To think a recession is looming?

[GrannyBloomers]

I was quoted £2 a litre for heating oil. £1000 for 500 litres, a matter of weeks ago it was roughly a quarter of the price.

Energy bills set to be £3k per annum - potentially more when a new price cap comes in in October.

Diesel near me is 171p and rising.

I'm in a 3 bed semi, nothing special. I need at least 1500 litres of oil a year (it runs the hot water too). That's say £3k. No gas but electric. I'm doing ok with cutting use = £1.5k per annum.

That's 4.5k at todays prices for household power. What will it be in October - 6k, 9k more?

This is before other costs increase - food will go up when the cost of storing it (refridgeration etc uses energy) and transport also increase.

If all the average person's income is spent on rent/mortgage/ bills and energy, then there's no money to spend on anything else. No eating out, no leisure, no holidays.

Surely a huge recession will follow.

And what if a much higher proportion of people need benefits?

@newyearnewwname2022

From people who have been through this before - is it likely that house prices will fall 40-50%? We have around that amount of equity in our home. Am I wrong in thinking that that will help us?

Very unlikely. If prices start falling the market slows down to a virtual standstill. FTBs don’t want to catch a falling knife and risk their deposits, downsizers don’t want to lose their equity so most people stay put. I’d be very surprised if we saw 50% drops but I’ve been surprised before. 🤷‍♀️

@newyearnewwname2022
In the 90s recession my DH flat went from 48 - 32 k
His house was I think 67 and went to 51

I don’t think there will be a recession unless the Ukraine conflict causes some unforeseen shock. The Bank of England is forecasting that inflation will return to normal circa 2024, with a lower rise in GDP (but still a rise each year to 2025) and a slight increase to unemployment, which is currently very low. Obviously their forecasts are not always correct and they don’t have a crystal ball, but they do have a lot of data.

[quote lorking]@ancientgran I'm not sure why you think I don't understand that? My initial response was to a post which just talked about pensioners paying it. As you have said low incomes are price rises are hard, again this isn't just applicable to pensioners. It will be hard for most. [/quote]
People of working age will see their NI payments increase by 1.25%.

Pensioners don't currently pay NI, but will start, so they will be paying an extra 13.25%. It's a much bigger drop in net income for working pensioners.

@newyearnewwname2022

From people who have been through this before - is it likely that house prices will fall 40-50%? We have around that amount of equity in our home. Am I wrong in thinking that that will help us?

It’s unlikely because people don’t sell at a loss unless they have to (ie repossessed by the bank). Data from the last quarter of 2021 (which is the most recent available) showed mortgage arrears and repossessions are low.

@newyearnewwname2022
Mentioned above. Bought a flat in London in 1988 sold in 1995 for just under 60% of its 1988 value.

Also I had previously bought a flat in Southampton for £30k in 1987, sold it in 1988 for £42k. I saw it advertised as a repossession in 1994 for £12.5k
This was in a time of 17.5% interest rates

[quote Grumpyoldpersonwithcats]@newyearnewwname2022
Mentioned above. Bought a flat in London in 1988 sold in 1995 for just under 60% of its 1988 value.

Also I had previously bought a flat in Southampton for £30k in 1987, sold it in 1988 for £42k. I saw it advertised as a repossession in 1994 for £12.5k
This was in a time of 17.5% interest rates [/quote]
My previous house was valued at £87.5k in 1987. I relocated for work in 1991, rented it out for 2 years and when I finally sold it in 1993, it went for £49k.

As I'd bought in 1982, I still had a decent amount of equity, thankfully, but the drop in prices was brutal for people who'd only just bought.

A friend split with her partner in 1989, and they'd bought at the height of the boom. He ended up owing her half the negative equity!

@GirlOfTudor

Yabu because the UK has been in a recession since 2020.

No it hasn’t. GDP growth was positive for the second half of 2020 and last three quarters of 2021.

@TheSmallestGiraffe

We are now seeing 40-year fixed mortgages being introduced to the UK market (these are common in the US), so it will be possible to side step the refinancing problem.

Who is offering these?

I actually think the system in many European countries where you can fix for 20-30 years is much better in many ways. You buy the house and fix your payments for the entire time it will take to pay for it. It massively reduces worry over the economy and creates stability and also encourages people to view homes as homes, not investments, and care less about their current value.

I have never seen a mortgage fixed rate over more than 10 years advertised in the UK market though. Do you have a link?

www.ftadviser.com/mortgages/2021/11/24/rothesay-backed-40-year-fixed-mortgage-launches/

@newyearnewwname2022

From people who have been through this before - is it likely that house prices will fall 40-50%? We have around that amount of equity in our home. Am I wrong in thinking that that will help us?

I think it unlikely, but we are living in very uncertain times.

