UKC

So we managed to get on the property ladder in 2019, after scrimping and saving for years. My fixed rate ends in 2024 and if the expected interest rates occur we'll be looking at £1300-  £1400 a month as opposed to just under £600.

We earn a decent wage and are probably in a better position than a lot of people but It very much feels like my quality of life has peaked and it's all downhill from here 

Tories are great aren't they?

I would encourage you to take a longer positive   view over the 25 years or so you have the mortgage for. It’s going to go up and down over that period. Some of it will be easy and some tough. 

I feel your pain. Imagine paying that… but in rent. And right now, not in 18 months. Welcome to Toryland. 
 

can’t trust Labour with the economy mind.
*Edit to make clear this is sarcasm. I don’t know how to do emojis*

I'd agree but if the downs mean you lose your house then it's kind of  irrelevant.

I'm sorry. 

You're collateral.

If it helps, so am I. 

I'm sorry about your situation, sounds really rough but I think it was always going to rise at some point.

Grim but most people get through it and in previous times the reality is few lose  their houses.it’s not all roses having a mortgage and most mistakes are made by pathetic politicians making poor decisions. all the advice was there not to do it and yet what did they do. Crass.

It seems so. My energy direct debit has just halved compared to what it was a year ago and it looks like I'm finally going to get some interest on my savings. I'm actually quite confused about whether I should feel guilty or not (given that I didn't vote for them and shan't do so in the next election).

Unfortunately, the shafting continues as always.

"Oh, you should totally get on the property market, you are paying someone else's mortgage as it stands. BTW, good luck, since we've got access to mortgages that are cheap AF, we have inflated the prices of every last shithole to 400k, you'd better stop your Netflix subscription to save up for it. Oh, by the way, I've increased your rent to two grand a month, the victorian slum terrace I bought in 1990 and split into 15 flats is quite valuable now. Oh you made it? Cool. Here's a real mortgage rate now, it was always going to go up, back in my day (of houses that cost peanuts) we had 15% mortgages and walked to school uphill in both directions. Hang on a second, what are you doing with that torch and pitchfork?".

Hyperbole of course but it absolutely does feel this way quite a lot of the time.

Choose life! Also, when exactly in 2024? It's a fair while off yet..

I'm not, I'm excited. 

I'm going to wait outside the bankruptcy courts and pick up properties on the cheap, turn them into HMOs (doing the bare minimum to scrape through any regulatory hoops left after the bonfire of red tape), and cram 15 people paying extortionate rent into each former family home.

I wonder what will happen to the families? Ah well, not my problem, and I'll sleep like a baby afterwards.

hooray for the Tories, hooray for Thatcherism mark II

But your savings are now being badly eroded by inflation - interest rates won't keep up with that.

At least they've cut stamp duty, so when they are repossessed, a landlord can pick them up cheaper. 

Yes, but the 6% interest rate I heard mentioned would still be a lot better than almost nothing!

Exactly holding cash will be suffering an 6-8% annual loss. In a few brief moves they've completely f****d the economy for a decade. 

Is anyone offering 6% ?

6% interest minus 10% inflation = -4% net

0% interest minus 3% inflation = -3% net

…so no, 6% interest isn’t better than nothing.  

The significant figure is the difference between the inflation rate, and the interest rate. You'll be losing more money in the future than you've ever done over the past ten years. Trust me!

I'll leave you with that happy thought.

I thought the point of raising interest rates was to reduce inflation?

Yes, but what I meant was that 10% inflation with 6% interest is a lot better than with no interest. Also, I have just retired and my pension is linked to inflation - good timing

I just heard mentioned that the base rate might go that high.

What are you all complaining about?

Just get rich.

Do you have any children you could sell?

You've got two years to plan, which is more than the poor people who took out sub 1% fixes for 2yrs in 2021 and will be facing mortgage rates of 8% next year have. You're also probably insulated from significant house price falls. 

Can you afford to cut back and overpay/save as much as you can now so that in 2024 your mortgage amount would be significantly less?

You’ll be levelled up soon enough, stop worrying. 

What a fooking knobhead!

Your mortgage payments are going to double, triple and beyond within the next year.

Screw your phlipent long term term comment.

Yeah, but that doesn't mean a bank will offer like for like on savings. They'll be losing money on debt defaults.

Turns out you can't do that on Ebay.  I got a very snotty email from them.

If it's any consolation, they did it to us before in the 80's. Thatchernomics sent my new mortgage from 80 to 240 pounds a month. Survived it somehow...

I got caught in negative equity between 1990 and 1996. The only people I'd wish that level of stress on are the residents of Tufton St who have engineered this situation for their own gain. Bastards 

It’s all a mess no doubt but if you commit to a mortgage at historic lows of interest rates then this should have been taken into account, even expected. The Tories are c- - nts of course but come on. It was always coming. 

Yeah. They know they have screwed up, Truss is in hiding and kamikaze was sent out to make a brief statement. Junior ministers will be stitched up to do any press meetings this week. 

Sorry, no one could expect this level of incompetence or stupidity. We've never seen anything like this. At least, I haven't in my 72-year life.

I'm happy for you, and I didn't dislike your post.

But probably not the best time to appear to be gloating.

Well I’m not saying it’s not stupid. I agree entirely. But eitherway interest rates were only ever going one way. So that should always be considered when taking out a huge loan. Sorry. It’s not a political thing. Simple math. 

Dunno.  Some maybe; not Truss.  Never voted for them; only for the yellow lot

BUT

This dog whistle reaction "tories bad" for everything is shallow uncritical bollocks.

Also, sadly, the current, and even the expected interest rates are not especially high.  Google a graph of uk base rates and you'll see a rather anomalous period of sub 2% rates from 2009 to just recently.  Prior to that it had been c.4%-6.5% since 1992 and before that more volatile but 8-14% typically.  I bought my first home when MIRAS was just about to get abolished and rates went to 14%; my parents saw 17% in 1979.

Interest rates have to rise because money has been way too cheap for way too long in an effort to keep up growth and investment following the 2007 crash, but now we have non-growth inflation (covid borrowing, war/energy).  Rate rises are a blunt tool but there aren't many other options.  Three decades of Japanese economic history is instructive just now.

But the point is that this new financial burden is totally unnecessary. It's the result of a rogue Chancellor who's gone bananas with a crazy ideology of helping the rich (poor souls) while hurting the poor at the time of a CoL crisis.

On top of this there's the extra puzzle that someone's just Tweeted: 

Anyone seen
@trussliz
?

Someone else then replied: 'Hibernating?'

As I said earlier, the country appears to be rudderless at the moment. Just when we most need a strong leader.

The potential for 10% mortgage rates with 20% inflation and 1000% energy prices with imports costing through the arse due to sterling becoming the equivalent of a wet wipe was always coming? That is some level of prediction skill right there.

I'm in a much better place than the OP, because at the end of my fix (also in 2024) my mortgage would still be affordable if the interest jumped all the way to 10%, and that's assuming the market crashes and I don't get much of an increase in value on my property, but for the love of god stop it with this "you should have seen it coming" stuff.

Personally, I went against all advice from every advisor I asked and locked for longer with a slightly worse rate, because I'm a pessimistic bastard and felt Brexit is not going anywhere good, but people had been struggling for years to get anywhere near a deposit to get on the property ladder while being fleeced by an entire system of people that had the cheek to sneer[1] at them.

It is not helpful to anyone, if interest goes up to ridiculous amounts millions will become destitute, anyone uttering "you should have seen it coming" is likely to end up getting lynched, we're on the verge of living through interesting[2] times.

