The horizon household currently runs a fairly high mortgage. Ours isn't fixed and is therefore vulnerable to hikes in interest rates. Fingers crossed though, there won't be any for a good while yet and Bank rate looks likely to stay at .5% until the end of 2016. I would say much longer than that in fact.
Interest rate rises are only likely if growth starts to take off, causes shortages and starts to put upward pressure on prices - inflation. But while growth is stagnant, that is unlikely.
Thanks to austerity, the UK economy will probably remain in the doldrums until 2019 when there will be a short loosening just before the election in 2020. By that time, our mortgage will be nearly paid off.
Lower taxes for the better off will result in greater household saving rates while cuts in benefits will result in lower spending by households. Taken together, along with reducing the deficit generally, growth will hardly show itself, the economy will stagnate, prices will remain flat and interest rates will stay at .5%.
Thanks George!
Thank goodness for austerity
Thank goodness for austerity
When the pestilence strikes from the East, go far and breathe the cold air deeply. Ignore the sage, stay not indoors. Ho Ri Zon 12th Century Chinese philosopher
Re: Thank goodness for austerity
horizon wrote:The horizon household currently runs a fairly high mortgage. Ours isn't fixed and is therefore vulnerable to hikes in interest rates. Fingers crossed though, there won't be any for a good while yet and Bank rate looks likely to stay at .5% until the end of 2016. I would say much longer than that in fact.
Robbing pensioners to pay your mortgage?
Re: Thank goodness for austerity
Yer havin a larf! You've stolen my humour Horizon. Oftentimes I'm misunderstood 
Re: Thank goodness for austerity
Low interest rates? Great for borrowers, but bad for those who saved diligently all their lives and now find that their fast diminishing and limited future years are blighted by a huge drop in the income that they expected to enjoy in their twilight years. As I get older I often notice this myopic and sometimes selfish view in younger folk. Fortunately many very large companies pay attractive dividends which are tax free for 20% taxpayers. Such investments are not without risk to your savings if you held some shares in Banks and supermarkets. Inflation is also the enemy. Around here there are labour shortages that are affecting manufacturing and construction. The vacancies are being filled by Poles, Romanians and other new immigrants who are prepared to work for low wages, but if you think about it our whole modern society depends on goods produced by workers with very low wages - in Asia. Hopefully our booming local economy will gradually ripple out into the rest of the UK.
Al
Al
Reuse, recycle, thus do your bit to save the planet.... Get stuff at auctions, Dump, Charity Shops, Facebook Marketplace, Ebay, Car Boots. Choose an Old House, and a Banger ..... And cycle as often as you can......
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thirdcrank
- Posts: 36781
- Joined: 9 Jan 2007, 2:44pm
Re: Thank goodness for austerity
It's easy to over-simplify the intergenerational thing. As a lifelong saver, I've £££ on deposit which attracts zilch interest. As a pensioner - a pretty general term which covers people in a lot of different circumstances - I enjoy a dependable income. I contributed all my working life to both National Insurance and a "gold-plated" public sector pension scheme, but those contributions were, in reality, no more than another form of tax to fund current spending, including the pensions of an earlier generation of workers. It's today's workers who are now funding my pensions and those of my contemporaries. They are keeping promises made by politicians before they were born.
AFAIK, for all the talk of austerity and reducing the deficit, the UK National Debt is ballooning and has continued to do so during the last five years. (The deficit is only the extent to which current public spending exceeds current public income.) A substantial part of that debt has been somehow bought up by the Bank of England with virtual £££ created by so-called quantitative easing. AFAIK, neither public pension commitments (ie old age pensions and public sector occupational pensions) nor PFI contracts are included in the National Debt as these are not debts, just promises to pay money in the future. Can anybody spot the difference?
Nobody knows what will happen next, least of all politicians with an ultra short-term outlook.
AFAIK, for all the talk of austerity and reducing the deficit, the UK National Debt is ballooning and has continued to do so during the last five years. (The deficit is only the extent to which current public spending exceeds current public income.) A substantial part of that debt has been somehow bought up by the Bank of England with virtual £££ created by so-called quantitative easing. AFAIK, neither public pension commitments (ie old age pensions and public sector occupational pensions) nor PFI contracts are included in the National Debt as these are not debts, just promises to pay money in the future. Can anybody spot the difference?
Nobody knows what will happen next, least of all politicians with an ultra short-term outlook.
Re: Thank goodness for austerity
al_yrpal wrote:Low interest rates? Great for borrowers, but bad for those who saved diligently all their lives and now find that their fast diminishing and limited future years are blighted by a huge drop in the income that they expected to enjoy in their twilight years. As I get older I often notice this myopic and sometimes selfish view in younger folk.
