InglebyUTB
Well-known member
What’s your solution?
Helping Mortgage holders
- Thread starter Redwurzel
- Start date
sherlock
Well-known member
Short term - a reduction in interest rates, then a freeze on further rises. Immediate introduction of a wealth tax as wealth urgently needs to be redistributed. Banks forbidden from repossessions whilst we are in this cost of living crisis. Rent controls. Regulators working in the interests of the people not the companies they are meant to regulate.
Longer term - rejoin the EU as Brexit was utter madness. Reform the housing market to introduce loans with lifetime fixed rates. Annual wealth taxes. A clampdown on profiteering. Close the tax loopholes.
That's just off the top of my head.
This is nonsense because it ignores what inflation means. Who cares about the costs of groceries going up 10% if mortgages are going up 50%? Mortgage and rent are excluded from CPI for this reason, so they can separate inflation for them, aka the rich, from inflation for the rest of us. Interest rates rising are causing inflation of total costs of living to increase by far more than just inflation. Inflation isn't being caused by excessive spending. I have a lot of friends in very good jobs and even they are struggling. Nobody has excessive amounts of money to be curbed so god knows how people on much less are going to be affected by jacking up another of their outgoings. The last year we have had people worried about making a choice between eating and heating and this year it's going to be people looking back on that as the good times.
If they want spending to reduce then inflation is a better way to control that than raising interest rates because we have a choice when we go to the supermarket of buying things over and above the essentials but we don't have that choice with our mortgage and rent. If holiday prices go up too far I won't go on holiday, if cars are too expensive I won't buy a new one etc.
What possible benefit do you think there can be for the people to be handing over several hundreds of pounds extra every month to the banks instead of spending it in the economy? Where is it going to go? Not back to the people. The only reason the banks and the government are scared of inflation is because it means they might have to start paying us more. We're in a cost of living crisis where people are struggling to pay the bills and the solution is supposed to be higher costs so we have less money to pay the bills. Think about it. Who is benefiting from that solution?
This is why all talk of "the economy" is utter bull****. The economy is totally disconnected from the people. It means the super rich, the landowners, the business owners, the off-shorers and global corporations. The rest of us are just pawns and every decision is made to maximise the transfer of wealth from us to them.
WoodallServices
Well-known member
Nail on head there. Too many people who rather than buy a home, bought bragging rights down the pub. They’ve inadvertently become the architects of their own downfall by supplying too much unearned money into the system. It’s one thing adding an extension onto your mortgage but cars, holidays etc was just crackers.
I have colleagues from all over the country at work but some of the interest only self certified mortgages people living down south have are absolutely eye watering. I shudder to think what the outcome is going to be when those mortgages need paying off.
WeeGord
Well-known member
That is absolutely untrue - any decent mortgage adviser gives advice based on an individuals circumstances, any future changes etc.
There is no difference in terms of commission whether it's a 2 year fixed or a 5 year fixed.
ForssAwakens
Well-known member
But that the point in the ones that’s are bad, they are incentivised to review every two years for either their fee or commission again
I’d like to think they are more good brokers than bad
Colgates_shaving_foam
Well-known member
There might be though between a 5 year and 20 year fixed though? Surely repeat business would be reduced?
Not sure if you've seen the whole thread but the discussion was around why 2 year fixes and to a lesser extent 5 year fixes are so common.
WeeGord
Well-known member
I started working in financial services 20 years ago today, and have been a mortgage adviser since 2005. In all that time I can genuinely say I could count on one hand the number of advisers who don't give good advice and who base their recommendations on 2 year fixed rates every time. Thankfully, the couple that I was aware of are now no longer in the industry.
InglebyUTB
Well-known member
Tell me you don’t understand inflation, without telling me you don’t understand inflation.
WeeGord
Well-known member
There were a number of lenders, though still a very small minority, lending on 7 and 10 year fixed rates and have done for some years. A couple of extra lenders entered the ten year fixed market and quickly withdrew. I think the primary reason for the majority of deals being 2, 3 and 5 year fixed rates is that almost all fixed rate mortgages have an Early Repayment Charge for the duration of the fixed rate period.
For many people, going further than 5 years and having the certainty that circumstances were unlikely to change isn't feasible. Mortgage borrowers tend to be younger to middle aged (though there is a growing number of older borrowers of course) and so they tend to have less certainty in their lives so don't want to fix for longer than 5 years ordinarily.
WeeGord
Well-known member
Also, I should point out that as an independent mortgage broker I give all my clients a range of options; variable rates including trackers, 2, 3, 5, 7 and 10 year fixed rates and discuss the pros and cons of each. It's only after these discussions and after taking into account any future changes to income, jobs and affordability that I make a specific recommendation to my clients. In all the years I have been an adviser there has slowly been a shift towards 5 year fixed away from 2 year and 3 year deals, but there is virtually no appetite for 7 and 10 year fixed unless there are very specific circumstances.
InglebyUTB
Well-known member
So much of that is either fantasy or nuts.
Rates were held at near zero for far too long, the BOE were wrong to keep them there as long as they did. How long have people been saying that the housing bubble is going to burst as it was fuelled by cheap credit and people over leveraging themselves? This is the correction to the market.
Rejoining the EU is simply laughable. It doesn’t matter how disastrous Brexit has been, we can’t just rejoin and if we could it would be on much worse terms.