[1]: https://www.rd.com/list/things-millennials-have-killed/

[2]: dangerous AF

The same rates, with the current average LTVs and value to income would be catastrophic, those numbers mean nothing if we ignore property inflation.

Stick ‘em on PreLoved. I did. 

Apologies. I didn't really mean to come across like that, though I can see I might have. My original post saying I sort of feel guilty about how developments under the new government affect me personally (at least in the short term) is equally to the point.

A natural long term rate looking historically is about 4-6%.  Planning to buy a house that was only affordable based on the artificially low rates lasting forever was a risk, unfortunately.

On the other hand, before the silly rates you got the likes of base rate minus something trackers, so it may not be as bad as you think.

You didn't see the 12%+ rates in the 80s?

The issue isn't just interest rates though is it?  Rates may have been much higher in the 70-80s but property prices and mortgages were much, much lower compared to wages  (I remember 3-4x income being average for a mortgage, what is it now, 6-7x ?).  I recall reading somewhere recently that the 14% rates of the early 80s are equivalent in terms of affordability to around 4% in today's market/

I lived through it, and it was appalling, but please correct me if I'm wrong: that was a global disaster that was not the result of one minister in the UK, on one day, taking leave of his senses. 

I don't really know the history of that, but if you look historically the super low rates since 2009ish were not going to stay long term, and so people needed to plan for them returning to a more sustainable rate when choosing what to buy or whether they could afford it at all.

Anyone who stretched themselves based on a Bank rate of around 1% made a very, very poor choice indeed, and any mortgage advisor who suggested that is complicit.

If anyone is stuck, though, having made that choice, if they are young there may be a way out by extending the term.

How? How could they plan?

The issue is that this ignores the reality that my generation faced: Property values got so absurdly inflated that for most people the *only* way was to expose themselves to these low rate mortgages. Income just didn't scale anywhere near property values.

That, together with rent increases, far outstripped the ability to save more to make up for it.

Literally everything kept going up apart from wages.

Yeah, but it keeps happening doesn't it, the banks keep encoraging it and it is often the hopeful young people who can least afford it who loose out while the bankers and the wealthy do comparitvley well out of it.

2007 -  average house price £180,000, 100% mortage? no bother prices will keep going up.

2009 - average house price £150,000. Whoops.

2022 average house price £270,000, want a mortage? No bother 2% you can afford that?  What could possibly go wrong. But give us a 20% deposit, incase the economy goes tits up and the interest rates go to 8%, then we won't loose out if we have to reposses your house and chuck you on the street.

2024? Lets see.

People do not have to buy if they can't afford it, or they can buy in cheaper locations or smaller homes, or one in a poorer state of repair so they could DIY it up to standard.

I agree prices have gone mad, and a good effect of this could be to bring them down a bit.  But in the end you don't HAVE to buy, and a lot of younger people seem to act like their dream family home should be their first, rather than a cheap flat or terrace in a scruffy area as a starter as people used to do.

Fundamentally people took a risk.  Sometimes risky investments do not pay off.

In a similar position here mate. It seems like we're heading for a shit sandwich with a glass of pish to wash it down and we're the fortunate ones...

I've been following this excellent "economics made simple" podcast by David McWilliams since just before the pandemic. Todays podcast covered, in part, this mini budget and the potential ramifications, the whole thing being framed by how deeply unequal Britain is compared with other European countries and how these choices are likely to exacerbate that.

It's interesting to hear commentary on how batshit this is from someone who understands economics. 

An aptly named episode and an interesting if a bit grim listen
"Is Liz Truss the leader of a Doomsday Cult?"
https://open.spotify.com/episode/6il5jM6qtT37DfmbMe2kxP?si=70bf3789e9704096

This exactly. I managed to save a 20%  deposit, live in a cheap area so only had a £160k loan. I've progressed through the company I work for, getting a few payrises but yet still I'm faced with being worse off than ever.

If someone could tell me exactly where I've gone wrong with my life choices and 'could've seen it coming' I'd be most grateful... Maybe I should get another job on top of the 40 hour week I already work plus self employed work. Who needs sleep anyway?!

Look, I've voted Tory in the past. We're not saying that all people that are generally "conservative" are bad but the fact is the current conservative party is running the country into the ground and anyone arguing otherwise and/ or supporting them is now actively complicit in the destruction of the country.

"People do not have to go climbing if they can't afford it, or they can do pull-ups on their door lintels." "People do not have to enjoy good food if they can't afford it, they can buy cheaper rubbish, or have smaller meals, or buy food that's gone off that they could DIY up to standard by sprinkling on some pepper or spices."

Please.

Again, you are ignoring rent increases. I paid 72 grand in rent in the 8 years before I bought a house. That is 72 grand with nothing to show for it, no wealth accumulation for retirement. The U.K. is not set up for renting to be a sustainable situation for people. It should be, but it is not. 

I did all of the above, which is why I'm in an alright state, although I did face certain other uncomfortable facts of the British housing market:

1) Houses are in a far worse state than is apparent.

2) So called professionals in the building trade that you pay to assess said houses don't know their arse from their elbow, further inflating prices. My *full* building survey was as much use as used toilet paper.

Genuinely, what do you think people did, bought mansions in Chelsea? A lot of the time these absurd prices *were* for terraces in bad areas that needed gutting.

My deposit was 20% and my mortgage payments knocked 150 quid off my rent. I'm not by means the worse off but these rises are big enough to make me me worry about losing my home...

I could have chosen not to buy but I would have to live somewhere and what's going to happen to rents when landlords suddenly see their mortgages double? 

As one of the richest countries in the world I don't think it's unreasonable to aspire to owning your own home. 

I am not defending this idiot Goverment.  I didn't vote for them and I wouldn't vote for them.  But we have to make choices based on how things are, not how we would like them to be.  A risk is a choice, and may be a valid one, but for some it will have been the wrong one.

Notwithstanding that, rates were ALWAYS going to go back up at some point.  The historic lows were short term economic stimulus.

You don't seem to understand the position a lot of young people were/are in.

It often costs as much to rent as to buy, if you are 25 years old and have a bank happy to give you a mortgage it would take a huge amount of maturity and caution to say no thanks.

Knowing that if you do you are going to be giving your landlord £15,000 a year and after 25 years have nothing as oposed to owning your own house. And if you don't get on the ladder NOW, if prices keep going up at this rate you will never be able to afford to get on the ladder.

Can you honestly tell us you would never have made that choice if you were young and in that situation?

Neil would probably advise you to buy a good tent. "There are some really good value cheap tents around now."

Again, we can only make choices based on how things are, not how we would like them to be.

I think that varies.

Which is why it's important to ask questions about competence.

Not mansions in Chelsea, but buying within the M25 *at all* (other than a studio) is not affordable for most first time buyers.  If getting on the ladder was important, then go well out of London and commute.  Yes, trains are expensive, but nowhere near as expensive as the houses.

Similarly Manchester has got very pricey, so buy in Liverpool, Wigan or Preston and commute.

I get where you’re coming from. A key difference now is the huuuuge mortgages people have in relation to their income, meaning a  % increase in their mortgage has a much bigger impact than in the 80s. Like you said, maybe folk have been enticed to overspend due to the unrealistically low interest rates in recent years. 

Im still on a variable rate, pondering what to do (I’m a bit of a gambler by nature, and I’m lazy !). 

I am on a tracker, staying put at the moment but watching to see if a higher bank rate brings cheaper trackers.  Pre subprime crisis they were typically bank rate minus, not bank rate plus.  When rates crashed this caused controversy as some people managed to get negative rates on such trackers depending on the exact wordings of the T&Cs.

