Too low of an increase 0.50% minimum is needed especially when the US has hiked it by 0.75%
[deleted]
For me this paints quite a bleak outlook for the UK, at least in the short term. The US is committed to getting inflation under control, shown by the 0.75% raise yesterday. Seems like the UK’s hands are tied from raising by more than 0.25%, potentially due to the overextended fragile nature of the housing market, and we’re already experiencing more inflation than the US.
Expect the dollar to net >£1 very soon.
People need to realise this is now state sanctioned theft from working people to protect asset holders. US increased rates by 0.75, Bailey et al 0.25. Everything these people do is done to protect the UK house price Ponzi scheme and other asset bubbles, all at the expense of wage earners who month on month are having their real wages smashed to pieces. Utterly mental we should all be rioting in the streets. As people say below, expect more inflation, a run on the £ and continued decreases in the real earnings of workers.
Don’t worry though, grandmas cottage will still be £400k
This is absolutely pathetic, does their mandate mean anything to them? A complete protection of the asset rich while our wages get eaten away. How does it go anywhere near far enough in dealing with the CPI figures?
Covid money printing and the Russian oil ban has put the west into financial meltdown. I think it’s unfixable at this point, just short the market and you should be ok.
Bank of England are doing their best to steer UK into Stagflation for 5-10 years to save the housing market.
This is the only explanation that makes sense with their policy decisions, unlike FED who are clear they want to end US inflation as soon as possible with 75bps hikes.
Pretty much a joke but at least they’re pretending to do something unlike the ECB or BOJ.
Low interest rates are bad. Increasing interest rates are bad. Wtf is a good interest rate? Surely this is a good thing for anyone who is saving money as their money will lose value compared to inflation at a lower rate.
BoE baserate now higher than my 5 year fix I did in January.
Honestly, I can’t see how the housing market survives continued rate rises. I have like 35% equity in my flat, so I’m not too worried. It can fall up to 35% in the next 5 years, and I haven’t lost anything.
And my mortgage is like 50% of what rent would be, so I’m quids in regardless.
But FTBers who just bought, on 1-2 year fixes at 2-3%.. Shits fucked, man. They’re going to have a real fucking difficult time with mortgage rates at 5-6% if we head that way.
Throw in a 5-10% drop in house prices due to credit being too expensive, and now they don’t even have any equity to do a remortgage and will default to their mortgages (always shit) variable rate when their deal ends.
The young, who in this situation actually somehow managed to actually get a fucking house and get on the ladder, will be the most fucked by this.
Landlords who’ve been doing it a few years, won’t have to care or worry. They’ll just up rents, and probably have a ton of equity in the properties anyway.
Older people who bought 10+ years ago won’t need to care for the same reasons.
Much older people paid off their mortgage, so no need for them to worry.
It’s so sad. The young of this country literally never catch a fucking break, and I feel for them.
The only saving grace, would be inflation falling and wage increases continuing. But that’s a big if..
Its being walked up so slowly but homeowners are still going to shocked pikachu face when they’re looking at 4 or 5% base rates in 2024.
They are giving people plenty of time to fix. Too much, some might say.
The fun thing for me is that I can’t remortgage to get on a fixed rate due to post Grenfell cladding issues so, basically this in combination with my housing authority upping my rent (I’m a part buy, part mortgage kinda guy) by £100 pm means I am SERIOUSLY concerned about losing my flat.
Fun fun fun.
Not enough. MPC have bottled it badly
It is depressingly long until we can even try to get rid of these people. I want to strike, or protest, or SOMETHING, but I would be risking what little food security I have left to do it.
I reckon the pound is in a death spiral.
There’s a study showing the average age of a fiat currency is 35 years that gets thrown about. I’m not sure about the exact numbers, but an inflationary spiral followed by a new currency isn’t uncommon. Germany had three or four currencies in the 20th century, Brazil has had six.
The thing that stops a currency spiralling out is either being backed by a finite commodity (and the UK left the gold standard in 1931) or restraint from money printing (and we’ve doubled the amount of £ in supply since the 2008 crisis).
So for me, the pound (and a lot of other currencies) now have no safety net, and have commenced a steep inflationary cycle with huge QE.
We’ve now backed ourselves into a corner to the point that we’d need to raise interest rates to 8% at the very least in order to stop the currency inflating, yet we can’t do that because it’ll crash house prices. And we need to be constantly selling government bonds to pay our existing debts. So we can’t tolerate inflation, but we can’t reduce it, nor can we pause it. It’s a three-way catch-22.
​
We’re seeing some countries struggling to sell bonds, paying very high rates just to fund their debt, I think we’re getting quite close to entering a rapid inflation spiral. Maybe hyperinflation, or maybe just serious stagflation.
Either way, I think we backed into this catch-22 back in 2008 and we’ve been walking an unsustainable tightrope ever since. But I think this year may be the year it all falls apart.
People banded around “the great reset” and that all the world leaders where in on it.
As I understood it, it was the put the working classes back in their place because too many had got a university education and were earning too much money.
At the time I rolled my eyes and just thought it was nutty conspiracy theorists. And I love a good conspiracy…
Now it seems as though that doesn’t seem as far fetched as I thought.
Making university more and more unattainable for the working class.
Wages frozen for years, because they got lucky with a pandemic (was it really as bad as they said? Or was it the fear factor?”.