As for inflation:
1. The UK - like the US - has a shortage of labour as a result of deliberate policy choices. People left the workforce for good post-Covid just as the UK cut off cheaper labour supply from the EU putting upward pressure on wages. But people don't want immigration in the UK or US, so it's not an option...
2. If we look at pure inflation and not core so that food and energy is included (chart attached), the picture looks even worse for the UK. This is because lower energy prices on global markets are not feeding into UK inflation because people have been shielded by the cap. Incidentally, that cap also adds to inflation since people have more to spend. But of course, this is a policy with wide support among the public.
3. Also in the raw inflation data is the cost of food. My alma mater conducted a study suggesting food prices in the UK are 33% higher due to Brexit because the UK simply imported labour (Britons don't want to pick fruit, that's clear) and various food stuffs. Let's not forget the huge proportion of grain that comes from Russia and Ukraine that is obviously very difficult to access and in reduced supply due to a proxy war that the UK is the biggest cheerleader of. But Britons want to continue the Ukraine policy and isn't going back to the EU anytime soon. Starmer is a coward, he wouldn’t even dare mention an EEA deal.
4. Since Cameron and Osbourne, Britain's productivity has gone in one direction, down which very bluntly means fewer goods and services are produced at a higher cost per unit so the ability to grow without inflation is dramatically reduced. Productivity is low due to a lack of business investment, and why would business invest in a country that has become insular and looking to reduce trade and add barriers rather than the reverse?
5. Given the public opposition and government incompetence, the BoE has just one, blunt instrument to get inflation under control and that's to keep raising rates until the economy is nuked and people facing massively increased mortgage bills when they refinance.
ThatFragranceGuy
Well-known member
taking out a 10-15 year fixed rate might sound great in terms of stability, but they're missing out on the ability to remortgage as they cross LTV bands and reduce payments and if rates dive, they're stuck paying the higher amounts. It's a lot to pay for a potential benefit.
ForssAwakens
Well-known member
But if they don’t want to worry about mortgage rates and they don’t care about reductions then those deals could be right for them, as no one can predict the future
ThePrisoner
Well-known member
Looks like the USA has nailed this. Variable rate mortgages don't seem to be a thing there.
On the other hand they did cause the 2008 financial crash selling mortgages to people who couldn't afford them.
Swings and roundabouts I suppose.
On the other hand they did cause the 2008 financial crash selling mortgages to people who couldn't afford them.
Swings and roundabouts I suppose.
sherlock
Well-known member
In your opinion….
Colgates_shaving_foam
Well-known member
I think there would be plenty of people that think I can afford 800 per month (for example) and I would happily pay this for 20 years. It would give real peace of mind.
InglebyUTB
Well-known member
No, it’s economic illiteracy.
Lowering rates and freezing them? You’ve just taken away the one and only tool in the BOE’s tool kit. So inflation will continue to rise.
Whether we like it or not that’s all they have, corporate profits have never been higher but the BOE isn’t in a policy position to tackle those. All it can do is choke off demand so they eventually have to lower their prices and reduce their profits.
sherlock
Well-known member
So we reform the system to give a policy position eg wealth tax.
I think all my qualifications say otherwise thank you very much.
There is a huge difference between understanding inflation and agreeing with it. Your list of causes of inflation and the solution, is also rubbish because you are suckling from the globalist teat and not reality.
1. There is no shortage of labour. There is a shortage of people willing to do a **** job for **** money. Raise the wages and people will do it. That might marginally contribute to inflation but only a very small amount but has further benefits to society (such as wage inflation).
2. You are correct that inflation is being caused by external factors which means putting prices up on everything else (such as borrowing) won't cause those costs to reduce so you are just adding an additional cost instead. Raising rates is going to cause a recession. If inflation is being caused by external factors then how would triggering a recession change that? All it will do is lead to an economic downturn here and then we're in a worse position to purchase global commodities.
3. The primary reason for all the economic turmoil is the government and their policies. They've pursued a low wage economy to benefit the wealthy at the expense of everyone else. The solution isn't to increase borrowing costs but to replace the government. Productivity is down because health, social, education and welfare is down which leads to low morale. Couple that with low wages and you get people that aren't willing to do more for less.
4. I don't care what the BoE only tool is. Take it off them if they are too irresponsible to use it properly. It's a stupid idea to have them independent anyway. It just removes the accountability from the government. They have one measure to control and one button to press so why do we need them if we know what they are going to do and they do it without any nuance? There are other methods to control inflation that the government can take instead or as well. They should have full control and then we can blame the correct people when they do it incorrectly.
There could be more flexible options. Long term fixes with steps when LTV bands were met including changes to LTV based on market rates done automatically if house prices are rising, break clauses to allow early exits without heavy repayment charges. Variable rates should be better as well. You could offer long term variables with capped increases for example. SVRs should be illegal. There is no reason they should be allowed to charge SVRs. There could be special mortgages for people that fall into negative equity. It's mental that people that do get stuck with an SVR.
2 and 5 year fixes are a con anyway. They are just there to protect banks and to increase their profits. There is of course no such thing as a 2 year fix. It's a X year mortgage with a 2 year promotional period. You still owe the rest of the balance at X-2. They could very easily change the structure to X year fix with the option to re-mortgage at 2/5/10 or whatever. The whole system is a scam.