You are norman tebbit and I claim my £10. 

(1981 tory party reference, for the youngsters)

You should have a go at becoming "Chancer of the Exchequer".  I googled that and the title is not yet taken

My son and daughter (ages 21 and 23) are paying £700/month each. Nuts. Happy for them to persue their own lives down south, but a part of me hopes they move back up north where housing is relatively much more affordable. 

I'm not a Tory, I am just being realistic.  If you want to get on the ladder you have to make some sacrifices.  Once you're on it you're in a better position to move up it later.

Some will consider the risks justifiable, but some will have a real problem.  Fortunately the people who bought at very high prices will mostly be young enough to change their term to 30-35 years for now so they don't lose everything.

Excellent!  May adopt that name when I next metamorphose…..

You should have a go at becoming "Chancer of the Exchequer". 

I think Kwasi has applied for the trademark already

He'll soon be the Ex Chancer of the Chequers

Because I've always been freelance, which in the early days meant being out of work for days, weeks or even months at a time, I've always been super-cautious with money. I lived in shared flats/single-room bedsits all around London, many of them very grotty by modern standards, until I'd earned enough in my early 30s to put down a deposit for a very small terraced house in Ealing that needed a lot of work done to it. Probably the wisest investment I ever made.

So I do not take kindly to Neil's preachy tone.

Let's reflect that back at you: How things were was: Expensive rent. Low wages. Cheap mortgages. The only valid choice in the U.K. market was to buy. Every financial advisor in the country was saying that. I was suspicious and waited until I was 33 and making more dosh before actually buying, but I would have been financially better off had I bought earlier. For most people buying *was* the correct choice. Unless rents crash, buying will still be the right choice now, with higher rates. 

Let me add some prices to this, just did a quick Google of where is reasonably cheap to buy within commuting distance from London. A season ticket from Peterborough to London is over 7 grand a year. Do that for five years and you've just spent 35 grand on your commute. 35 grand that could have been paid into your mortgage.

People buy houses where they can get work.

Luckily, my job is in Nottingham, but there are several industries for which there plainly aren't any jobs in the cheaper areas.

The best choice was to buy IF you could still afford it if rates got up to historic levels, say 6%.  Yes, it might involve some hardship and needing to strip things out of your life, but it should be possible without going bankrupt.

If that wasn't the case, the best choice was NOT to buy.

One of the many stupid things the Government did was removing that from the affordability criteria.  It was there for a bit.

And yes, Peterborough is a good example.  The season ticket is indeed pricey but in the end it would be a safer option than superstretching to live in London.  Northampton is another possibility.

I have looked at rent prices in our area. To rent a house equivalent to ours at the moment costs at least £1000 per month. We currently pay £405 per month on our mortgage! If you suddenly can't pay your mortgage, you certainly can't pay rent!

We, luckily, locked in for a longer term while interest rates were low and had a very large deposit due to inheritance and a government LISA. When this current period of being locked into our mortgage ends, my mum will buy us out and we will pay her our monthly installments instead. We have been incredibly fortunate to have the family we do and so be able to get on the ladder. So many of my generation and younger are absolutely screwed through no fault of their own. 

I agree it is unfair and bad for young people.  I do feel for them.  However, it doesn't affect the fact that overstretching at historically low interest rates which were always going to go back up is financial suicide.

In the end the fix is for supply to exceed demand, which means massive housebuilding.  A few more Milton Keyneses (but designed for public transport and cycling rather than the car) would be a good start.

This is one of the best concise summaries I've seen of the dire situation many in our country are now in.

They did that when I applied for my mortgage,  was given a prediction for how much to would cost all the way up to a rate of 12%. I was told that at 12% basically no-one in the country will be able to afford their mortgage at current house prices. For the record, I could still manage at 10%. It wouldn't be pretty, but I could. Most people not only can't, they would literally end up being homeless, as rents would also jump up to service those rates and councils sold off all their housing.

Just as to why people have been so utterly desperate to stop renting, I'm going to go out on a limb here and take a wild guess: You have not rented in decades, have you? There is zero security for a renter in this country. You can be out pretty much any time. Your rent could double next month and you end up on the street with nothing to show for it, most landlords I've encountered like to keep things on a rolling contract after the first six months. Hell, a couple of friends with a two month old baby got kicked out because the owner wanted to move back in. This is the level of shitfest renting in the U.K. is. 

There is "indeed pricy" and then there is 600 quid a month for commuting, not including the underground. 

6.5 grand.

I wouldn't be concerned about 10-12%, I would be astonished if it went anywhere near that high, what happened in the 80s was a political decision before BoE independence.  But 4-6% is a normal level if you look historically, and so is totally expected.

As for the train, London prices are so high that your monthly outgoing will be much less if you do commute.  You do understand that's why well over a million do?  Rejecting it out of hand because it could go in a mortgage is exactly the sort of imprudence that leads to overstretching.

"but the fact is the current conservative party is running the country into the ground"

Thats flat wrong. What has been running the country into the ground is 40+ years of conservative economic ideology.
 

Kwarteng has not taken leave of his senses, nor are the members of this government incompetent or idiotic. Take a good look at who Truss has filled the cabinet with. IEA and ERG members all, mostly multi-millionaires too. They have a plan and an ideology and they know exactly what they are doing: ransacking and asset stripping the UK in a way that even Thatcher would consider excessive. 

The question is whether they can engineer a crisis to delay elections and stay in power indefinitely. I fear the that the craven, deferential and gullible British public will suck up a lot worse before they start questioning the Keep Calm and Carry On tea towel philosophy. I may be wrong but I don't think the spirit that killed the poll tax and ejected Thatcher is resident on this island any more.

There are plenty of reasons for concern, but some thoughts to hopefully allay some of your fears.

All the interest rate predictions at the moment are just that - predictions. The flippancy and lack of rigour in the latest budget has spooked the financial markets. The markets may have overreacted. C
You have almost two years before you will be affected so hopefully you will have the option to either pay off part of the mortgage or put some cash aside. 
Mortgage lenders do not generally want to evict you, this is a highly regulated market which gives you some protection, and it should be more profitable for them if you have to extend the loan. Better for them than the eviction process. 
Finally, if interest rates are very high in two years time, the most likely reason is because inflation is still high. If you have a good job in a competitive market then your income ‘should’ have risen roughly in line with that inflation meaning some of the increased mortgage costs should have been inflated away. 
Not a nice place to be, but maybe not as bad as it looks right now. 

Personally speaking I would not be going anywhere near London or its commuter towns unless I were making well in excess of 100 grand a year, spending half my life commuting is not my cup of tea, I already work longer than 50 hour weeks (if I don't pop in on weekends) when I'm busy. If that remained the only option I'd be leaving the country.

The fact remains that where it's cheap it's rapidly becoming no longer cheap. Part of it is constant NIMBYism from the very people that already own property.

A prudent government would attack the issue of housing systemically. We haven't had one of those in decades. Can you imagine what the country would be looking like if a bunch like these cretins was in power in the aftermath of WW2?

Okay so let's imagine that I decided against buying and was still renting as I was in 2018.

My landlord was a private landlord who had the property as a retirement investment and had a mortgage on the property. Now if his mortgage doubled I'm pretty sure he isn't going to make a loss every month which means I'm still exposed to the price rises + the profit the landlord makes on the property unless I'm missing something.

A key decision to us buying was that in 2017 we were evicted from what we thought was a long term rental property with a section 21 (no fault) eviction .we had 2 months to get out the property (helpfully this was across the Xmas period and impossible to find a new place). Resulting in 12 months of instability which mentally put me in a very bad place.  

