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?

I didn't say deflation was impossible but it's not inflation

Sorry who and how and where are these people who managed to save during covid??many of us weren’t allowed to work but weren’t financially supported either!
we had to shut our whole business down but not a penny did we see, no grants or loans for us. these people must be living in cloud cuckoo land.

Tbf we saved quite a bit as did colleagues and all of my friends & it coincided with childcare costs ending. But I didn't know anyone who was furloughed; lots of us in public sector eg medicine, teaching, police and things like tech & law.

"Paul Dales, the chief UK economist at the consultancy Capital Economics, said the higher ratio suggested households had accumulated about £190bn in additional savings during lockdowns."

It wasn't illegal to work and BoJo fucked that bit up.

Any work could take place it didn't need to be essential work only, they just had to try and make it covid safe.

Outdoor building work was more or less business as usual.

Some neighbours had huge renovations during lockdown, it was horrific. All the neighbours hate them!

I was down in New Addington the other weekend and was talking to my friend's neighbour. He paid £25k for his house a few decades ago and it's now worth about half a million. It's pretty unsightly tbh, has that kind of gravelly finish to it which a lot of old council houses seem to feature.

There was such huge variation in how people fared financially. Some were fucked, some did very well out of it, and everything in-between.

Look, I’m saying that decreasing prices and result in a falling, but still positive, inflation rate due to the way it’s calculated.

it’s just maths. I’m saying those(lie you) who say that a lower inflation rate doesn’t mean prices are falling are not correct. It can mean that sometimes.

do you understand?

*can result. Not and

yes @StormShadow

I retired 7 years ago, having finally paid off my mortgage, and calculated I could live on my (reduced for going early) NHS pension. After 7 years of Tory misrule and Brexit, not to mention Covid and Ukraine, my pension - perfectly live-onable in 2016 - now doesn’t even cover the bills, and that’s without having to pay any rent/mortgage. My self-employed partner received no government/financial help at all during the pandemic and he couldn’t claim UC because we had to claim jointly and I don’t qualify, so over the 2 Covid years I racked up a £10,000 credit card bill that I’ll probably be repaying for the rest of my life.

Some people may have been able to save loads and do extensive improvements on their homes but nobody I know managed to do this.

I agrée that construction carried in during lockdown. DH is building control and he was still out and about doing inspections. Yes some sites slowed down and reduced the number of staff on them but in the main they carried on as normal as their jobs can't be done from home.

Yeah it def happened, my friends extension was done in 2020. She did pay for it before lockdown and the work had started a couple of weeks earlier, but the builders kept working on it.

I worked for a management consultancy, didn't get furloughed, didn't have any commuting costs, received 3 bonuses in a year in their desperate attempts to retain staff, and no longer had anywhere to go to spend any money.

DH worked in residential house sales, also didn't get furloughed, was the busiest he's ever been and no longer had to buy petrol as he was home based (this used to be his biggest outgoing).

There are lots like us.

The pandemic in 2020 for some people was same income, and indeed lower outgoings. Not for everyone, some laid off, self employed losing a lot of money in some cases. The OPs colleague is correct about some of the expenses being things that can be cut back or avoided, though some people don't see it that way (on a small scale, see the responses to my contention that school proms are expensive). I'd argue an SUV is an expense that could be avoided and replaced by a smaller car or one fewer in the household.

That does not mean that these apply to everyone and some will have hardship that all these changes could not avoid. It does not absolve government from things they could do to minimise inflation and therefore the scale of interest rate rises. Stopping rip-offs and excessive profiteering in its various forms would reduce inflation, for example.

The inflation rate is based on the price 12 months prior. So a tin of beans cost £1 in June 2022, in April 2023 it has gone up to £1.50 but by June 2023 it falls back to £1.30. In this example the price has fallen from a few months ago but inflation is still positive because it is based on the June to June pricing.

What these hypothetical savings in lockdown are not meant to fund eh? Just about every extra cost for the last 3 years 'should be covered by the savings people made in lockdown'.

It was almost 3 years ago now: saved once, spent about 10 x over.

Yep. I got made redundant March 2020 but saved my redundancy money (statutory and part time) as I found a job quickly. It's gone now on a cheap second car that we needed for DS starting school.

I've been listening to some financial and politics podcasts on this, and they made the point that older home owners tend to be in a better position, whereas younger home owners and renters are going to be more stretched.

As mortgages go up the extra costs will inevitably be passed on to renters. What would your colleague say about that? Do they assume young renters have tons of savings too?

From what I can see, a lot of people aren't thinking about the impact on private renters full stop.

We both have graduate jobs and before the price hikes we bumbled along ok. Now all of our bills have risen an insane amount including food so we have nothing left once all has been paid. We can’t afford the nice things we used to indulge in like the odd coffee shop visit or getting the DC an ice cream on a day out. We’re so skint most of the time we have to weigh up whether we can afford to take DC out at the weekend because of fuel.

I say this as a uni lecturer with a DH in STEM field. Our mortgage rose by £150 a month alone and we got off lightly compared to some of our friends.

I was listening to an LBC phobia in with James O'Brian and the Mayor for London where the impact on landlords and private renters was discussed. A landlord who'd moved in with her partner was saying she knew her tenant could not afford the rent she would need to set to cover the increase in her mortgage payments so she was going to sell the flat. Other private renters rang up to say that they couldn't afford the rent increases planned by their landlords.

This is a very serious issue in london and elsewhere and speaks to the shortage of housing in the UK which is a massive issue not being addressed. If rental properties are sold off as a result of rising interest rates then that will potentially exacerbate the shortage of homes to rent. Even if they are bought as buy to let, rents will inevitably go up. And if people default on their mortgages (which I think the Govt is trying to work with mortgage lenders to avoid) they will then need to rent properties....

Cutting back eventually bites someone.

Eat at less independent cafes and they go bust. Staff lose jobs. Supply chains run into issues. Funny how it was all "Eat Out to Help Out" and encouraging spending and now pushing us to cut back. Because as long as small businesses fail slowly and the unemployment rate trickles up rather than big wealthy business chains collapsing it's not really a problem...😏

I've been a victim of this twice. In spring 2009 I worked for a posh footwear company and we all had to do 80% hours for 80% pay for 6 months, and then in March 2020 with the anticipation of no sales the company folded. I don't think people realise how many people work for businesses that sell things that aren't essential food - from things like online flowers and jewellery stores, to gig tickets, car showrooms, and hotel chains.

I bloody well don't want to have to cut back and live on the bones of my arse to get by. I want to work hard and earn a decent, livable wage in line with inflation, and enjoy life a little. I think the idea of just 'cutting back' is reductive. Guilting people for having a holiday abroad and buying a takeaway coffee is so unfair. What are we meant to do, turn into work robots who plug 60 hours a week and spend all our earn money trying to compete with high inflation and work ourselves to the ground with nothing to show.
The sooner the government realises the problems higher up, the better. And no, it's nothing to do with Jane going to Costa coffee once a week

One of the many reasons I'm disinclined to curb my discretionary spending when I don't have to. Its other people's livelihoods.