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?

There will be no housing crash. I have family work in property construction. House building will continue. Simply put there isn’t enough stock for the demand. Think wisely on location (good schools and transport links) and you’re quids in.

@Elsiebear90 they've been saying London house prices will crash for well over 15 years. That being said, I am not confident prices won't drop, particularly given the constraints put on Russian wealth.

For the person who asked what's the difference between a depression and a recession; a depression is a sustained period of time of negative inflation, generally over 3 years. A GDP decrease of 10% would also occur. @Riverlee www.economist.com/finance-and-economics/2008/12/30/diagnosing-depression

Economists say there is a recession approximately every 10 years so one is due, that's for sure.

My ISA had dipped massively too.

Had an interesting chat yesterday on the potential for the housing market to crash. Current thinking seems to be that the crash last time was driven by the fact that lenders had insurances to cover inability to pay mortgages - these policies paid out to the lenders who therefore recouped their money when home owners defaulted. So then they just put the properties into auction and didn't care how cheaply they sold for as they'd already recouped their money. However these type of insurances have now been stopped. So lenders will NOT sell houses cheaply, instead they'll hold them until they have a chance of recouping money. So the thinking is there will be no large drop in house prices.

I’m going to suck it up for a couple of weeks and let someone else stick their next on the chopping block first. When I was hired I was told it was completely working from home with visits to offices as an when required. My local office is 80 miles away! My next nearest office is over 150 miles away which i can expense. The trouble is that it’s a 4 hour drive there and then another 4 hour drive back!

I went to my nearest office this week and it was full whereas the London office was approx 10% full. The problem is that none of the senior staff in the London office are coming in but on the rare occasion they do they start jumping up and down as no barely anyone is in but they are not leading by example!

Yes not much mention of interest rates going up in the news but it will happen gradually through the year. House prices are going to start falling soon. We desperately want to get on a long term fixed rate whilst the value of our house is 'high' and rates relatively low but we will be stung by early repayment charges. Now trying to weigh up if over the long term those charges will still be less than the savings we might make over say a 5 year fixed rate at a lower rate.

Every house we viewed had over 40 people wanting to view who were proceedable. Do you think these people are struggling? No. They can afford the rising house prices and the rising cost of living isn’t putting them off. For these people, they will make the choice of just saving a little less money to make up the shortfall of increasing basic necessities. Interest rates do not rise significantly in a recession, they either stabilise or reduce.
In times of market volatility, people sell their equity investments and pour it into “safer” options ie the housing market. There will continue to be house price growth for the next few years at least

I would use a bus trouble is it doesn't get to where I work @user1497787065

I think it's likely one is coming. In terms of preparing for it, we're definitely using the car less. DH and I have to drive to work (him because of the distance and no public transport options), me because there's no public transport options and I need to take DD2 to nursery down very rural roads so wouldn't feel comfortable cycling with her (about 7 miles).

Luckily with an increase in WFH we're both commuting a lot less and we've stopped using the car for little trips. I now walk into town rather than drive (about a mile) and I've also started walking to the supermarket rather than driving (have bought a granny shopping bag on wheels at the ripe old age of 34!)

We're eating a lot less meat, just twice a week on average and that's made a massive difference to our shopping bill and saved us a lot of money.

We also have the heating on less. We've been wearing vests as an extra layer all winter and the DDs have had an extra blanket on their beds on top of their duvets.

Yes, it's going to be bad. Some of the issues are caused by Mr Putin but others are long term effects that governments might have done something about. That said, I doubt Johnson is going to help us much. He has already made benefit cuts and is putting up NI.

@Bananarama21

There's something so grossly wrong with people who are working full time and being unable to afford to feed their families relying on food banks to get by due to price hikes. I think that's what will happen to many families who only have minium wage.

^This

Those with a buffer can cut back, but those already on the breadline are going to start going into arrears on housing & energy. It must be a horrendous position to be in.

Rising bills. Rising costs. Rising interest rates /mortgage repayments. The rise in NI in April.

The 2020'a are not shaping up as a good decade.

@Enb76

I think we're looking at a depression rather than recession. Tighten your belts, it's only going to get worse.