We were responsible with what we brought. We kept the LTV bellow 80% and fixed for 5 years which, I might add, was  against the advice of our mortgage advisor who was encouraging us to spend more. I knew interest rates were low and were likely to go up but we're talking about a potential 700% increase. My house also cost £190k which doesn't buy you much anywhere 

It feels like you're basically saying to me and many people that are in my situation that despite being a 30 year old with a degree, in a 2 income household with a decent job it is unreasonable to expect be able to afford  to live independently in 21st century Britain.

I hoped we were better than that as a country but I'm not so sure anymore

No, that's not what I am saying.  What I am saying is that we make choices based on what is the case, not what we think should be.  I think we need a massive programme of housebuilding including a few more New Towns to ensure supply outstrips demand in places where people want to live, and then prices would become more affordable.

Given the figures you have quoted you might find things tight for a bit but I don't think you will end up in trouble.  You may, if things get tight, want to consider extending your term - if you bought at 30 on a normal 25 year loan you could easily take it up to 35.

I don't agree with you on rates, though.  4-6% is TOTALLY expected if you do even the tiniest bit of research.  Yes, it is a big increase, but it was always going to happen - very low rates were an emergency measure.  Were it not for COVID I expect we'd have been back up there by a year or two ago.

Without descending into the knee jerk dogma of: Tories are bad labour is good (because I remember new labour and it was much like an alternative strain of centerist Tory views so I'm suspicious of the lot of them!)

Anyhow hopefully back on topic about the cost of living and the cost of housing. Did anyone read this pretty critical comment on this stupid mini budget? Seems a pretty fair comment to me

https://www.bbc.co.uk/news/business-63051702

"...The International Monetary Fund has openly criticised the UK government over its plan for tax cuts, warning that the measures are likely to fuel the cost-of-living crisis.

In an unusually outspoken statement, the IMF said the proposal would be likely to increase inequality and add to pressures pushing up prices..."

A Professor Blanchflower is scathing:

https://twitter.com/BestForBritain/status/1574787435132817409?s=20&t=rB...

You do keep saying that don't you. However I think the main rebuttal has already been said... that as mortgage repayments are about to skyrocket for many people, including landlords, that had the OP decided 'actually no, I can't afford this mortgage as rates will rise in a few years' they would now be facing the same increase in housing costs, but likely at much higher risk of homelessness due to their landlord giving them the boot.

Given the detail you’ve provided, I reckon you’ll be OK (unless you’ve got other massive outgoings).  As outlined above, you could extend the length of mortgage. Don’t blame you for getting worried though - shit times ahead for most/all of us.

I agree with Neil about interest rates, hovered around 6% for decades now, a reasonable figure to plan on. 

There’s been a degradation of values in the U.K. - driven by the Tory’s and going way back. In societal terms we don’t care as much and we have little fight in us. 

My gut instinct is that we won’t see mass evictions from landlords due to increases in rent and non payments, because who else will the landlords get to move in ?  Landlords could end up with too many empty properties and will have to suck up a large suck up any increases. There will obviously be an increase in evictions and homelessness but it may not be as bad as the worse predictions 

Have you discussed your fears with your partner. At worrying times it is best not to bottle things up.
This too shall pass.

Before we start building new towns (which I am totally against), let’s address the 228 thousand permanently empty homes and the massive number of other hardly used properties (like the one opposite where I live, used for about four weeks a year, retired GP) and second holiday homes (and I’d place a massive wager that the vast majority of these properties are owned by Tory voters). 

Plus huge swathes of development land that property businesses sit on, rather than build on, to keep prices up. More UK style trickle up one might say!

I do sympathise with anyone in your position or worse. I was in a similar position in 2008-09 when I was 24, I'd just bought my first house on a modest single income after years of saving for a deposit, and my partner had just given up work due to being heavily pregnant (she was also re-locating). All of a sudden the financial crisis kicked off, and I was faced with redundancy in a new career where I only had 6 months experience, a new born baby, and a single insecure income. I remember it vividly because it all happened at the same time (house, pregnancy, new career, financial crisis, redundancy) and in the space of just a few months I went from being happy, comfortable and with no responsibilities in life, to all of a sudden being fearful for the future. One of the few 'oh f**k' moments in my life. 

All you can really do is prepare, and you have time to do that. 

If you are able to, in your position I'd be overpaying my mortgage as much as possible between now and then (after you've saved a few month's income as emergency money), it can make a big difference surprisingly quickly and will help when your fix ends. 

Would you and your partner's jobs be secure in a recession? As interest rates normalise, there's almost certainly going to be a big recession, which means lower demand, which typically means higher unemployment. That being the case, if I thought my job would be at risk in a recession, now could be a decent time to look at some kind of income protection insurance (with redundancy/job loss cover) for a period of time. I took out some in 08-09 as soon as I heard whisperings of potential redundancies in the pipeline, and it turned out to be a good decision as redundancies were announced 9 months later.

Or needing to downsize/move to a less nice area, which is much easier when renting than owning.

I'm not sure they are all that relevant.  What use is a holiday home in rural Wales to someone with a job in Reading?  Your profile suggests you're in Wigan, which isn't desirable (despite being a very cheap place to live indeed very close to super-expensive Manchester) - perhaps some regeneration might help there?

The Russian (largely) owned flats in London yes, but even if you halved prices in London they'd still be unaffordable.  Buying property in London is for investors, rich people and mugs.

I'm not sure much *fight* is actually needed.  We just need not to vote Tory!

This is clearly going to weigh on your mind, so first you should do some more careful calculations. A mortgage of £150k at 2% is ~£600/month, at 6% this is ~£900, at 8% ~£1100.

You may have less of a difference to now (granted energy prices will have hit your monthly income) than you first thought. If you start saving £150 now for 18 months, working on the 6% value you would position yourself to have almost 3 years without a problem. Rates will fall back as BofE gets inflation under control, so you may find that deals in 2024 are cheaper than the variable rate - yes you'd lock in for 5 years, but you'd get a short term advantage.

The best way to not worry about your finances is to have a clear plan.

If you can scrape together a deposit (no mean feat for young people given the next point) then a mortgage can be considerably cheaper than a rent (see GirlyMonkey that you replied to) and you have something to show for it at the end. I always refused to rent for exactly this reason once I left Uni.

The point you seem to be missing/ignoring is that if interest rates rise, then anyone renting a house on a buy-to-let mortgage is also going to be putting rents up. These houses are also taking stock out of the market and so inflating the price of everything else, too! My landlord at Uni owned something like 30 houses!

I was lucky, I bought when rates were around 5% and at 3x my salary - I'd never be able to get on the property ladder where I currently live on my own.

At last! We can finally see the mechanism of the tory levelling up programme... make all the generation x and z professionals' accommodation costs so expensive they have to move to run down towns thoughout the land. Genius!

None, but people do work in rural areas. I've know a couple of ex students who have taken out 40 year mortgages, so they can live near where they now teach, Keswick. OK, they could have commuted from West Cumbria and investment properties/second homes are only part of the problem, but for many they have contributed significantly. I also wonder, if forced to sell their second homes, how many would choose to sell their "city" rather than "country" residence? 

We bought in the early 00s when rates  were around 6% and I still remember our financial advisor explaining that rates would probably go up again and we needed to budget in for significant rate increases.

What I'm saying is that those who have bought stretched to the limit with historically low rates have been badly advised or naive in not expecting to see rates rise. Obviously how much they might rise is a impossible to predict, but looking at historical records I'd say to 3% is likely and 6% wouldn't be a surprise.

