Inflation and interest rates

[Sallywallywoowoo]

The BOE keep raising rates to curb inflation. I understand that is the only thing that the BOE can actually do and so they've got no choice. But isn't there anything else the govt can do? It's genuinely scary seeing articles on the BBC how 1 million mortgage holders will see their payments increase by £500pm by 2026. Literally nobody I know could afford that. And it doesn't even include renters in that number. Presumably loads of them are in the same boat or worse. If their LL mortgage costs go up, then so will their rents.
It seems to me the financial burden could be spread more fairly. Anyone who owns outright isn't feeling the pain. And for the most part that group is likely to be the ones who could most afford it. Especially if they have a load of savings that they're now getting a nice high rate of interest on. Surely things COULD be done differently if the will was there?

Sure, as long as I get a rebate for the years I had a fixed rate that was lower than the tracker. I'll be nice and not demand interest on it.

Really, if we're talking about fairness, it needs to be a mechanism that isn't so ageist. Anything that disproportionately affects those with mortgages and who privately rent is bound to be.

Higher than the tracker, even. Wasn't much room to get lower!

I don’t think either is greedy. They’re the opposite sides of the same coin.

Classic MN - whilst Rome is burning the government is happy all the little people are arguing about who has it worse (oldun’s youngun’s, those with a mortgage, those without) whilst they sit back and laugh their asses off knowing that INTEREST RATES HIKES ON THEIR OWN WILL NOT SOLVE INFLATION.

Of course while maintaining a narrative of ‘bringing down inflation is a top priority’ yet doing precisely nothing to achieve that (because as a reminder the BoE is not the government) and because the actions will be political suicide.

FFS how many times does it have to be said on this thread?

It’s not just a few of us ‘suggesting ideas’. It’s multiple economists with decades of experiences across multiple countries with varying types of inflationary causes.

Yes. Seriously.

For one side to continue winning all the time the other has to lose. All the time.

If you expect to be on the winning side all the time ... that is ... ambitious.

For some reason you believe mortgage holders have a greater right to be subsidised than savers.

News flash. That's not how economics works.

Ok it's getting very boring people arguing points with me that I haven't made. I didn't say it was how economics works. I didn't suggest it was the answer to the problem. Nor did I say that the savers shouldn't get interest, or that anyone should be subsidising anyone's mortgage. What i took issue with is calling people "greedy" for wanting to be able to afford to stay in their homes all the whole discussing where they can pick up the most interest on their (already large, judging by the poster saying each 1% rose would "earn" them another £4,500) pot of money

If one set of people want or expect money all the time at the expense of another set how is that not at the very least quite optimistic ?

I am a net saver.

How do you know what I need the money for ?

How can you judge that your need for it is greater or moire deserving than mine or indeed anyone else's ?

To be fair I only said that as a wind up.
Nobody wants anyone to suffer, but as someone else said savings interest and mortgage rates are two days of the same coin. Savers have been punished for about 15 years with proto interest rates, mortgage holders have done very well during the same period. Now it's our turn to do well.

That doesn't mean I wouldn't like to see people in trouble get help. I don't want people thrown out of their homes, or for their payments to be unaffordable just so I can get a bit more money. I'm not a BTL landlord who charged renters "the market rate" enjoying 15 years of near zero rates, or a total monster like that.

Obviously that would make more sense without the shocking autocorrects

Do you really think the majority of people have control over monetary and fiscal policy?

@AuntieJoyce

Have you heard of this thing called voting?

@Sallywallywoowoo
and you’ve conveniently ignored all those people who made thousands just by selling their house. The very definition of free money! Were they not ‘greedy’?

Anyway the poll says 57 percent unreasonable and 43 percent reasonable. Wonder if that is split along mortgage holder / saver lines or not. No way to tell.

I have. When was the last politician elected with a one vote majority?

*Is it shitting on the generations that come after you if pensioners are happy to accept payments in line with inflation?

Genuine question - I'm 10 years away from being a pensioner myself.*

Not necessarily, but I do sincerely believe that the cohort size and voter turnout of older people in this country has meant that policies are developed in their favour to secure votes.

I haven't come across many voters in that age group who put the needs of their children or grandchildren high on the list when deciding who to vote for, (and I'm not talking about pensioners in poverty, who rightly need support).

The reasoning they often give is that they had hard times too or that things will be made right through inheritance, but I think that attitude stinks and just further entrenched inequality, which harms us all.

Just my opinion though.

Yup. But we still get a government with a landslide on less than 50% of votes cast.

@AuntieJoyce m

How do you think elections are decided? Last I checked, it's based on the majority, so of course the majority of people have power.

The fact that voters in this country make voting decisions on the basis of how someone eats a bacon sandwich or wanting to laugh at a bumbling buffoon is a separation issue.

That doesn't mean I wouldn't like to see people in trouble get help. I don't want people thrown out of their homes, or for their payments to be unaffordable just so I can get a bit more money.

This is good to hear. Thank you for saying that. I'm pretty sure many on this post don't think like that sadly.

But it’s not the majority at all. This government got in with 43% of the votes cast. More people voted against them than for them.

@Blossomtoes

Are you really arguing that the majority of people in this country have no power over the governments we have?

Or are you just being argumentative? Genuine question.

I used to work in a field related to this and believe me, every single MP pores over voter sentiment and voting intention data at every opportunity.

People have gotten lulled by low interest rates for years. In early 2000 interest rates were 5% we stressed tested ourselves to about 8% when considering mortgage as you only have to look at bank of England rates over the years we're they have fluctuated up to 10%

Stupidly large mortgages were offered to people who wouldn't be able to afford them if interest rates increased but many people didn't consider that

Genuine answer - 43% is not a majority and it resulted in a landslide. If 57% of voters voted for other parties, the government didn’t get a majority. How on earth is that being argumentative?

I agree I don’t get the not a majority it’s how our system works

The same for other landslides not just Johnson’s

You know nothing whatsoever about my situation, and yes, I have invested for retirement - I said I had savings. I am just as "entitled" to high interest on my savings as anyone else is "entitled" to own their own home. Renting can be a cheaper alternative to owning. I spent 19 years in a flat at a low rent, and during that time it was re-painted throughout, new carpet throughout, the bathroom remodelled, a new water cylinder, and expensive plumbing repairs which had to be done - all of which were at the landlords' expense. I am now in a different flat - and the landlord hasn't "hiked" the rent.

Thank you for your kind comments. I have actually owned a property in the past, but a marriage breakup put paid to that. I'm not in the UK, but things are just the same here regarding rising interest rates. The word pension isn't used much here, we call it superannuation, and yes, I am in a superannuation scheme which I included as part of the word "savings".

@Blossomtoes

What about Brexit? That has to be the very clearest example of the majority of people deciding on something with huge monetary and fiscal policy ramifications.

See also: joining the Single Market in the first place.

Any anyway, the poster I was responding to claimed that the majority of people have no control over policy and I disagree.