However, if recession leads to widespread job losses, I'd say all bets are off.

People of working age will see their NI payments increase by 1.25%.

It's an increase of 10%.

Pensioners don't currently pay NI, but will start, so they will be paying an extra 13.25%. It's a much bigger drop in net income for working pensioners.

I don't think you have that right - according to various sources, people who continue working after State Pension age will pay 1.25% on earnings over the threshold for NI.

@daimbarsatemydogsbone

People of working age will see their NI payments increase by 1.25%.

It's an increase of 10%.

Pensioners don't currently pay NI, but will start, so they will be paying an extra 13.25%. It's a much bigger drop in net income for working pensioners.

I don't think you have that right - according to various sources, people who continue working after State Pension age will pay 1.25% on earnings over the threshold for NI.

This is correct.

It only applies to pensioners who keep working.

So they are in the same position as all other working folks.

My point wasn't that it only applied to working pensioners as that was already stated by @LakieLady
The point I was making was I think Lakielady has misunderstood the rate of NI these working pensioners will pay - I think it's going to be 1.25% - not the 13.25% LakieLady suggests.

...and just to be extra pedantic, it isn't actually working pensioners paying NI - they will be paying the social care levy, at 1.25% from 2023/4 onwards.

Yes, it’s fair to say there will be. There’s enough evidence out there. The war hasn’t helped either.

I said all the way through covid there will be a recession or potentially depression afterwards.

Peoples lives have changed, their priorities and working patterns have changed the economy has changed as it was structured on pre pandemic priorities working patterns and lifestyles. It’s why the government and large businesses were desperate to get people back in the office, back into city centres, back to the old.

Coupled with sanctions against Russia in short we’re fucked economically as is the rest of the world.

The Government knows it and suspect this is one reason they are limiting refugees.

People will have to ride out this period of economic readjustment.

There was a thread earlier when someone was saying they had a comfortable life but had had to make cutbacks, followed by the inevitable posts of well think yourself lucky you can eat. But it’s this “luxury”
Spending which props up a lot of the economy.

[quote lorking]@ancientgran I'm not sure why you think I don't understand that? My initial response was to a post which just talked about pensioners paying it. As you have said low incomes are price rises are hard, again this isn't just applicable to pensioners. It will be hard for most. [/quote]
Your original response, which I replied to, was you saying, "Why don't you think that's fair?" I pointed out the poster hadn't said it was unfair, she was talking about how it would financially hit her. I'm not sure why you don't understand that.

I know that the recession which will hit us is going to be the worst in history. The energy increases are going to hammer the Western economies. Forget non-essential items - people aren't going to be able to afford to eat! I live in central London and it's going pear shaped. The deprivation and poverty is visible. There'll be food riots. It's unsustainable. I am very very concerned. I won't be able to afford to live and I'm a pensioner. I dunno perhaps the world needs this, we've been happy to cosy up to Putin and entertain the oligarchs, and now the worm has turned.

Re house prices I can’t see them falling by 50% . When this last happen for you might have lost say £30k. Now it would be £150k. People can’t afford that and more importantly banks can’t. Even repossessions will be sold at higher prices than that. There’s always cash investors that will buy up these properties.

It depends on the area whether prices will drop or not.

I bought my first house in Manchester for 40k in 1988. It’s worth 475k now. Just a 3 bed terrace.

Second house bought for 45k in 1996. Now worth £270

3rd house bought for 250k in 2013. Now worth nearly an unbelievable 500k or over. Just a 3 bed semi. Doubled in price in 8 years

I thought we were in a recession and heading for a depression.

I don't think there will be a technical recession no, that's not to say that life isn't going to get much worse for a lot of people though :/

This doom mongering needs to stop it’s a self-fulfilling prophecy if you keep talking down the economy it’s gonna end in disaster

[quote 70kid]@newyearnewwname2022
In the 90s recession my DH flat went from 48 - 32 k
His house was I think 67 and went to 51[/quote]
That's about right. I remember those times. Haven't RTFT so might be repeating stuff but I remember interest rates were around 12% and repos abounded. I think mortgage providers have something in place to mitigate those now but might be wrong.

I think it’s worldwide. Cousin in law (not in uk) owns a skin care company where she has product made in the USA and she labels it with her own branding - sales dropped significantly with the start of covid and haven’t picked up.

Another self employed lady in the USA construction industry mentioned to me yesterday they are getting monthly price increases from their suppliers and CD we are expericingvthe same. People won’t be able to have work done shortly as materials become h affordable.

I bought a pack of fresh beans a couple of weeks ago. Enough for one dinner for two of us. I don’t usually look at the smaller cost items on my grocery bill but did this time. I have since started to plant out garden beds and the seed incubator with vegetables.