However with regards the buy/rent argument, our first mortgage was pretty much on par with rent. 20 years on, no appreciable changes in mortgage repayments (thankyou steady mortgage rates) but rents have more than doubled. Maybe we were just lucky with our timings, but buying has saved us a fortune.

I'm terrified and I don't even have a mortgage. I'm not in this position because I work harder and I'm more sensible than anyone else, I'm there because of luck. I'm worried for all the people who weren't as lucky as me, who had to borrow 5+ times their income just to have a basic secure place to live, and are now going to get screwed. Yes, interest rate rises were inevitable, but what else could they do? Keep on handing over a fortune to a private landlord who can turf them out when ever they feel like it? This situation was deliberately engineered by Thatcher when she sold off council houses. By getting rid of the only secure rental option she forced people into buying. It was always going to go wrong, but the current scum in charge, who make Thatcher look like a saint, have precipitated the crisis right at the same time as everything else is going to shit.

So with all this going on, the really big crisis of climate change is going to get shifted to the back burner while we deal with immediate issues, when it's already too late. We're doomed.

When (i.e. in which elections) have you voted Tory? My own assessment of the Conservative Party matches that of redjerry above.

Yes, they could have commuted from West Cumbria, or Carlisle, or Penrith, all of which are way cheaper.  Keswick is expensive, and not only because of holiday homes and hotels, but also because it's a nice place with good facilities and limited housing stock, and nobody would countenance doing what would be needed to fix that problem - doubling it in size with new builds.

While it is a country of high prices, it's worth looking at Switzerland, which has houses all over hillsides etc in a way we wouldn't accept here.  Imagine for instance a housing estate half way up Blencathra with a little funicular railway up to it?  We'd never countenance it but the Swiss would.  (I'm not actually suggesting it - if I was going to build a couple more New Towns as I do support they'd be in the South East on generic farmland - but it is a valid point).

They of course made their choices, but if those choices were based on 1% rates (or less, wasn't 0.25% where it bottomed out?) then they're going to get burnt, and predictably so.

I don't see a problem with home-workers buying houses in rural areas to actually live there.  Their high wages will bring money into the local economy and genuinely promote levelling-up - they will use local pubs, local shops etc, unlike tourists who arrive with a car already full from Tesco down South.  There might be a few towns where it causes overpricing, but there are so many cheap and nice places in Cumbria that I doubt the effect would be massive.

What else could they do?  Something that wasn't *predictably* *definitely going to go wrong* at some point.

It's grossly unfair, I agree.  Prices could do with roughly halving pretty much throughout the UK, and probably dropping by two thirds in London, then things might be affordable again.  But we are where we are, and decisions have to be made based on that.

It would be interesting to see where a party proposing the sort of housebuilding needed to drop prices that much would get to.  People are already opposing the "freeport towns" thing which would allow that sort of development, because most people are happy for houses to be built anywhere other than their back yard.  (Living for 21 years in a growing New Town does give rather a different perspective on this).

In essence you're only going to get there if you abolish Green Belt.  That's not a vote winner.

Yes, this is what I'm saying.

I totally agree it is really unfair on young people today.  Pretty much everything about the last 20 years of Government policy has screwed over young people.  I'd like to see that remedied, and I'd be happy with a reduction in my house value as the value is only relevant if you're going to sell up entirely or move somewhere cheaper - if you want to staircase up, lower values actually benefit you.  I'd also happily pay more tax to fund university fees etc - I don't like waste, but I am happy for my money to go to allowing others to have what I had.

However we are where we are, and choices have to be made based on a realistic assessment, and 6% interest rates long-term are realistic - it was just a question of when.

The difference between buying and renting is that if I buy a house for £200K then it's still £200K I bought it for in 25 years' time when the mortgage is coming to an end.  £200K now is probably worth about £100K in real terms in 25 years' time.  Thus, even if rates stayed the same and my monthly payment was say £750 (random figure) now, £750 now is far more than £750 will be worth in 25 years' time.  Whereas rents increase somewhere along the lines of inflation, so if renting you'd be paying *at least* the same in real terms.

This does mean that stretching yourself a bit at the start can be sensible, and when I bought that did mean going from a £450pcm rent to a £750pcm mortgage, which was somewhat of a whack and required a fair bit of reining in of spending (rents were very cheap in Milton Keynes at that point due to oversupply, and I bought a bigger property than I was renting, albeit in a less nice area).  However, £750pcm in 2010 isn't worth the same as £750pcm now, and while I've enjoyed payments far lower than that due to low rates going back there or a bit over isn't going to kill me.  And there are ways out if it did go silly high, such as giving up my car and switching to cycling/public transport - inconvenient but would free up a load of money.

I think that's what people need to look at when stretching - are there things you could do if rates went to say 8% (I can't see them going much beyond that, but 6% was totally predictable) to avoid losing your home, and even if no holidays for 5 years, no car and Tesco Value food isn't great, are you happy with it?  If so, by all means make that stretch.  But if 6% will result in bankruptcy, even if renting is a pain, buying does not make sense, or if possible people should look for cheaper locations, cheaper homes or longer mortgages etc to make it possible.

Regarding holiday homes: because there are loads of people living and working in rural places who will also be struggling and facing housing issues and homelessness. Including people who use this forum. 

Wigan is a massive Borough - about 330,000 residents. Housing cheaper than many areas, lots of schools better than average, good road connections, public transport to Manchester could be better. Over 1000 houses being built where I live, mainly at the higher end of the market. The word is out !  

Wigan is certainly an obvious place to go if you work in Manchester and need much cheaper housing than available there.  Chorley is another.  Neither are amazing places, but they are incredibly cheap and mostly OK.  (Certainly better than other options a similar distance out e.g. the old Lancashire mill towns like Blackburn which can be quite rough, and Oldham is just an abject dump with a fancy tramway and a serious race relations issue).

The trains to Manchester could be better, yes, but they're usable.

Yes, you might covet a place in Didsbury or Chorlton, but if you can't afford one you can't afford one.

I don't think it was *predictably* *definitely going to go as wrong as this. A massive rate increase at the same time as energy prices rocket, Covid recovery and Brexshit. They took a bit of a punt, because they had to. 

When I took out my mortgage I took a 5 year fix at 5%, certain that rates were due to go sky high. I was kicking myself when they promptly dropped below 1%. No one had any idea what was coming then, and they didn't this time either. The low interest rates could have easily continued for another 5 or 10 years, giving all the new home buyers time to reduce their borrowing enough to cope with the eventual rise.

Rates were definitely going to go back up to historic averages of about 4-6% at some point.  The question was when.  I'd agree this has happened more quickly than expected, a creep back up with maybe 0.5% increases per year is more what I'd have expected.  But either way, it was going to happen.

Perhaps not with the other stuff I'll give you.

Of course if you've bought since 2016 you knew Brexit was coming and wasn't likely to go well, and if you've bought since about May 2020 when it was clear COVID wasn't going to be a quick thing you've known about that too.  Energy prices I'll give you.

Nobody *has* to buy a house.  Literally nobody.  It is possible to rent one.

Yes, renting has big disadvantages, but suggesting you *have to* buy is just disingenuous.  Many people never will.

It's fine to "take a punt" but you need to accept that that is what you are doing and that you might lose on that bet.

Nobody *has* to buy a house. That is true. But it is the only non-shit option. It's the only option if you want security against being forced to move. It's the only option if you want to have somewhere to live when you can no longer work.

I'm sure a lot of these people didn't want to take the punt, they would have been happy with secure, reasonably priced rented accommodation. But this is just not available.

TBH, I’m expecting levelling up to nudge Wigan past Chelsea in the ‘posh’ category. I’m sure the tories are keen to throw money into Lisa Nandy’s ward !  

