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?

@lorking

Tbh the war is obviously not helping but this was coming before. Look at wage growth, the productivity & lack of investment in the economy despite high employment & ever increasing house prices. Too much reliance on QE has fucked things

Agree with this. COVID and the war are very convenient excuses (and cover) for a mismanaged economy that has served the very wealthy at the expense of the average working person and it needed to go to bollocks and correct itself at some point.

We have had years of austerity in this country, yet prior to COVID the debt had got far worse.

They are exploding a bomb in a burning house and only blaming the original fire for the damage. Actually that sounds very dramatic, but YSWIM.

And yes, in some ways I think a housing crash is necessary, but as a renter, this is not the ideal as many renters would be kicked out of their properties. It is the only way people have a chance to get on the ladder though, so I don't blame them for wanting it.

Yes. I think we were headed for a recession even before this oil business, because of the effects of covid.

Frankly I'm only waiting for some fool to suggest going down the Japanese route, where they pass mortgage debt onto the kids

Even in Japan they've recognised the ageing population issue & have the long term insurance model for social care, another we are kicking down the round.

road!

We have had years of austerity in this country, yet prior to COVID the debt had got far worse*

and the rich have got richer

It’s really worrying. I think a recession is inevitable.

[quote 3ormoredogs]@lonsion what about people like us (if you can call 30 young) who have scrimped and saved for over 10 years to buy a home if your wish of a crash happened. We would loose every penny we have spent on this house, not all of us were given handouts and I’m sure thousands of others would be in the same boat.

Also if there’s a massive crash and we are all plunged into negative equity nobody will move and so there’s will be no homes to buy anyway.[/quote]
If there's a crash and you can afford to sit it out until prices recover, it's really not a big deal. Prices recovered quickly after the 2008 crash, but the one that started at the end of the '80s took far, far longer - I think it was several years in many areas.

If you're selling and buying, the house you buy will be cheaper too. If you're moving to somewhere more expensive, you save more than you lose, iyswim.

The government borrowed 400 billion to pay for lockdown. They shut down the economy for two years - yes there's definitely an economic crash coming.

@Roselilly36

I can’t see how a recession can be avoided tbh. Rising utilities, food costs, fuel, interest rates, inflation, rise in NI from April. The poorest in society will be hit again, what choice do you make, eat, heat or put fuel in the car.

A housing market crash is a real possibility, it has happened many times in the past. Cheap money is a thing of the past. As mortgage rates rise, the squeeze will get worse. I can remember mortgage rates 12-15% and the repossessions and negative equity that it cause. Awful times, I really hope it doesn’t happen, but I think it’s entirely possible, sadly.

I remortgaged in 1990 and got a fixed interest rate of 13.5%. This was a really good deal, as mortgage rates went up very soon afterwards and the best I would have been able to get a couple of weeks later would have been 15%.

Those sort of interest rates are unthinkable nowadays.

In the mid 90s I sold my house for 60% of what I'd bought it for. I had no choice but to sell.
Many people will have no choice but to sell. Shit happens. People die, get ill, get divorced, lose their job, need to move to another city.

There is no "handing back the keys". You are liable for the debt.

So if you bought for 300 and sell for 200:
If you have 200 left on the mortgage you are ok.
But if you still have 280 left on the mortgage, you get 200 from the sale and still owe your lender 80k.

It has happened before and could happen again. There is no "they" looking out for the housing market. No-one cares if it is fair or not. The market is the market.

I'm not saying this to be doom and gloom, but just as a warning to all the folks who think that the market never crashes. Pay off as much as you can, don't overpay for a property, stop renting huge cars, paying $$$ to get your hair and nails done/whatever else.

Tbf people think that people there has been so many props to stop prices falling

Yanbu. The Tories have run the country into the ground. While some of this has arisen due to "global issues" the UK is looking set to be worse off than many as a result of shortsighted and incompetent policy descisions over the past decade.

