Page 7 | Bailing out the squeezed middle's mortgage repayments?

EveSix · 2023-06-24T14:15:14+00:00

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?

sleepyscientist · 24/06/2023 22:29

groupery · 24/06/2023 21:59

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 simple answer to an aging population is to cut public services to a standard we can afford. Everyone will disagree about which service should go.

There has got to be a way that the current working generation doesn't pay for all of this, which is what raising interest rates is largely doing as they are the people with large mortgages and other debits. They are also the least likely to have voted for Brexit which is a massive part of this.

We are only in our 30s but sat with around 50% equity and a 4 year fix but younger households and those just starting our face negative equity to control inflation for what benefit to them?

Do you allow prices to rise, people can control flexible costs like utilities, food easier than downsizing.

How about targeting LHA that would drive down rents or create HMOs freeing up more properties to buy if you want cheaper housing.

Do you create two bases rates one lower specifically for mortgages and one a lot higher for other debit.

A lot of this is being driven by a worker shortage so how about opening up immigration by rejoining the EU!!

Plan for winter, power up the coal plants, invest in nuclear and stock pile gas now.

lifeissweet · 24/06/2023 22:37

Great, @sleepyscientist

This is what I mean. Thinking of ways to ease the pressure so that it isn't ruining the lives of a whole generation of ordinary, working people (those unable to afford to have children or buy homes, to have any stability or any hope for future comfort) while the retired,who own their houses outright and have their triple lock pensions protected, and those wealthy enough not only to not feel the pain, but to profit more from it (buying up repossessed housing stock, for instance - there are always people who profit from a recession after all) benefit from the squeezing of everyone else.

There have to be some different solutions if only those who make the decisions are motivated to find them.

I'd suggest our current Government are not fussed about trying and too many voters just shrug and turn on each other instead of objecting.

Abitofadventure · 24/06/2023 22:45

Your rant was a great post @lifeissweet .
Whatever posters think about the solution it is so disheartening how we turn on each other. After COVID, then rising food bills, trying to keep homes warm throughout winter and now fear of losing homes. Its pretty awful.

tourdefrance · 24/06/2023 22:46

Yanbu. (Yes I know you didn't post in AiBu).
Universal credit should be increased by £20 before supporting people struggling with their mortgage.
Our first mortgage (about 17 years ago) was 5.25%. Rates fell soon after but we've always been aware they could go up again.

mortgagequandary · 25/06/2023 00:16

lifeissweet · 24/06/2023 22:09

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

🙌🏻🙌🏻🙌🏻🙌🏻🙌🏻 absolutely spot on

Boxthemup · 25/06/2023 07:27

If wages keep up with inflation, inflation will just keep rising. That's how it works.

lifeissweet · 25/06/2023 08:44

Boxthemup · 25/06/2023 07:27

If wages keep up with inflation, inflation will just keep rising. That's how it works.

It is really not that simple. That's the line taken by the Governor of the Bank of England. Economists are not all agreed.

See this on public sector price rises:
blogs.lse.ac.uk/politicsandpolicy/does-public-sector-pay-drive-inflation/

If wage increases are driving inflation, then it stands to reason that the solution also lies in decreasing wage growth.

But using wage growth to try and temper inflation caused by external factors such as supply shortages and increased import costs doesn't make much instinctive sense.

We are not in a inflation/wage increase spiral, so why have we jumped straight to trying to prevent one rather than deal with the actual issue - which seems to be abject inequality in the economy. There are very wealthy shareholders taking big chunks of profits that could be used for wages without effecting the price of goods at all. It would mean the wealthy taking a pay cut and passing it down.

Guess why that is never suggested as a solution? Trickle down economics doesn't work, and yet we hold onto the idea that we can't possibly expect the rich to contribute more or rake in less because they'd move abroad and we'd lose their wealth in the economy... well their enormous wealth is not helping the economy all that much at the moment, is it?

watermeloncougar · 25/06/2023 09:09

@lifeissweet great post. As you say, people have 'done the right thing' in working hard at school/ Uni, got themselves skilled up, saved and scrimped along the way and are still screwed. Families who are working to capacity- in full time jobs. If there are literally no more hours in the week that you can work, then what can you do?

Kalodin · 25/06/2023 09:17

Trickle down economics has never been proven to work and I think we can all clearly see right now how vastly inequal our society is

Busygoingblah · 25/06/2023 09:22

The posters that are talking as if anyone who’s unlucky enough to about to have a fix ending has been stupid. I haven’t been stupid it just feels like I’ve been unlucky.

I didn’t overstretch myself, I made sacrifices to build up money for a deposit and I bought a cheap house in a cheap area. My fix is up and the end of the year and it’s going to double my mortgage repayments. That’s terrifying. My basic little terrace that needs work doing isn’t a luxury ‘forever home’ it’s just my home

I always knew interest rates could and would rise but what I didn’t and couldn’t anticipate is that they would rise at the same time as everything else has risen so fast.

I work in the public sector and my wage is being kept low but the government to control inflation. I therefore earn less at this point than I thought I would. Again, this was pretty hard for me to anticipate and plan for.

Bring about to fall off a mortgage cliff is terrifying. I can’t sleep at night. It feels like the absolute perfect storm of low wages, high bills, high everything else and a probably doubling mortgage.

The worst part is it doesn’t feel temporary, this feels like forever. I can’t see my wages increasing much in the future or prices coming down dramatically.

I didn’t benefit from furlough or any other recent government bailouts due to my public sector job but now I need help and I’m keeping everything crossed that happens.

Busygoingblah · 25/06/2023 09:36

mumyes · 24/06/2023 19:32

I would be appalled if the government bailed out mortgage holders.

It's simply stupid to have got a mortgage without making sure you could cope with worst case scenarios like interest rates going up.

The tricky thing is though that I sought financial advise before I got my mortgage. They said it was fine, I’d be able to deal with a rise. o saved hard and bought a small house with a mortgage I was told was manageable.

The financial advisor did however fail to predict a global pandemic, a war in Russia, spieling food costs. An energy crisis and the government artificially keeping my public sector wages low all at once.

Should I go back and complain about this terrible lack on insight?

I would be able to cope with my mortgage doubling if everything else wasn’t rising so fast at the same time. I would be able to cope with price rises if my mortgage wasn’t doubling.

I be able to cope with both at once of the government gave nhs staff a fair pay rise.

Kalodin · 25/06/2023 09:40

Nah posters on here will say you should have predicted all that and worked out your budget on payments increasing by 50% along with rising COL too @Busygoingblah

Taytocrisps · 25/06/2023 09:42