I bought a house just before black Wednesday. I was on holiday ( pre widespread internet) so missed the 15% interest rate hike, otherwise I might never have bothered to come home again

And end your life in abject poverty.

I will unfortunately have to ask you again: When was the last time you were on the rental market in the U.K.? Things are not as they were even when I moved in the U.K. 18 years ago.

the interest on your savings will cover less than half of annual inflation

I bought in December 2010.  Before that my rental experience was fine - I stayed in one place on a rolling contract for 8 years with only inflationary rent increases.  Only time the landlord tried it on was with the deposit at the end, I called him out on it and he paid in full.

I'm conscious that experiences particularly in London can be much worse, but living in London may be fun, but in housing terms is and always was a mug's game, whether buying or renting.  The rental market in Milton Keynes was and so far as I can see still is a much more mature setup, possibly because the very transient population makes it a much more mainstream choice rather than a distress purchase.

(sorry fixed, I got the dates a year out)

Will be worse if you overstretch and lose not only your house but also your deposit.  Buying has advantages in terms of later life, but buying when a 6% interest rate will bankrupt you is stupidity itself.

Just some info coz I know loads of random stuff: there are 12,500 (maybe 14,000) people of Wigan Councils waiting list for a council house. This current problem has been building (lack of ) up for years. 

Yes, but that is better than none of it!

And that to be fair is why we need higher rates.  Savings needs to give a decent return in order for people to make prudent decisions rather than spending up and getting deep in trouble with credit.

Low rates were an emergency measure to prevent economic collapse.  They would never last.

Not so fast, the BoE has reacted. Not by raising interest rates but by more QE. 
Not sure how that’s going to help the £, anyone?

On the bright side, we're possibly going to get vaporised soon so we won't have to struggle any more

It won’t.

Short the pound, but GILTS.

Slightly nerdy mathematical point (and it makes little difference  with smallish percentages) but it is not quite as straightforward as a simple subtraction. An example:

Suppose I have £100 and chalk balls cost £5 each.
I have enough money to buy 20 chalk balls.

Now suppose inflation is 100% and the interest rate is 50% pa.
At the end of the year I have £150 and chalk balls cost £10 each.
I now have enough money to buy only 15 chalk balls.

So my purchasing power has reduced by 25% from 20 chalk balls to 15 chalk balls.
So 50% interest minus 100% inflation = -50% net is the wrong reasoning.

Full general algebraic treatment available on request.

QE reduces the Pound's value.

Yeah just seen this now. The way I understand it, is it's basically the government buying up gilts for 2 weeks hoping that this is all going to blow over. So not 'technically' QE, but pretty it pretty much is in reality.

The way I see it, it seems to be a bit of a fessing up moment, it signals to the rest of the world (if we hadn't already done it the last few days) that yep, the UK really is in a massive crisis now, and the government and BoE are out of ammo. Seems like a desperate move to me, designed to just try and slow down the crisis and buy themselves some time. Whether it works or not, I doubt it, £ is nose diving again. Problem is, the government and the BoE have lost all credibility internationally, and that's very hard to get back.

Can see an IMF bailout at this rate (no idea if the IMF has the funds to bail out a country as large as the UK). I don't see a way out for the UK unless the Fed starts to pivot with interest rates letting us off the hook.

Not really. House price inflation has been outstripping RPI for many years. For example, the median house price here in '99 was 142k. With inflation that would be £280k now. It's actually £599k.

The problem with renting in the UK is that rents are so high compared to house prices that a) it takes forever to save a deposit and thus people waste so much on rent, b) prices have risen faster than people can save and thus they're trapped in renting for longer than they want to be, c) developers build what makes them the most profit, not what people want. Certainly here it's impossible to build your own house unless you're very wealthy because only developers can afford the plot prices as they're going to knock down an old house and replace it with apartments/semis.

Rather, it's the BoE buying gilts. (Whereas last week, they were intending to sell £80 billion of them.)

I don't see that the BoE has lost credibility. But the government certainly has.

You're missing the point.  The actual market value of a house is only of relevance if you're going to cash in, do equity release or downsize.  Otherwise it's of no relevance to anything, and a disadvantage if you want to climb the ladder rather than descend it, give or take negative equity. 

What I'm referring to is the monthly payment.  If my monthly payment was £750 when I first bought (it roughly was) and it is looking like it'll be about £750 in my last month of my mortgage in 2035 with rates going back up, then that £750 is worth a heck of a lot less in 2035 than it was in 2010.  Which means that in real terms as things have gone along my mortgage has got cheaper, assuming a constant interest rate.

This allows for things like "slowing down" in work terms as you reach retirement.

It must be difficult for people who've only known low interest rates to suddenly be faced with rates increasing. I've got the benefit of having bought my first house in 1996, when I thought I got a good deal by taking out a 5 year fixed rate mortgage with Northern Rock at 7% ! I've moved house a handful of times since then over the years, but despite the subsequent generally low interest rates, I always have in my head they're temporary and we'll be back to 7% at some point, so have never stretched myself on borrowing. But as I said, that's because I spent years paying 7% mortgage interest; to someone who has never known that as a norm, it must be a daunting prospect....

Not convinced building more new second homes/investment properties will help much. 

No need to I'm just imagining the current houses in Keswick having people living in them. 

Even nowI think they will be OK in the long run, mainly because their jobs are pretty secure. I seem to remember about 80k repossessions per year in the late '80's early 90's, does anyone know how many of these were for households that didn't suffer some unemployment? If it comes to the point when households where everyone is working fulltime are being repossessed, like the fuel crisis, there will need to be some sort of bail/hand out. 

For many people saving is a luxury they cannot afford. We do manage to save a bit, but not nearly as much as I'd like, and we're both middle class folk on decent incomes - reasonable income, fairly low mortgage, but absolutely astronomical childcare costs. God only knows how those with less could possibly hope to save anything.

It's not that it's a "daunting prospect", it's that these low rates inflated property prices which means that an unmanaged return to real rates at the same time as the rest of the cost of living crisis is a scandal well beyond anything we've seen in recent years.

Don't get me wrong, as I explained above I can afford the increase, in fact I will pre-empt it by overpaying the mortgage for the next two years, so I'm not "whining" because I've overstretched myself and will get screwed over.

My point here is not that interest rates have to remain ridiculously now, that is in fact a huge part of the problem.

It's that this has to be managed by the government carefully. They watched on as property prices went to hell and back, increasing people's rents and pricing people out of the rental market. They actively refused to consider any measures to make the rental market healthier. My theory on that is that the reason for this was two-fold, make more profit out of rent and force people to buy houses in order to continue the unsustainable trend of rising property prices allowing them to be used as the best investment in the country.

What will happen if they increase the rates in an unmanaged way is far worse than just some people not being able to pay their mortgages for the houses they've bought, it will result in landlords not being able to service their mortgages and increasing rent to compensate, pricing even more people out of the rental market.

Ah I see what you mean - the real-world value of the payments gets inflated away.

"Rather, it's the BoE buying gilts. (Whereas last week, they were intending to sell £80 billion of them.)"

Yep, that's correct and that's what I meant sorry.

"I don't see that the BoE has lost credibility. But the government certainly has."

They have totally lost all credibility in my opinion, and for lots of factual reasons, which I won't go into again on this thread.

Yeah, you are right of course...

You have 100 apples.
I give you 6 more apples.
Kwasi eats 10 of your apples.
You now have 100 + 6 - 10 = 96 oranges i.e. net lose of 4 bananas.

Although I'm not in any way financially qualified, with a very rough calculation (loads of assumptions) your predictions for future payments seem a bit off.