Ah, yes the younger generations. Those will be the ones who will be working into their 70s, indebted to gain an education or to buy houses to an extent that you and I could never have imagined. All the while meeting the cost of an ageing population. Make no mistake, ours is an extremely privileged generation. One of retirement at 65 or earlier, relatively cheap housing and pension contributions which belonged to a previous era, lagging massively behind the surging life expectancy, It is them, not you or I who are meeting the cost of our old age, an old age they will not enjoy on anything like the same terms. I don't wish to attribute blame or merit; most of us did not intend this and none of the younger generations willingly took this on. We could, however, stop complaining like we are hard done to.
A couple of well written articles which have gone against the complaining about the youth of today tide:
http://www.dailymail.co.uk/news/article ... story.html
http://www.theguardian.com/commentisfre ... elfish-old
EDIT: Sorry, TC posted first.
Re: Thank goodness for austerity
tyreon wrote:Yer havin a larf! You've stolen my humour Horizon. Oftentimes I'm misunderstood
Yes, I'm having a larf - thanks for spotting it (I think irony must be a dying art).
If the economy tanks (i.e. the Tories will continue to mess it up), growth with stagnate and interest rates will stay very low. That's actually really good for me personally but I feel sorry for the millions of people who have just voted Tory in the belief they will get the economy right - they've been well and truly shafted, but I've had the last laugh.
When the pestilence strikes from the East, go far and breathe the cold air deeply. Ignore the sage, stay not indoors. Ho Ri Zon 12th Century Chinese philosopher
Re: Thank goodness for austerity
One thing that really confuses me is that we have a government (for some time now) that if completely in favour of "Market Forces" and who worship to the god of free enterprise, yet they happily completely distort the market with their own significant interference.
As a saver I dispare at the artificial low interest rates. However, my impression (which may be incorrect as I am no expert) is that it is not so much the BoE base rate that is keeping retail saving/borrowing rates low, but more Osborne's "Money for Nothing" schemes where he lends shed loads of our money to his mates are trivial interest rates - so they really don't need our/savers money. I can see that BoE base rate has an impact but I do thing that Osborne's "Cash for Bankers Bonuses" schemes are them main issue.
Appart from my own personal income considerations (which is bound to put me on one side of the higher/lower debate), I do worry that such low savers rates is discouraging the younger generations from saving. Why bother to save when all that happens is the money you put away loses value from the moment you put it into your savings account. And if youngsters fail to save, that makes everything more precarious as they have no rainy day buffer and no provision for older age. I was brought-up with the "save" ethic; my parents opened savings accounts for me and deposited small sums in them and then when I was old enough got me to save some of my pocket money, etc. And those savings are very useful even whilst still working. As a home owner you have more expensive times e.g. when the boiler needs replacing, roof needs fixing, etc. So buy a home with no savings buffer and it is a matter of when you have problems rather than if you have problems. And with the government helping people buy with minimal deposits there will be a lot more home owners around without that buffer that most houses make demands on at some point.
Ian
As a saver I dispare at the artificial low interest rates. However, my impression (which may be incorrect as I am no expert) is that it is not so much the BoE base rate that is keeping retail saving/borrowing rates low, but more Osborne's "Money for Nothing" schemes where he lends shed loads of our money to his mates are trivial interest rates - so they really don't need our/savers money. I can see that BoE base rate has an impact but I do thing that Osborne's "Cash for Bankers Bonuses" schemes are them main issue.
Appart from my own personal income considerations (which is bound to put me on one side of the higher/lower debate), I do worry that such low savers rates is discouraging the younger generations from saving. Why bother to save when all that happens is the money you put away loses value from the moment you put it into your savings account. And if youngsters fail to save, that makes everything more precarious as they have no rainy day buffer and no provision for older age. I was brought-up with the "save" ethic; my parents opened savings accounts for me and deposited small sums in them and then when I was old enough got me to save some of my pocket money, etc. And those savings are very useful even whilst still working. As a home owner you have more expensive times e.g. when the boiler needs replacing, roof needs fixing, etc. So buy a home with no savings buffer and it is a matter of when you have problems rather than if you have problems. And with the government helping people buy with minimal deposits there will be a lot more home owners around without that buffer that most houses make demands on at some point.
Ian
Re: Thank goodness for austerity
Younger people today are no different to younger people 50 years ago, they cant afford to save and they are usually borrowers. Saving starts when you have the excess income to do it.
The housing crisis for the young and their parents is a tragedy. Why… parents often have to step in to help using hard earned savings originally put aside for retirement and care to bridge the deposit gap. IMO, whilst its great that you can now take your pension as cash and spend it or invest it as you wish, its just going to make house prices rise further. Why? Because with lousy savings interest available a lot of that pension money will be funnelled into the purchase of property to rent out and thus get a steady income and capital growth.