A very wise post, OakPine, though I'm so sorry you also got clobbered in the 90s

Sometimes people have very short memories (or perhaps weren't even alive then?), and while insisting "It'll never happen again" may be a comfort it's not necessarily realistic

Yes, it's worrying already how much our outgoings have risen. Childcare fees rising by 5% as well as fuel, food and energy. We have cancelled prime, Disney plus and also my son's weekly football class. We are cutting our 'holiday' budget as we need the extra for our essentials. It's going to be a tough couple of years

Cannot see how there won't be. Prices of fuel, gas and electricity going through the roof. Food prices up and current conflict on top of Brexit will only exacerbate that.

I'm on the lowest salary I've ever had due to poor health. Heating is on one hour a day. It's a bit scary tbh.

I wish we could overpay our mortgage
We will just be able to afford bills and food and not much else.

I know negative equity isn’t a worry until you sell but if we did loose our jobs or couldnt afford the house and had to sell at a massive loss it would ruin our lives and the same goes for lots of of the home owning population. There’s also people on help to buy schemes etc who would be in the same boat.
I’m not sure why anyone would hope for that

If young people can’t get jobs because there aren’t any or save any money because bills are so high that’s not going to help either.

I hate renting, but have no option. Last year we moved to a flat with locked rent for 3 years. At that point we thought it a risk as it looked like rents may be going down in the area.
Now I'm quite happy that at least we don't have to worry about that. On the flipside of renting: we have no control over who our energy supplier is. We have yet to receive a bill.... not looking forward to that.

@lorking

And they're going to make working pensioners pay NI on their earnings,

Why don't you think that's fair?

Well it doesn't just come down to fairness, it will be a big drop in income for some at a time when prices are rising so it will be hard. It isn't the only thing that is going to be hard but for the people it hits it won't be pleasant.

I'm pushing 70 and still working but I'm struggling after covid so I think I am going to give up work which will be a big drop for me. It's just one of those things, no ones fault but we all feel the thing that hits us. I suppose on the plus side I haven't got the energy to go out and spend anything or use petrol so that will be a saving. I've cancelled Sky as well so that will help with the bills.

Surely that's applicable to anyone working who has to pay it though? I don't agree with it & thinks it's regressive but don't see why working pensioners should be exempt.

I hope not. I’m on my uppers as it is.

At those prices it must be worth looking at an air source heat pump, surely?

@crispmidnightpeace

Of course, all part of the great reset. You will own nothing and you will be happy.

Ffs

An air source heat pump requires electricity running 24/7 to power it, costs around £7-10k initial outlay and you need massive radiators and pipework due to the low temperature flow rate plus a super insulated house. If you have microbore pipework then it’s a complete non starter.

@lorking

Surely that's applicable to anyone working who has to pay it though? I don't agree with it & thinks it's regressive but don't see why working pensioners should be exempt.

I don't think anyone has said they should be exempt but surely you can see if people have a low income and prices are rising then this will be hard for them.

@Gonnagetgoing

Doesn't this mean that all the businesses which struggled through Covid and furloughed staff etc - so cafes, restaurants etc will put up prices?

I've got a new hairdresser who's lovely (my best so far!) and she opened her salon last autumn/winter, she won't want to put up her reasonable prices but she may have to! I could just about afford them. But the small independent organic grocer/greengrocer will have to put up prices etc.

I don't need a second job but surely if people want extra work, local cafes/restaurants where lots of the workers headed back to their own countries due to Brexit, well the work is there. Noticed at least 2-3 restaurants require extra staff.

My hairdresser has already put hers up to cover overheads, I can't justify going to the salon any longer or I won't be able to pay my own household overheads! She is now charging 70 quid for a cut & colour, was 60...i know its cheaper than alot of places but it's 70 quid I need to put towards our huge energy bill. I'm going to colour my own & go to the barbers for a dry cut or get DH to trim. Hair is a complete non essential to me now..