyone would think all baby boomers were born with a silver spoon in our mouths and didn't experience high inflation, high taxation and high interest rates, many of us had no choice but to work abroad as the UK the sick/poor man of Europe collapsed into an economic mire with the oil crisis, 3 day week and traditional industrial base collapsed almost overnight.

Thank goodness after years of low returns, that a section of society many now living on fixed incomes are seeing increased returns for their years of prudent saving and personal sacrifice.


John
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Re: The Bank of England [Re: IMHO] #750878
05/08/22 10:40 AM
05/08/22 10:40 AM
Joined: May 2019
Posts: 496
Hampshire, UK
I
IMHO Offline OP
Learner Plates Off!
IMHO  Offline OP
Learner Plates Off!
I

Joined: May 2019
Posts: 496
Hampshire, UK
Been there, done all that, but the topic at the time was mortgages and incomes and the divergence between pay packets and house prices. Baby boomers suffered less severe shocks than the one that would ensue if the mortgage rate went up to 15% on a £1m terraced house in London.
My kids have mortgages that are on another planet compared with my past mortgages, all fuelled of course by our obsession with house values, lack of housing stock and years of negligible interest rates. As for years of prudent savings, it’s not an option for a large proportion of the population, anyway what good is saving at tiny interest rates that are blown away by inflation. We could see significant civil unrest if the events of the late 70’s materialised again.


M3W Brooklands (2015)
Moody 41 (2013)
Re: The Bank of England [Re: IMHO] #750881
05/08/22 10:54 AM
05/08/22 10:54 AM
Joined: Apr 2008
Posts: 11,012
Gloucestershire, UK
Hamwich Offline
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Hamwich  Offline
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Posts: 11,012
Gloucestershire, UK
Originally Posted by IMHO

We need reservoirs here in the south because the policy of taking it from rivers such as the Test doesn’t work in hot summers.



I think that's true over large parts of the country now as weather patterns change. More than ever I believe it's time we put more investment into the establishment of a national water grid based on utilising our existing canal network. More than enough rain for our needs falls on the UK, but we let it go to waste rather than ensuring it's captured and used effectively.


Tim H.
1986 4/4 VVTi Sport, 2002 LR Defender, 2022 Mini Cooper SE
Re: The Bank of England [Re: IMHO] #750882
05/08/22 10:55 AM
05/08/22 10:55 AM
Joined: Mar 2009
Posts: 9,950
Hampshire
Alistair Offline
Smile, it confuses them
Alistair  Offline
Smile, it confuses them
Needs to Get Out More!

Joined: Mar 2009
Posts: 9,950
Hampshire
Originally Posted by JohnHarris



Alistair,

Don't disagree with your comments, however low interest rates has created greater personal indebtedness with low service costs and stoked house price inflation. I don't remember having much money to spare when I bought a house in the 70's. with high PAYE taxation, high inflation and high interest rates. Many people are now asset rich and cash poor and the main asset being their house, so cant deal with the current inflationary pressures, but is that any different to what we experienced in the 60's,70's and 80's.

If high interest rates cause house prices to fall then so be it, but the last period of negative equity in the 90's was a painful time and caused a major recession in the UK..........but a realignment is due.


I may not have said that but similar thoughts were in my head re the "cheap money distorted the market". It was never as cheap before the peak I/we experienced leading into the last round of inflation. Credit was seen as bad, but in this day is seen as natural on top of cheap money as you say. I made the jump by purchasing a shoebox three bedroom mid terrace and putting two mates in as renters, I would not have made it otherwise. I considered moving in a third and living in the dining "room" myself when it went above 12%.

If I add the almost-beyond-our-control global situation I do think this round will possibly be more difficult for them than ours was. I see a lot of teens failing to eject out of the family home now. Hard to give them a pep talk about my own experience of what was essentially the same situation without sounding like the moaning old fart I used to hate listening to! Perspective is a ______


Everyone loves a Morgan. Even me, unless it's broken again.
Re: The Bank of England [Re: IMHO] #750884
05/08/22 11:00 AM
05/08/22 11:00 AM
Joined: Apr 2008
Posts: 11,012
Gloucestershire, UK
Hamwich Offline
Scruffy Oik
Hamwich  Offline
Scruffy Oik
Member of the Inner Circle

Joined: Apr 2008
Posts: 11,012
Gloucestershire, UK
Originally Posted by IMHO
Been there, done all that, but the topic at the time was mortgages and incomes and the divergence between pay packets and house prices. Baby boomers suffered less severe shocks than the one that would ensue if the mortgage rate went up to 15% on a £1m terraced house in London.