Al
The housing crisis for the young and their parents is a tragedy. Why… parents often have to step in to help using hard earned savings originally put aside for retirement and care to bridge the deposit gap. IMO, whilst its great that you can now take your pension as cash and spend it or invest it as you wish, its just going to make house prices rise further. Why? Because with lousy savings interest available a lot of that pension money will be funnelled into the purchase of property to rent out and thus get a steady income and capital growth.
Al
Reuse, recycle, thus do your bit to save the planet.... Get stuff at auctions, Dump, Charity Shops, Facebook Marketplace, Ebay, Car Boots. Choose an Old House, and a Banger ..... And cycle as often as you can......
Re: Thank goodness for austerity
There's no point considering nominal interest rates in isolation with no regard to inflation. Interest rates are low but so is inflation.
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borderghost
- Posts: 140
- Joined: 24 Mar 2015, 8:14pm
Re: Thank goodness for austerity
The question is would house prices/mortgages be so high if Mr Blair did not open the flood gates? Once we started to feel the effects of are open door policy around 2003 house prices started to rise rapidly, in the north there were plenty of 3 bedroom houses under £50,000 which was great for first time buyers, now were much nearer the £100,000 mark for the same propertys, it means peoples mortgages are taking up a lot more of there income, in many cases it has increased peoples monthly mortgage cost by more than £500 on the average property price in the north, and much more in the south.
Now i guess the next comment will say im blaming immigrants for a lot of the uk problems, i do not blame the immigrants i blame are goverment for not controling the numbers of migrants better, like it or not the truth is immigration at this scale only benefits the rich. for the 98% it has made life much harder, it has driven down wages why at the same time increased the cost of putting/keeping a roof over your familys head.
With net migration running at 300,000 and rising year on year it is a situation that will only get much worse.
Now i guess the next comment will say im blaming immigrants for a lot of the uk problems, i do not blame the immigrants i blame are goverment for not controling the numbers of migrants better, like it or not the truth is immigration at this scale only benefits the rich. for the 98% it has made life much harder, it has driven down wages why at the same time increased the cost of putting/keeping a roof over your familys head.
With net migration running at 300,000 and rising year on year it is a situation that will only get much worse.
Re: Thank goodness for austerity
Just to reiterate: my post wasn't about interest rates (that's just an ironic fall-out advantage to myself).
My post was saying that although everyone voted for the Tories because they looked better at managing the economy, austerity will prevent growth. This will lead to more cuts (to "balance the books"), less growth, more austerity, less growth, more austerity, less growth, more austerity - are you getting the idea?
We have entered a deflationary spiral. It's too late now, the votes have been counted and declared.
My post was saying that although everyone voted for the Tories because they looked better at managing the economy, austerity will prevent growth. This will lead to more cuts (to "balance the books"), less growth, more austerity, less growth, more austerity, less growth, more austerity - are you getting the idea?
We have entered a deflationary spiral. It's too late now, the votes have been counted and declared.
When the pestilence strikes from the East, go far and breathe the cold air deeply. Ignore the sage, stay not indoors. Ho Ri Zon 12th Century Chinese philosopher
Re: Thank goodness for austerity
horizon wrote:
We have entered a deflationary spiral. It's too late now, the votes have been counted and declared.
Who says - the Guardian? yet to be felt around here…
Al
Reuse, recycle, thus do your bit to save the planet.... Get stuff at auctions, Dump, Charity Shops, Facebook Marketplace, Ebay, Car Boots. Choose an Old House, and a Banger ..... And cycle as often as you can......
Re: Thank goodness for austerity
al_yrpal wrote:horizon wrote:
We have entered a deflationary spiral. It's too late now, the votes have been counted and declared.
Who says - the Guardian? yet to be felt around here…
Al
Sorry Al, it was the Telegraph:
http://www.telegraph.co.uk/finance/econ ... ction.html
When the pestilence strikes from the East, go far and breathe the cold air deeply. Ignore the sage, stay not indoors. Ho Ri Zon 12th Century Chinese philosopher
Re: Thank goodness for austerity
horizon wrote:al_yrpal wrote:horizon wrote:
We have entered a deflationary spiral. It's too late now, the votes have been counted and declared.
Who says - the Guardian? yet to be felt around here…
Al
Sorry Al, it was the Telegraph:
http://www.telegraph.co.uk/finance/econ ... ction.html
Touché! But..one swallow doesnt make a Socialist summer ..
Al
Reuse, recycle, thus do your bit to save the planet.... Get stuff at auctions, Dump, Charity Shops, Facebook Marketplace, Ebay, Car Boots. Choose an Old House, and a Banger ..... And cycle as often as you can......