merseymouth wrote: As Al says the cheap mortgage rates are on the backs of the older investor, sod all return!
Understanding exactly why that is, and who really benefits from it, is probably a good start to understanding many of the problems society faces today, both old and young.
Savings rates are abysmal because of the creation of massive amounts of money by quantative easing. Supposedly that was done in the best interests of society as a whole. The whole financial system was in danger of collapsing, with banks unwilling to lend to each other because they feared that other banks were in danger of going under due to the extent of their hidden bad debts. In reality, they pretty much all had enough bad debt on their books that their own actions in refusing to lend to each would have resulted in the very thing they feared: an economic crash and massive fall in the price of houses (on which a lot of that debt was secured). That would have crystalised those bad debts on the banks' books and triggered their failure.
So all that financial chicanery kept house prices high, but who really benefitted from that? A lot of homeowners might feel relieved that the value of their house did not fall by 50% or more, but for the most part it would not have made any difference to them if it had. They would still have carried on living in the home, and if they had to sell to move somewhere else, the value of the house they wanted to buy would similarly have fallen. Those who had borrowed excessively to have bought a house would have been in negative equity, but that has happened in previous recessions and eventually that negative equity disappeared as people slowly paid off their mortagages and house prices gradually rose again, or in extreme cases they went bankrupt and were able to start again with a clean slate after a few years. Those who were relying on the value of their house to fund care in old age would have lost out, but we probably need to stop seeing housing as an 'investment vehicle' to fund end of life care.
The real beneficiaries were the banks and wealthy investors. The shortgage of housing in the UK and the superficial financial advantages of people buying their home as an investment (rather than a place to live), e.g. no capital gains tax, resulted in banks and other wealthy institutions pumping vast amounts of money into the mortgage market, in order to take advantage of people's desire to own their own home. Unsurprisingly, all that money simply served to increase house prices because there was so much extra money available to borrow in order to buy a house or buy houses to let.
With no quantative easing those banks and wealthy investors (many of whom probably borrowed to fund their investments) would have been wiped out. Ordinary workers and savers would probably have been the winners: the value of what their wages would purchase would have increased, and the interest on their savings would be a lot higher.