With you on this one. I’m scared more for the fact a lot o people aren’t even considering this a possibility.

We’re almost panicking. We thought down sizing was a good idea but we had solar panels with a really good deal, we were in credit most years. Now we have a heat source pump and our bill will be just under £3,000 this year, until the next price rise.

@EverydayIsPJday

Thank you everyone for your advice we are doing to look at the rates now.

@EverydayIsPJday Go for more than a 2 year fix if you can, predictions are that the base rate will be at 2% next year so the longer you can lock in for the better - and before the next rate rise - discussions are next Thursday I believe.

It is here already. Just kicking off.

@Plinkyplonkyplonk

House prices won't crash, I think they may stay the same for a time, before continuing to rise.

Why do you think that? They’ve crashed before.

Its going to get worse and little to do with Putin, I am from an ex soviet country with close friends in Ukraine and the problem there was Zelensky, putting his eggs in the US basket. We were occupied thanks to the West for 50 years, when the western countries were "booming" and same time genocide, deportations etc in the occupied countries.

Ukraine produces 40pcnt of Europes wheat, currently not much being sown there either, if Russia gets hold of the land whatever they get they look for Asian market. They too have cancelled Europe.

Europe is finished and Bojo follows WEF plan, read up on it, covid was part of the plan the goal is, no one owns anything, no cars, no houses, no holidays, rationed energy through "smart" meters etc.It was planned long before ukraine war.

Thank you @butterflycatcher were just reviewing the rates. Five year is slightly higher but seems a safer bet if we really are about to hit recession. Worth it in the long run I guess

@SpiderinaWingMirror

I'm surprised that the recession has held off so far. It will only take mortgage interest rates to move a couple of notches in my view. Been through it before and it's grim. Inflation is high, interest rates follow.

You can't raise interest rates in a stagnating economy. A recession would halt, or at least slow, rising interest rates.

The inflation that we are seeing isn't caused by too many pounds chasing too few goods. It's caused by problems in the global supply chain. Raising interest rates in the UK will do nothing.

Not sure. Jobs market is booming, housing market is red hot, every builder round here had a waiting list a mile long despite the rising cost of everything. But the cost of living is going up and up.

@Bonny00

Have you been on the glue?

"Covid was part of the plan"?

I remember the house price crash of the 1970s, I think it started in 1973 about 3 months after I bought my first house. We bought at the height of the price bubble and it took years to make up for what we lost but we didn't lose our house. I'm not sure how we managed it but we didn't have a car or phone so couldn't cut back on them, we didn't eat out much so that went but wasn't much help, no holidays, no take aways. It was a tough few years, I don't envy anyone reliving that.

Later crashes didn't have much of an impact on me but we do seem to have them fairly regularly. Not sure if my memory is spot on but I seem to remember a crash starting in the 80s and into the 90s and of course in 2008. Seems like a longer gap than 10 years between them, maybe more like 15 years but that would fit with 2007/8 and 2022.

@Porcupineintherough

Not sure. Jobs market is booming, housing market is red hot, every builder round here had a waiting list a mile long despite the rising cost of everything. But the cost of living is going up and up.

The crash in 1973 seemed sudden and brutal. One day we were chasing houses that were selling for 50% more than the advertised price, lots going on the first day they were advertised. Then suddenly it was over.

I knew a couple of developments that the council ended up buying as the builder ran out of money and couldn't finish them without selling some of the first to be completed and he could barely give them away. I knew people who moved onto those developments and then bought them as sitting tenants. They did very nicely.

Recession will come around early 2023.

People will first cut down on spending as much ad they can, which will then hit consumer spending.

But the hit won't come until winter 2022/23 as people don't use the heating during summer or autumn.

Lack of disposable income, depleted savings, and sky-rocketing energy costs at the tailed end of 2022 will then tip the country into a recession.

They have already adjusted UK economic growth from 1.7% to 0% for 2023.

And gas & energy prices can still go higher so I would expect that 0% figure to become negative.

I love MN, every time something happens there is going to be a recession and housing price crash, where we will all be buying 4 bed detached properties in the south for peanuts....brexit, covid, energy prices, war in Ukraine....🤣🤣