People just need to cut back & they will be ok

[nameschangg]

Following a discussion on the radio about mortgages/col I made the comment that even for those that can afford the increased mortgage costs it's difficult to get one's head around paying more just to service debt. Colleague replied that's exactly the problem & the media are over egging it. His argument was recent buyers have stress tested & many will still have seen jumps in house value. He said any older buyers will likely have a ton of equity so can just shift to interest only or sell. His main argument was people can afford the rises & they just don't want to give up the nice things they are used too. He said the gov know this & know how much people saved in lockdown. Admittedly everyone in the office did say they saved quite a bit (including myself). I argued that not everyone fits that criteria but he believes the majority do & the media needs to stop scaremongering. Does he have a point?

So it's not really affecting your ability to eat or pay bills then just luxuries.

The problem is it isn’t just mortgages that have gone up. My gas/elec has gone up by £150 and my food bill per month has easily gone up another £150, plus all the other stuff that has gone up. I’m guessing my mortgage will go up by £400 per month on July so that will be a total of £700 just on essentials. Fortunately, we can afford it but it won’t leave much spare. Fuck knows how the other people on lower incomes can. It’s depressing having to work 40 hours + per week knowing you can’t afford a treat at the end of the week or if you have to constantly say no to the kids.

See, the mistake you're making is being reliant on earnt income. There's fuck all within current fiscal policies for you. Your best bet is to join a trade union.

I got made redundant during covid so I saved fuck all and got into debt. Your colleague needs to get his head out of his arse and realise it is different for different people.

I'm sure there are lots of people who could afford the rises if they sold their houses, never had their hair cut, never went on holiday, never bought themselves a new pair of jeans or shoes, never went to restaurants for meals and so on... But really... Why would that be any better for the economy?

And then there will of course be those that already don't do any of those things!

Utility and food prices are coming down.

Food prices are not coming down. They might be increasing slightly less quickly than in recent months, but prices are only coming down when the inflation rate is negative, not when it's slightly lower but still in double digits. Rich-guy Sunak wants us to believe that lower inflation means lower prices, but only the innumerate believe that.

Well it depends on your disposable income each month. If you normally have 2k disposable income a month then that might drop down to 1k and you’d be able to solider on. If you normally have 1k left, now you might only have £200 left and you’ll have to make serious cut backs. If you’re already living month to month with £50 left over then you’re fucked aren’t you.

I keep on trying to assure myself that the country has never stayed in recession forever and there are early signs things might be turning round. The fact that wholesale costs have stopped rising; the cost of gas and electricity has started to come down; and the stock markets have stabilised over the past couple of months.

If interest rates could just stop rising it would make me happy.

The media have made things 100 times worse by the constant reporting, which is then making people more nervous to spend which then affects the economy BUT that doesn't take away from the fact there is a real problem. The cost of everything right now just makes me want to cry.

I'm really not sure how having equity helps anyone with large mortgage payments. "Downsize" into what? We are in a "middle" price property into which a pensioner couple could downsize, but we can't afford their 5 bed detached family home so we're not vacating it for them.

I don't think downsizing means moving into a five bedroom property. Unless you currently live in a six bedroom one.

Was that in reply to me? I said we can't afford their 5 bed detached (neither can the other families round here, living in 3 bed semis like ours). The large properties here are about £500k and just sitting unsold while there's very little around the £250k-£300k mark.

There are lots of people who just aren't that exposed to higher interest rates

that's a good point. If they are not exposed they will just keep spending. Just reminded me said colleague booked an expensive holiday last week!

What nice things??? What lockdown savings? We had to find new jobs and we don't eat out, only buy second hand clothes, no days out unless they are free (quote our child after a long day out on a hike with a picnic "this was fun mummy, was this free? Can we do it again?"). All money goes on mortgage, bills, car (needed for work) and food. Oh food! I have sold most of my possessions to update the house etc. Oh and I speak two languages with two higher degrees. Perhaps we shouldn't have chosen careers in science and the environment.

Are other countries in Europe experiencing the same financial problems, does anyone know?

Exactly. It is food and energy mostly

Well, I don't think that's the depressing part. Lots of people having a few hundred quid a month slack in their budget isn't a bad thing. It's the inequality, the stupid policy that got us into a lot of this mess in the first place and the every problem is a nail when you have a hammer thinking that we've ended up stuck with.

Have you got a problem with that? I am explaining to OP how it has effected us, not you....or other people. Everybody is in a unique situation. If you want to go into a poverty competition about who has had it worst between is two then be my guest.

That depends on where you live. A lot of Merseyside and the North hasn't had those increases, yes they've doubled, but the new over 55 flats start at £67k, yet the two bed, no gardens houses, without having a lot spent on them, aren't much more, if at all more. Equity release isn't an option because the property has to be over £70k.

A lot of self employed people are still paying off the debt they built up during Covid. A lot of over 45s can't get jobs paying what they used to earn, but have to help their kids out etc etc. Single person households suffered more than couples, obviously. There's very few blanket statements that apply.

The overstretched argument is bullshit. I'm overstretched because I paid what the market said a house costs and because I didn't have a massive lump sum (let's be real either an inherentence or equity in your previous house) I had to get a hefty mortgage. The fact the ratio between salaries and house prices has been growing and growing is a fact that those who harp 'we paid 15%' often fail to mention. I don't want a massive mortgage for a long period but I do want a roof over my head so it's either that or rent right?

I have to disagree. They are actually going down. There are a couple of key items that I am literally tracking the prices of. It’s not every item. Of course it isn’t. But they have dropped by 20 to 30p each over the last two weeks.

Very strange to call people innumerate when you’ve not worked out that inflation is the annual rate of increase. Prices on all our food items in the CPI basket could fall tomorrow and would definitely be coming down. However, inflation would still be higher than 0% because the items had not fallen to the levels of a year ago.

This is a good point. I don't dispute that some of the people now struggling are doing so because they bought much more expensive properties than they needed, but it's a fact that for a lot of people it was either an overpriced house or overpriced rental property. And private renters are liable to be hit the worst by all this, despite the headlines mostly being about homeowners.

It's all very well saying just cut back, but when everything has shot up in price it's not just a case of eating cheaper food to pay for mortgage costs, or using less electricity to pay for higher mortgage payments, some people gave absolutely no place to make savings from at this moment.

Aye, price of loo roll is coming down. The pack I buy (Sainsbury's 24/7 9 double rolls) has gone from £5 to £4.90.

I think both views are too simplistic, the letter I had from the bank at the weekend informed me that my mortgage payment had gone down, but I am nearing the end so paying down the balance, but that doesn't negate the rise in everything else.

Many will weather the storm comfortably, many will manage ok and many will struggle with some not managing at all.