Recession ..?

[Jamesy]

Much more likely renters.

[Animal]

so HMG claims. IRL total costs have gone up far more.

[JNugent]

I don't recall that being a reason not to increase mortgage rates when I was paying one.

We really have come to something when anything more than 3% retail for a mortgage is somehow unacceptable. It was never less than twice that rate during the period 1977 - 2009 when I was paying one.

[Animal]

Last time I looked they did it by including in their basket of goods luxury items that predictably came down in cost rapidly.

[SteveW]

It's not that the rates themselves are unacceptable, but that the house prices are so high that people have already had to stretch themselves to have anything that isn't in a bad area or too far from work. Couples have lost one income due to job loss or having children and everything is a struggle, without increasing mortgage payments.

It's not a problem for us, as we're only about 9 months off paying our mortgage off, so the interest is only a small proportion of our monthly payment.

[Fredxx]

Some friends have just purchased a 3 bed house where before they were renting a relatively small flat. They made the comment that their mortgage payments were lower than the rent they were paying.

In short mortgage payments are relatively low, and can climb somewhat higher before they truly pinch and make renting worthwhile (for those who have the choice that is).

Anyone who purchased a house a while ago is sitting pretty. It's a shame that some have little empathy towards those with families and struggling.

[JNugent]

Low interest rates are achievable *only* at the expense of savers / investors (who have not been able to get positive* savings rates since before 2008).

[* "positive" meaning a rate above the rate of inflation.]

Why should a building society saver be expected to steadily lose the value of their savings in order to subsidise someone else?

And what right do house-owners have to steadily-rising asset prices at the expense of savers and frustrated would-be homebuyers?

That's not really the issue, is it?

It's a matter of principle.

[Andrew]

Not Barclays though. 0.01% on some of their accounts.

[Andrew]

They did between 1973 and 1978. The next election is the one that Labour really do not want to win, if inflation is looking likely to be heading towards 20%.

[Fredxx]

Perhaps governments would prefer saver put their money in projects that increase wealth rather than leaving dead money to stew in an account.

Quite, but that is down to demand and the economy being awash with lots of money, in part through printing money and more recently through cheap bounce-back loans.

One man's principle is another's poison.

[Fredxx]

Be a good excuse to balance the books by raising income tax, perhaps introduce a 30% band and apply NI to all income?

[Andrew]

Anyone with a brain should have realised that when base rate went down to 1% in Feb 2009 and both the USA and UK embarked on QE that base rates would be kept low for a long time. This meant asset prices like bonds and shares would take off, notably the USA with its technology bias.

I have made the equivalent of over 10% every year since 2009 thanks to moving building society deposits into investment trusts and OIEC's Even after the big correction in the first 4 months this year I am still ahead of inflation.

Don't leave money in a deposit account for other than a limited time pending proper investment.

House prices have pretty well doubled since 2009 so you cannot complain. The alternative is stick interest rates up to 12% and keep them there for the same time that they have been almost zero. Savers would be over the moon but the economy would collapse, there would be millions of repossessed houses so their price would also collapse. There would have to be brutal *actual* cuts in public services.

Look on the bright side, the old moaners would no longer have to worry about stamp duty or IHT because their biggest asset, their house would be only be worth what it was in about 1982.

[Andrew]

Or scrapping NI and having a progressive set of tax bands starting at

10% on income over say £6000 (which would be the NI charge anyway) and then rapidly increase to the combined rate.

It won't happen of course because 'cutting tax' benefits the people on £50K plus and a combined tax+NI set of bands would appear like a big tax increase.

[Fredxx]

That doesn't follow. QE aka printing money is free for a government, whereas borrowing cost money in interest payments. Therefore QE is no incentive for holding interest rates low.

I'm impressed, please do share your secret.

Stamp duty is a shameful tax on mobility.

[JNugent]

<sigh>

Savings with a bank are not "dead money".

The whole point of putting the funds into a bank (and the bank paying interest on them) is that the money may be used for bank loans, charged at a higher rate than the bank pays savers.

Capital formation is just like any other business really, except that since 2008, the banks have been getting effectively interest-free money in the form of Quantitative Easing, so don't feel any need to pay proper rates to savers.

Exactly. QE should have ceased a long time ago. Mark Carney was the culprit. He even boated of never having presided over an interest rate rise.

There is no "principle" involved in the devaluation of savings.

[Fredxx]

I agree, but what about the 55% (on top of IT and NI) tax on Universal Credit?

But only to those who don't vote Labour.

[R D S]

Yeah, my house is worth 3-4 times the 40k I paid for it circa 25 yrs ago. My son has just paid nearly 170k for a 2 up 2 down terrace in East Lancs. Nightmare.

[Jamesy]

That isn't what happened in Oz when the interest rate peaked at 20%

[Fredxx]

Quite, not to those without any.