To be pissed off about mortgages rates being so low and down to 1%

[feellikeahugefailure]

All in the headlines today about the 1% mortgage to last 10 years.

Oh great so landlords and those lucky enough to own will be paying even less than the have nots that cant afford to buy.

I doubt my rent will be going down, but the tiny savings I have towards a deposit and emergencys will be earning less interest than inflation :(

Its one side of what could happen. Not the whole picture.

IR increase, company, banks and individuals that can't service their debt go under. Ban investment from foreign people / companies in the UK.

Its what do you want, short term can kicking or long term sustainability.

IR increase, firms go bust, unemployment increases, millions of people are made bankrupt, investment falls, Government deficit and therefore debt increases and there is no current desire for a Keynesian level of Gvernment spending on investment. A long term downturn in the economy benefits no one apart from the cash rich who snap up all the assets.

I'd encourage supply side policies to develop infrastructure rather than using the rather blunt tool that is monetary policy as this would only suit the vested interests of the few and not the many.

I genuinely don't see how your idea is beneficial.

Unproductive firms go bust, rather than be saved by printing money. Not all firms.

Your all about the one sided arguments.

What we have now is like socialism where banks and other businesses are not allowed to fail. Desperately printing money and keeping IR near zero. Zombie economy.

The UK economy is based on selling and speculating in house prices. Its a pyramid scheeme. Not a good idea to base a countries economy on that.

No firms would go bust or downsize considerably with an IR rise due to the lower level of consumption, as well as the increased costs they would face on borrowing.

Where does the business optimism for investment come at this stage? Where will consumers get their confidence to spend? With jobs falling and people paying more to service their debts where does demand come from?

Where does the growth come from in your scenario? I'm intrigued.

this made me more pissed to be honest

"He explained that the Local Housing Allowance (LHA), which is used to calculate how much housing benefit people are entitled to, is supposed to be enough to pay for the cheapest 30 percent of properties in any given area. That means that if you can find the very cheapest properties in the area, you can rent them out to housing benefit claimants and get them to claim as much rent as if the place was at the top of that 30 percent.

He then showed us an example of how, using this technique, he charged a pair of single LHA renters (via the taxpayer) £1,090 a month for a two bedroom property that he could only rent out at £625 per month to a professional couple.

He also pointed out that you can get more money from four individually-paying single LHA tenants than a family of four. That way he managed to get £2,860 per month for a property where the market rent would have been £1,300 if a family was living there.

Benefit is calculated on the people claiming it, he continued, not the property they’re living in, so if you can convince a family who would be entitled to three bedrooms to live in a house with two bedrooms, you can get them to claim as much as a three bedroom property and put the whole lot into your big wallet.

His final wheeze was his new service that he dubbed “Lease 2 Let”, where you offer to apply these techniques for landlords who can’t be bothered to do it themselves, guarantee them the market rent and take the mark up for yourself."

www.vice.com/en_uk/read/i-learned-how-to-make-it-big-on-the-property-market

There is a special place in hell for people like that.

feelings, I understand your frustration I really do, but I don't see how big interest rate rises would benefit you or the economy at all.

A lot of people are waiting for a house price crash, but think that they will be made better off by it, it really won't work out like that because of the multiplier effects of such an economic shock.

The growth comes from people spending less on houses. Can afford to move , buy homes, furnish them, have money left over for weekend activities, nights out, new kitchens etc.

The low interest rates have allowed the BTL bregade to fill their boots over the last few years, out bid FTB and banks see them as a safer bet.

Thanks breaking dad. I'm just off to the gym, that has pumped me up to take out some anger.

Parasite scum.

I don't agree that the UK economy is based around house prices. Most people have one house. most people will need one until they die so they tend not to use them as piggy banks to cash in when they need money. They are just their home. Most of us who have managed to buy one have made considerable sacrifices often things those who rent are not prepared to sacrifice - we all make our own choices in life.

I can remember just the 1970s when over 3 years we had a total of 60% inflation. people savings became worth very little. It was not worth saving. We also had a massive property crash. That almost Zimbabwe like hpyer inflation only benefited a few people - eg those who had bought on a huge loan and then we had high house price rises and some wage rises so those lucky enough to buy at the right time did okay but not most people. High inflation gives you a lack of certainty and makes it harder to plan.

For decades the most people could borrow in the UK was 3x salary (someone referring to 10x is a multiple I have never seen in the UK and I have bought about 7 times). You could also not borrow if you were female. We did get multiples up to 4 or 5x salary if you were in certain well regarded secure jobs like doctors where pay rises on a scale. Now we are at more like 4x salary (taking now account of whetehr you've been wise enough to buy before you breed of course because childcare is so expensive as is a lost wage) or 3x which can be borrowed. I think my son was offered 4x.

In life if you get cross with everything like parasite scum it tends to make you feel really awful and does not lead to happiness, acceptance or contentment. If instead you just do what you need to do to get to own something then contentment follows from that. So may be the collective wisdom of the home owners on this thread which will be awesome given our experience of the housing market over 30 years we can help this poster to find a way to buy a property. There are plenty of ways to skin a cat.

First bit of advice is to look for a better savings account, if it pays you less interest than current inflation you can certainly do better. The next is to read up on some basic economics:

"The growth comes from people spending less on houses. Can afford to move , buy homes, furnish them, have money left over for weekend activities, nights out, new kitchens etc."

But if interest rates rise most people would be paying more for their mortgages and have less discretionary income at the same time. Cutting consumption, resulting less growth, and most likely causing a recesssion and job losses as we are in really low period of growth that isn't particularly stable and mostly based on consumption.

