Bailing out the squeezed middle's mortgage repayments?

[EveSix]

Listening to Any Answers and feeling frustrated, but wondering if I'm missing some nuance.

A caller is advocating for government bail-outs to cover mortgage payments for home owners impacted by recent hikes in interest rates.

I feel a sort of existential exasperation at this idea.

I absolutely understand that times are tough, and that we form strong attachments to the buildings we live in and the choices and advantages that a certain income affords us: holidays, the ability to have savings and university funds for our DC, as were mentioned in the programme.

I understand that there is, what some would argue, a precedence for such a bail out in terms of recent quantitative easing, furlough payments and schemes to support businesses following the pandemic.

But home ownership is a massive privilege in itself, in a skewed growth economy that encourages profiteering from the basic human need for shelter.

Home 'owners' don't own their mortgaged houses; they owe money to the financial corporations which will be the ultimate beneficiaries of such bail outs.

Does the squeezed middle need bailing out? It seems ludicrous to me. People have been permitted to overreach financially. Surely, the remedy is to spend our own assets first; use our savings; the rainy day did come. Move in order to downsize or relocate to a cheaper area; we're not tethered to the building we currently call 'home' if we no longer can afford it.

The caller asserted that "...life is for living!" by way of explanation why scrimping and cutting back feels like deprivation.

What am I missing?

It makes me laugh when people fail to understand the distinction between never experienced hardship and never experienced this particular and specific hardship. And when they cite 15% interest rates whilst conveniently ignoring how much lower prices were in real terms at that point.

I don't actually disagree with your conclusion, but much of the first paragraph is bollocks.

On the one hand (at the risk of sounding like an old gimmer) we lived through this in the late 1980s/1990s and for many of us it just meant getting extra work- evening or weekend jobs on top of full time professional roles. There were no bail outs, and no tax credits or support like that. And before anyone says 'yes but houses were so much cheaper then' - Yeap they were but wages were so much lower.

mmm l was a young graduate and home owner then. We bought our first house on a combined income of 16k. It was £39999. Wages were lower then, but it was easy to buy houses as prices were much lower. So your argument doesn’t really stand up.

100% this.

So easy to point at those on their first or second homes but in my lifetime the interest rates have been super low. It has been the norm for my generation. Reference the eighties and nineties all you like.

We can afford our mortgage once our fixed runs out but if everything else remains high then we will squeezed when I got on maternity leave. I like Labour’s idea of having the option to switch to interest only for a period of time.

I remember the recession well in late 80s well. Friends of ours brought a small flat in a Bedfordshire town for just under £50000. Within in a couple of years, they had a £10000 negative equity on it, a lot of money in those days.

people, who had been in secure, lifelong jobs were being made redundant. Prior to that, getting ‘made redundant’ was almost shameful, and implied you had done something wrong. People didn’t chop and change jobs/ companies like you do today (or not so much). Thus took its toll on a lot of people.

There was also high unemployment.

The country can't afford to bail out mortgage holders. Look at the national debt after covid and the furlough scheme, the country simply cannot afford it. Besides, there is no point increasing interest rates to slow inflation, squeeze the economy by taking money out, as was the reasoning for it, if the government continue to inject money back in. It will just continue to rise doing nothing but earning more money for the banks

Our mortgage rate is a bit above what it was when we bought our place so we have paid this amount before. Like lots of others, we are feeling the pinch with the cost of everything going up.
I don't think we, or others, with mortgages should be bailed out when there are people who are homeless or living in unsuitable housing. Let alone the lack of money being spent on public services.
I would like to see house prices come down. We live in a small 2 bed flat with a teenager and ideally need somewhere bigger (ok that's personal preference). We're not the only ones I know in our shoes. I don't see how young adults have any hope of buying in so many areas.

House prices don't need to crash wages need to keep up with inflation. Look at NHS staff a 12-35% pay cut. We can afford our house (and still have 4 years on the current fix). If repossessions start the first thing to go will be peoples second, third, fourth property that they rent out which will cut the rental market.

Maybe it's time the government stepped in and made 10 year fix's the norm. I'm all for racking up the rate on non essential credit like car finance and credit cards to force people to spend less but not on essential debit like mortgages. It's also not over spending that's driving inflation it's external factors which aren't going to be controlled easily.

Once the triple lock is ended I will take their aim to cut inflation seriously

Different, yes but not nonsense. People in "jobs for life" were losing them with no prospect of another. Whole communities built around one industry died. House prices had been lower but not but 2/3 (the difference between 5% and 15%) but that didn't help when they were suddenly worth a lot less than had been paid for them and less than the mortgage
.