Yes, that's exactly it, it was a bit of a side-thread on the benefits of buying.  Rent increases with inflation (or more), mortgages in effect decrease with it.

I'm interested to hear your reasons. If you've already outlined them in other posts, give me a pointer.

And you have to live in Northampton.

There are positives and negatives to everything.

Periods of particularly high interest are usually short lived. I'm not sure what interest you assumed when you worked out your potential future payments but if more than 6% this would be fairly temporary so provide you can make the payments, you'll come through the other side in a great position.

Inflation is great at eroding debt. Now you've got lots of debt, it's shrinking without you even paying any of it off.

You might start worrying about negative equity etc, but hold on to it and the price will continue to increase.

Provided you make the payments you will win in the long run.

Cracking post. About the worst possible thing you can do is starting overpaying with inflation running at 10%. 

Does that work if wages are stagnating?

1. Inflation like this is usually accompanied by rising wages, that won’t happen.

2. Housing costs as a %age of income are higher than last time interest rates were this high, people have only been able to afford the prices they paid for their houses because borrowing costs were so low

3. No one is predicting a rise in house prices in the short or medium term.

A point worth mentioning is that the UK hasn't seen a proper & truthful housing crash yet...2008 was absolutely piddling, not very deep (15%?) and short lived.
Huge drops in real estate prices can happen...houses were losing 60% of their value in some of the worst hit US regions.
 

Personally I'd rather we provided benefits so that children under school age were able to be looked after by one of their own parents, rather than institutional childcare being used so people can rush back to careers.  It's still possible in some parts of the country if you're willing to live a frugal lifestyle (my sister has done it for her three for example) but it really should be the norm.

Obviously it can be either parent as preferred, or indeed a mix of both through part-time and home-working.

I am not inclined to fund institutional childcare, as I'm very strongly of the view that the best people to bring up very young pre-school-age children are their own parents.  Yes, it's good to start "socialising" them by taking them to places they can meet other kids, but not all day, they are just too young.

I find the way high house prices etc have forced people into this becoming the norm quite tragic and sad, and I am of the view that if parents wish to do that anyway even with additional funding provided to allow them to do it themselves then they should pay the full commercial cost of that institutional childcare themselves.

I blame Norman Tebbit. Once everyone was forced onto their bikes to look for work, traditional support networks were broken up. When you close a steelworks and disperse families around the country suddenly grandparents aren't on tap to pick up child minding.

I could be wrong but I'm not sure a parent at home to look after the kids was historically ever much of a thing for the working classes.

Not sure either, but the proportion of women working has risen significantly, about a third of working age women were employed in the 1950's, that had risen to about a half in the 1970's and is now over 70%. Perhaps the change is in the middle classes? 

I have always said that my childhood would have been happier if my mum had gone out to work and we had childminders. She did what was expected, she didn't have a career and stayed home with us, but was permanently grumpy and unfulfilled. She wanted to study physics at school but was told it wasn't a girls' subject. She was told she should do domestic science instead as it would serve her better in life. I think she would have been an ideal candidate to be a sergeant major in the army!! Lol!

I agree that the option should be there to stay at home with the kids if it suits, but also going to work and using childcare can be a better option for some families too. People are all different.

Investing in childcare is a very smart investment. Many seem to worry themselves believing that the world is overpopulated, when in truth, in the west at least we're heading toward a population crisis due to a lack of children being born.

These children are going to pay your pension one day and investing in affordable childcare is one way to encourage more families to have more children.

It hasn't hit home yet and isn't covered much in the media, but one day it will be.

Interesting to hear that.  Obviously it doesn't need to be the mother (unless a single parent I guess), it could be the father (I do know a stay-at-home father), or there could be two mothers or fathers anyway, or it could be shared by way of part time/homeworking.

However I guess I'm just a bit traditional in that I believe kids should be brought up by their own parents and that if those parents aren't willing to do that because their career is more important then perhaps having kids isn't for them at that particular time of their life.  It is just something I very, very strongly believe should not be outsourced in those formative years, other than a bit of a hand from friends and family as necessary.

Thus I think the funding system should be skewed towards that.  You are of course entitled to disagree!

(Extending the school day to fit with full time work for older kids is a bit different, and to be honest is one I think that should be provided by the state system in some form, e.g. breakfast clubs and after-school clubs)

My understand was that the 1950's were the peak "housewife" years and historically more working class women worked. I'd guess the change since the 50s just part of the trend back to Victorian values as championed by business secretary JRM.

It's one way, but it's one I'm incredibly, incredibly strongly against.  Not because I don't think kids should be born, but because I think it's incredibly important who is with them in their early formative years, and that they're not just shoved off into childcare 5 times a week so parents can just run straight back to their careers.

I would however be willing to take a significant taxation hit to increase child benefits to the level where every family could afford to have only one FTE (the family's decision which one or if it's shared) for the first 4-5 years of their kid's life and still have a good if basic lifestyle (ideally) *as long as* they did actually use the money in that way.  It's one benefit that UBI offers, for what it's worth.

I totally respect that in most of the country it is financially impossible to do this at the moment, of course.

(And no, they're not going to pay my pension; mine is an investment one and I'd be surprised if the state pension existed by then)

Mrs J would agree with you, she is adamant that I've always been middle class as my mum didn't work I the 70's, but as she is working class, her mum had to work full time so they could make ends meet, and as you say she was often looked after by gran or aunties. 

I suspect many parents are rushing back to their jobs (not careers) in order to continue paying their rent/mortgage. Having had to move out of large population centres, where their families are, because of high housing/rent prices there, the option of being looked after by grandparents some days is no longer there, unless they commute with the kid into the city centre for this each day. Me & my sister were both looked after at different times (1970s and 1980s) by our grandparents, who lived within sight of our house, because our parents (both teachers) couldn't afford for one of them to be off work once maternity pay stopped/tapered.

Yes, I agree most are doing it for that reason, which is why I think funding should be provided so they don't need to.

Ditto.

Absolutely with you there.  Childminders simply don't generally have the desire to bring the kids up properly in their control. Most are to be found at the local soft play area drinking coffee, chatting to each other and ignoring the kids they're supposed to be looking after.  I have friends who literally only see their child between 5pm and 8pm bedtime, at weekends, and for breakfast.  Every weekend has to be packed with 'family fun stuff' because they are so precious to them.   It's not even about returning to a career for many mums these days, it's purely about being able to afford the mortgage because the family cannot survive on a single income.

Societally, it's a bonkers idea because kids have no sense of 'family'.

May I ask, do you have children? And are you a stay at home dad? If so you have a very unique character. Well done.

If not, then what I would say is I've got two young kids, and it's hard, very hard. And it's hard even though we use full time childcare. Weekends are pretty straightforward because you bounce off your partner, but the idea of being home for 5 years looking after kids would be too much for me (and I think for all the parents of similar age that we know).

I don't believe humans have evolved to stay at home alone with kids. I think that is a recipe for mental breakdowns across the breath of Britain. I think kids would have been raised by a village and in this world a nursery is probably the closest thing you will find to a village where there are several adults looking after a group of kids, they can run around safely. I think it's brilliant for their development and they learn it's different rules in different locations and how to interact with different carer which is basic life skills that will be useful later in life.

I don't see why it would matter if they are related to the carers or not. As long as the adults care.

If you happen to live near your parents, uncles and nephews etc then that's great but it's not the case for many so I don't see what benefit there is having a child stay at home with one parent.  

So can we also blame him for all those cyclists clogging up the roads cycling two abreast and impeding our progress to the crags?