"The low interest rates have allowed the BTL bregade to fill their boots over the last few years, out bid FTB and banks see them as a safer bet."

Not true and was disporved in a link to the council of mortgage lenders article earlier, highlights of which included this data:

"A common accusation levelled at buy-to-let landlords is that they have an unfair advantage over home-buyers. The data released today would suggest this is not the case, with buy-to-let purchases making up only 11.6% of all purchases. First-time buyers accounted for three times as many transactions as buy-to-let purchasers."

The only people an interest rate rise favours is people who are cash rich, they can then go around buying up the cheaper assets.

Let me explain what would happen in the case of a large interest rate rise briefly:

Interest rates go up, households have less discretionary income to spend and cut their cloth in order to stay in their homes, 6 month leases holders properties see rents rise as landlords pass on their increased costs and have less to spend too.

The resulting contraction in comsumption leads to firms making people redundant, some firms become insolvent due to the increased costs and lower revenue and fold althogether. Consumer confidence falls rapidly and we end up with the paradox of thrift damaging the economy even further.

Households who can no longer afford their mortgage payents put their houses on the market at significant losses, and end in negative equity. Banks are forced to write off these loans from their balance sheets which makes them more reticent to lend, meaning the housing market falls further as there is a lack of demand. More bankruptcies, less consumption, less business investment, higher government deficit and thus less money to spend on investment.

Where in this do you see a winner, following the recession/depression which would ensue? How long would recovery take?

Oh and also if you were buying in London/South East, you'd have found that asset prices here don't drop nearly as far as those outside as this becomes a "safe haven" investment, a big UK recession would have a wider impact on the very precarious global economic situation.

When does growth start happening again? Who benefits?

You certainly wouldn't

I can remember just the 1970s when over 3 years we had a total of 60% inflation.

We've had similar inflation over the last few years, t least double figures. They have been cooking the inflation figures by adding in one time only purchases and ignoring ever increasing essentials like housing

Sorry on phone and need to get to my second job in a second, but this video explains my POV well.

Not true and was disporved in a link to the council of mortgage lenders article earlier, highlights of which included this data:

That article about BTL was very shit, vested interests and selective data. BTL has gone down recently as they have just increased tax on it so plenty are planning on exiting, or exiting. TO say new lending has gone down a bit recently means very little as of course it has, the have just started to tax it. However the damage has been done over the last decade or so.

Oh Jesus, that wasn't funny, accurate or even insightful, if that infuences your view of economics then there is no point debating you.

Enjoy renting!

All of that guys stuff is wildly over simplified and slightly conspiritorial, it really doesn't work like that.

YABU
I know it's tough, but what makes you think homeowners have always had it so easy.
We saved for first deposit, thankfully went for cheapest they'd lend rather than the biggest amount.
Lived in a huge mess whilst doing it up.
This took us 3 years longer than we wanted because all our money went to pay the 15% interest rate that came in just after.
Most people unless born with a silver spoon experience hardships at some time.

We have not had 60% inflation over 3 years (as we did have in the 70s). Wages have been the same for 10 years. Yes rents have risen a bit in some areas but nothingl ike 60%. Mortgages are down. Fuel has indeed increased qutie a bit but nothingl ike 60%. The price of many consumer goods is much much less than when they first came out - I remember when we bought a video camera - a massive thing that cost an absolute fortune.

I would far rather our work out a plan to ensure the original poster can buy a property using our collective wisdom though or even use her a case study as to why she hasn't been able to buy so we can ensure her children and our own don't make the same life mistakes if indeed life mistakes have been made which result in inability to buy.

Yes rents have risen a bit in some areas but nothing like 60%.

That is a rather simplistic analysis. The wages of young people have 'grown' in money terms at a lower rate than the rest of the workforce since the financial crisis (in other words hardly at all). When I sold my old house in 2009 it would have commanded about 600pcm in rent. I saw the identical house for rent recently (well 12 months ago) for 950pcm. So OK a larger time frame but housing cost is not even included in 'cpi inflation'. Inflation is also a totally personal thing, because it depends what your money goes on. The thought of paying that kind of rent (on a basic house) and being able to save for a deposit is madness.

I can say categorically it was much easier when we bought. Writing enormous posts with some biased economics in there did not change that fact.

The biggest issue it seems to me is that people dislike the thought that they had it 'easy' and we get tales of hardship from the past. However perhaps these days you wouldn't be buying a property AT ALL!

Alasalas I'm sure it was. Different periods of time/individual circs were different. When I bought it was a hell of a lot easier for me personally than it would be now. On balance for most people starting out now is hard, hence the level of home ownership is dropping.

But of course the idea that everyone in the past had it easy and lived comfortably in their naice suburban semi as a sahm is utter nonsense.

YANBU OP. I bought my first property in 1996, it was a two bed flat in th expensive South East and I bought it alone in a nurses salary....a staff nurse salary so I wasn't earning loads. Even though I had promotion etc and at one point was earning 40k I could not have afforded to buy the same property within a few years of purchase.

(I would have bought today as much as 30 years ago we had to have two full time salaries though and buy before you had children to buy in this bit of outer London 30 years ago in zone 5 - none of this part time working stuff and long maternity leaves and interest rates of 12% were not fun nor the long commutes during which you are paying for child care in due course once babies come. As my daughters also became lawyers I have direct comparisons - and both of those have bought in London in their 20s although as in my day it remains very difficult and many people never could and never will be in jobs which pay enough to enable you to buy. It is one reason the three of us picked law (and business law in London) rather than a lower paid job)