Yep. We were living paycheck to paycheck when we first got together in the early '80s, but it was entirely feasible for a married couple like us on average earnings to buy a freehold house with a 10% deposit. It's completely out of the question these days for nearly everyone.


Tim H.
1986 4/4 VVTi Sport, 2002 LR Defender, 2022 Mini Cooper SE
Re: The Bank of England [Re: IMHO] #750887
05/08/22 11:11 AM
05/08/22 11:11 AM
Joined: Aug 2020
Posts: 1,260
Lytham St Annes, Lancashire
J
JohnHarris Offline
Has a lot to Say!
JohnHarris  Offline
Has a lot to Say!
J

Joined: Aug 2020
Posts: 1,260
Lytham St Annes, Lancashire
Originally Posted by IMHO
Been there, done all that, but the topic at the time was mortgages and incomes and the divergence between pay packets and house prices. Baby boomers suffered less severe shocks than the one that would ensue if the mortgage rate went up to 15% on a £1m terraced house in London.
My kids have mortgages that are on another planet compared with my past mortgages, all fuelled of course by our obsession with house values, lack of housing stock and years of negligible interest rates. As for years of prudent savings, it’s not an option for a large proportion of the population, anyway what good is saving at tiny interest rates that are blown away by inflation. We could see significant civil unrest if the events of the late 70’s materialised again.



Maybe I lived in a different part of the world back then, but the norm for many newly weds who couldn't afford to rent, let alone buy a house was to live with parents . Did baby boomers suffer less shocks, I'm not so sure...the level of government support/benefits available these days is staggering compared to when I grew up. Somethings without question have changed for the worse, further education used to be pretty inexpensive where today many have substantial university debts to bear.

In the same way inflation erodes savings it also effectively erodes loans, so at 10% inflation a £1m mortgage is in effect eroded in purchasing power equivalent to zero in 9 years whilst the inflation growth in equity at the same rate of inflation on a £1m house increase £1m in the same time............creating a massive effective inflationary benefit, compared to the same type of inflationary benefit of a 70's relative house price. The greater the asset value being uplifted the greater the benefit in real terms.

At one point in the UK the highest PAYE rate was 90% and if you had investment income that had a further surcharge of 15% tax, so higher earners with investment income could finish up paying £1:05p in tax on the £1 they earned, no wonder we had the brain drain in the 70's..............
If it leads to civil unrest unfortunate but fine, but Covid which was a major shock to personal liberties was taken very much in its stride without protest..........another example recent fuel increases taken in their stride compared to the first time petrol went over 80p a litre.




Last edited by JohnHarris; 05/08/22 12:04 PM.

John
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Re: The Bank of England [Re: Hamwich] #750891
05/08/22 11:44 AM
05/08/22 11:44 AM
Joined: Aug 2020
Posts: 1,260
Lytham St Annes, Lancashire
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JohnHarris Offline
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JohnHarris  Offline
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Joined: Aug 2020
Posts: 1,260
Lytham St Annes, Lancashire
Originally Posted by Hamwich
Originally Posted by IMHO
Been there, done all that, but the topic at the time was mortgages and incomes and the divergence between pay packets and house prices. Baby boomers suffered less severe shocks than the one that would ensue if the mortgage rate went up to 15% on a £1m terraced house in London.


Yep. We were living paycheck to paycheck when we first got together in the early '80s, but it was entirely feasible for a married couple like us on average earnings to buy a freehold house with a 10% deposit. It's completely out of the question these days for nearly everyone.


I think we see each successive generation has a greater expectation of what is the minimum norm to survive and usually with it comes a higher and more entrenched cost in the basics deemed essential required living standards I remember in the 60's when only my Grandparents had a phone. Now by comparison most families have a mobile phone each, including the children with the resultant entrenched costs that have to be found and covered every month. Compound that with many two car families, commuting to children's schools as many no longer educated in home catchment areas...and the other 'deemed' essentials in life and resultant higher cost base has to be found each month .

Having the specific ingredients for you to cook a meal delivered to your home in a box, was inconceivable not that long ago, is an example of what is becoming more acceptable normalised higher food costs.

Last edited by JohnHarris; 05/08/22 03:51 PM.

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