I guess the counter argument is that mortgage owners /payers are a relatively small proportion of the population but are going to make by far the biggest contribution in terms of stemming inflation.

I'm not convinced it will have the desired effect since so many are mortgage free, have small ones or long fixes.

This. Anyone in banking right now will be sick of the phrase “customer duty”

House prices don't need to crash wages need to keep up with inflation. Look at NHS staff a 12-35% pay cut.

wages for most have been going backwards but all that QE fuelled this. The problem now is how to you fund all those wage increases? income tax is already high & we have an ageing population with the increased strain on public services. Far too much money is tied up in housing costs, it's not productive.

The use of those examples is nonsense in this context. Nobody thinks bad things haven't happened before now. This particular bad thing hasn't.

Sorry about the rant incoming...

I have read a lot of threads on here today and am feeling increasingly despairing.

IABU, I know, but I am angry.

I am angry because all of this is about ordinary people's lives. I have seen people on threads about strikes calling strikers greedy and entitled, people telling others they are entitled for expecting a decent standard of living. Entitled to want the odd luxury or a roof over their head that suits their family (not done up to a high standard or with several spare rooms - just big enough and in a liveable condition). People telling those struggling with bills to cut back to eating gruel and to use Jack Monroe style tips to shave 20p off the cost of soap (or whatever). That to do any more is 'entitled'. Telling people that they should downsize their houses, that they aren't 'entitled' to their own home.

You know what? I think we are 'entitled' to live a better life than that.

We live in a relatively wealthy country. We trust our Government to do what's right and support us.

They haven't. They aren't.

You can do everything 'right'. Work hard at school, do well, get an excellent education, degrees or a good, skilled trade, be frugal, save up, buy the smallest house you can, live within your means...

And then something happens totally outside your control (Brexit, Energy, War, Pandemic) and the Government decides that the solution is to inflict pain, cut spending, freeze pay, kick off a recession and take it out on everyone below the wealthiest 20%

It's not the wealthy reducing their lives to 4 walls, no holidays, no treats and making do and mending. They are protected from nearly all of the effects of this, but everyone seems happy to accept that.

It's the poorest and the next rung up, plus the professionals who had every expectation of doing all of the 'right' things and getting a decent standard of life as a result.

And now we are arguing among ourselves about who deserves what help and who deserves what level of pain and who is the most 'entitled'.

It's Victorian thinking. Anyone struggling must be feckless and have brought it on themselves. No one below the upper middle class is entitled to decent housing and enough to eat? Is that what we are aiming for?

It's bullshit - and there MUST be a better way. Some economist somewhere must be able to suggest something. We have just all rolled over and accepted that our economy works this way and this pain is necessary. Why? Because the Government tells us so? Because the banks tell us so? Because it always has in the past?

I don't know what the solution is, but I suggest that it shouldn't be hard working people arguing among themselves about who has it worse and who is being 'entitled'. It helps no one. We can't be in each other's shoes and everyone has their own story.

This is crap for everyone - and in 2023 in this country - it really shouldn't be like this.

....

Rant over

Yup, we were prepping for negative interest rates 12 months ago

But the point is bad things need to happen to correct the market, just as they did then and things eventually corrected and improved leading into a long period of boom, until the next cycle.

Mess with it with a bail out and you'll just prolong it

Agreed. Not that the BOE have many tools available to them, of course. But it's basically only a minority of homeowners and probably most private renters.

I didn't disagree with that. It's an argument that can be made without the associated dipshittery though. And you're asking for trouble when you trot out the 15% with a massive hole where the context should be.

I wouldn't support it but I see why people are asking, furlough was absolutely insane bailout- £2500 a month for doing absolutely no work at all! If they can do they I can see why people think they can do it again

I also think that the train mortgages has been harder to get in recent years compared to the old 110% of the early naughties was that there was a stress test to qualify- this is the stress now surely? It is a shame that it has coincided with absolutely everything becoming unaffordable though. Dreading my fixed rate ending!

We're a year into a 10 year fix with a v low LTV so no skin in the game but I do think it would be cheaper to support home owners than to shift more assets to banks and pay rent to rich landlords to pay to house the former home owners. But making the rich richer is the name of the game...

Yup, no way. I do sort of feel like that's what furlough was though, I was so jealous of people getting paid to sunbathe!

furlough was absolutely insane bailout- £2500 a month for doing absolutely no work at all! If they can do they I can see why people think they can do it again

They did furlough to protect jobs though. You can't stop people going to work & not pay them, how does that work?
Plus 2.5k was the limit so not everyone got 2.5k & many earned more than that but were capped at 2.5k. I wasn't furloughed but I wasn't stopped from going to work...

True!

But making the rich richer is the name of the game...

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