Hi Rob,

Without going into any detail, this whole crisis is being driven by US monetary policy, and the crisis has been building since March. Basically, the Fed started down a path of raising (normalising) interest rates in March, to tackle their inflation, and is indicating that they have no intention of stopping until well into next year. For lots of fundamental reasons, where the Fed goes with interest rates, the BoE quite simply HAS to follow to defend the pound, the markets demand it and if they don't get it, the pound falls in value. The bigger the gap, or further the BoE lags behind the Fed's curve in raising rates, the more the £ falls in relation to the $. The mini-budget itself, has just accelerated the crisis which was coming anyway. It's the straw that has broken the camel's back, the trigger but not the cause.

In terms of context, I posted this on another thread on Saturday, and it sums up how much value GBPUSD has lost since March, and how much of that loss of value was due to the mini budget:

"GBPUSD fell 100pips on Thursday as a result of the lower than expected interest rate rise which widened the gap with the fed. GBPUSD then fell a further 400pips (which is a really big movement) as a direct result of the mini budget. So yes, a mix a both, and depends what timeframe you're looking at. Purely looking at a timeframe of the last two days, it's 80% the fault of the mini budget, 20% the fault of the less than expected interest rate rise.

Of course, big picture-wise, you are absolutely correct. Over a longer time frame (I'll go with March 2022 since that's roughly when the Fed started raising rates from memory), the picture is very different. Since March 2022, GBPUSD has fallen 2,500 pips, which is an absolutely monumental fall in value, actually greater than the fall in value due to Brexit (that was around 2,300pips). Out of that, the mini budget was responsible for 400 pips, so still very significant for just one event (and shows just how bad the mini budget was), but the other 2,100 pips are mostly due to the BoE lagging behind with interest rates combined with our astronomical debt levels."

ahem.

having bought at the end of 1989 I can say that we have had a price crash!  Prices had not even recovered by 2000 when I had to sell the property.  After years of paying interest when paying only 6% would have seen a wonderful dream!

Subsequent problems with house prices have certainly been piddling in comparison.

Where does it say in the BofE 's remit that it has to defend the £.

I am intrigued.

Are you a personal friend of Kwasi Kwarteng by any chance? It seems his friends do rather well when financial catastrophes happen. Just luck I suppose..

Probably in the part of their name that says "England ".

I am intrigued

wasn't that of a similar scale? 15-20% haircut from the crest of a fairly steep spike?

In 1988 the craziest of crazy housing markets just came to a full stop. People were pushing envelopes stuffed with cash through estate agents' letter boxes to try to secure a property before it went in the newspaper. 

In the autumn it all just stopped. I went to the auction of an ex council house in my village. It was held in the pub and the place was packed. The auctioneer had a big grin on his face. After about a quarter of an hour of no bids he said "Come now you haven't all just come to watch." Five minutes later the blood had drained from his face: " My god, you have all come just to watch!"

After that,  estate agents shut everywhere and my brother and thousands of other builders went bust. The blight lasted for years. Nobody wanted to sell because they were in negative equity and buyers were too broke to buy.

Last week a stonking big Victorian stone house in the Pennines sold for £200K at auction. There was only one bid.

It's happening again...

Yes, he gave me a quick call a couple of days before the budgetary statement.

But seriously, presumably anyone with savings rather than debt is going to benefit at least in the short term from a rise in interest rates.

Depends on inflation levels that could erode ' benefits ' of the recent rate rises.

Yes, if the policies triggering the interest rise also cause a sufficient further rise in inflation.

Nobody is benefitting with average inflation running at 10% and wages are stagnant. This CPI rate also doesn’t seem to account for increases in rent or emphasise basic products that are hard to go without. We have very modest savings - having a 6% interest rate on that means f all when my weekly food shop has gone up by about 30%. A good example of what I mean by the CPI is that it takes into account stuff like Xboxes (I can do without), whereas savers bread has gone up by 70% (need bread). No getting away from the fact most people are suffering. Good for you if you’re on a cushty pension though fella, enjoy. 

Of course not. All I am saying is that if you are lucky enough to have savings rather than debt, things will be better rather than even worse if interest rates go up.

I guess so, but the value of those savings is eroding faster than it’s accruing. We’re all on this sinking ship one way or another. 

Indeed. Going down fast under our new captain.

The previous 12 years of tory misrule are beginning to look like plain sailing.

You said it bro. To (kind of) link back to the OP’s point, I think for the first time I’m worried about what the future is going to look like for the UK - could be pretty bleak out there over the next couple of years. 

I've got savings. It'll be nice for the rate of their devaluation to be slowed down. Really grateful the Bank of England saved my pensions as well. 

Not if they need to spend money, as by about any imaginable measure, price inflation is outstripping savings interest rates.  So, by default, those who made no effort moving cash around for decent interest because there was almost no savings interest are now going to be badly shafted, unless they now spend more time chasing savings rates, at which point they’re only going to be gently shafted and have less time for other stuff 

I don't, no, but I was brought up by a stay at home parent and my sister's kids were too, so I do feel I can comment.

I think that is an utterly bizarre statement given that children brought up by mothers* at home until they went to school was the norm until the 1980s and still very common well into the 1990s.  We'd have had a country in mental breakdowns if that was even close to true.

* I don't think it has to be the mother, that was just the tradition back then.

Nope.  By their parent(s).  Those parents would chat to other local parents when they met them at the park and friendships (and mutual assistance) would form, but it was never like you might get in a small village in the African rainforest, say, where people might live in something more like a commune.

Too early in my view.  They learn that when they reach school age.

The impression I have of institutional childcare is of a conveyor belt - not of a loving environment for children to experience their formative years.

Certainly family help does, er, help, but my sister brought up her first two well away from me or my parents and so most help was from friends she met at e.g. activities for preschool kids.

Of course this is all a bit academic when lots of people are going to have trouble affording a home with both parents in work, though I have heard of cases where childcare costs were higher than one income (common if the second income is just minimum wage) in which case my immediate reaction is "why not try the traditional option?"

It’s on the cards but not quite there yet I think - housing market has slowed considerably but still the house builders are going hammer and tongs, not sure how many more new developments will be starting in the next year though

Though one issue is what they're building.  What's needed is a modern-day equivalent of the Victorian two up two down terrace (albeit with a couple of parking spaces, so they may want to build wide rather than deep so they can go at the front).  Families don't really want flats (at least not pokey UK style ones, I did live in a great 3-bed family flat in Switzerland when I worked over there which was bigger than my house and had a great balcony and views to die for), but relatively few smallish two-bed houses are being built as they're not very profitable.  You get more in the South East where prices are higher but hardly any elsewhere in the country.

Silly use of the word "evolved". We evolved with kids being carried around by their hunter gatherer mothers on the African savannah as they went about their gathering and other chores

So where does it say anything about defending the £.If that was their brief or remit then the BofE would have been a basket case a long time ago.

I was extremely lucky to catch the tail end of that, bought my first house in 1994 off someone who had bought just their council house. As you say some estate agents had barely sold a house in the previous five or so years. 

Incredible sh*t for anyone who has bought a house recently, but I was doing my A levels in '88, perhaps those doing their A levels now will benefit from a similar situation, although there is a dearth of council houses to sell off at the moment. 

As a buy to let mortgage is typically interest only, mortgage costs have already more than doubled since late 2021 but rents have not increased in that manner. They can only charge what the market can bear and rents tend to track incomes. In addition I think only 50% of rentals are actually mortgaged. The landlord that tries doubling their rent due to interest rate rises during a recession is the one that's in trouble - they can get repossessed a lot quicker than an owner-occupier.