Slowly eeking out every last penny,so the working class don’t have spare cash for the inevitable private health care.
Human rights out the window, so slave labour is a thing again (hence them trying to smash the RMT union).
If it isn’t any of this and just an evil tory government raping the country of all its money (yet somehow getting peoples to STILL blame Labour from 12 years ago), then I’m not sure what’s worse.
Either way, people need to kick off sooner rather than later.
For every 1% rise in interest rates, the UK loses around £11 Billion – the interest on QE which is why we see tiny ineffective rises.
HelloOOOoOo recession!
So dear bank, can my saving account interest now raise from 0.01% to 0.02%?
Still a long way from where it needs to be to make a dent
Only about 30 more to go.
God fucking dammit. I’m 32 and 2 years ago I finally, *finally* saved enough and bought my first home solo income after living at home for far longer than my mental health could deal with, working my arse off and saving every penny I could.
And now what happens? Everything gets jacked up to ludicrous levels. Heaven forbid millennials get a win. I’ve done everything right, went to university, got a decent paying job, saved and scrimped AND I was lucky enough to have parents who understand and helped me. We *literally* cannot win.
(my parents are lovely, people but being 30 and living with parents is just draining on morale)
(And no, before anyone asks, I’ve never voted Tory.)
Remember 2007ish when interest rates were 2-3% and that seemed low. Now people go crazy when it goes above 1.
The housing market is literally a ball and chain around the UK’s ankle nowadays. We have, through completely intentional processes, allowed the market to get entirely out of control – and as a result are now unable to even use the most basic of levers to tackle the rampant inflation.
I’m just about to take on a fixed 5 year mortgage at 2.9%
How fucked am I gonna be?
This seems points. If interest rate hikes work then it probably should have been higher. But if they don’t work then this still does nothing.
It just seems like a half baked change.
Every 3 months +0.25% for the next 2 years or so I would imagine.
We have tied the entire integrity of the UK economy to the housing market. Absolutely anything that could threaten house prices – notably increasing interest rates too far – will cause the entire thing to collapse. This has left us unable to respond to inflation.
28 comments
Too low of an increase 0.50% minimum is needed especially when the US has hiked it by 0.75%
[deleted]
For me this paints quite a bleak outlook for the UK, at least in the short term. The US is committed to getting inflation under control, shown by the 0.75% raise yesterday. Seems like the UK’s hands are tied from raising by more than 0.25%, potentially due to the overextended fragile nature of the housing market, and we’re already experiencing more inflation than the US.
Expect the dollar to net >£1 very soon.
People need to realise this is now state sanctioned theft from working people to protect asset holders. US increased rates by 0.75, Bailey et al 0.25. Everything these people do is done to protect the UK house price Ponzi scheme and other asset bubbles, all at the expense of wage earners who month on month are having their real wages smashed to pieces. Utterly mental we should all be rioting in the streets. As people say below, expect more inflation, a run on the £ and continued decreases in the real earnings of workers.
Don’t worry though, grandmas cottage will still be £400k
This is absolutely pathetic, does their mandate mean anything to them? A complete protection of the asset rich while our wages get eaten away. How does it go anywhere near far enough in dealing with the CPI figures?
Covid money printing and the Russian oil ban has put the west into financial meltdown. I think it’s unfixable at this point, just short the market and you should be ok.
Bank of England are doing their best to steer UK into Stagflation for 5-10 years to save the housing market.
This is the only explanation that makes sense with their policy decisions, unlike FED who are clear they want to end US inflation as soon as possible with 75bps hikes.
Pretty much a joke but at least they’re pretending to do something unlike the ECB or BOJ.
Low interest rates are bad. Increasing interest rates are bad. Wtf is a good interest rate? Surely this is a good thing for anyone who is saving money as their money will lose value compared to inflation at a lower rate.
BoE baserate now higher than my 5 year fix I did in January.
Honestly, I can’t see how the housing market survives continued rate rises. I have like 35% equity in my flat, so I’m not too worried. It can fall up to 35% in the next 5 years, and I haven’t lost anything.
And my mortgage is like 50% of what rent would be, so I’m quids in regardless.
But FTBers who just bought, on 1-2 year fixes at 2-3%.. Shits fucked, man. They’re going to have a real fucking difficult time with mortgage rates at 5-6% if we head that way.
Throw in a 5-10% drop in house prices due to credit being too expensive, and now they don’t even have any equity to do a remortgage and will default to their mortgages (always shit) variable rate when their deal ends.
The young, who in this situation actually somehow managed to actually get a fucking house and get on the ladder, will be the most fucked by this.
Landlords who’ve been doing it a few years, won’t have to care or worry. They’ll just up rents, and probably have a ton of equity in the properties anyway.
Older people who bought 10+ years ago won’t need to care for the same reasons.
Much older people paid off their mortgage, so no need for them to worry.
It’s so sad. The young of this country literally never catch a fucking break, and I feel for them.
The only saving grace, would be inflation falling and wage increases continuing. But that’s a big if..
Its being walked up so slowly but homeowners are still going to shocked pikachu face when they’re looking at 4 or 5% base rates in 2024.
They are giving people plenty of time to fix. Too much, some might say.
The fun thing for me is that I can’t remortgage to get on a fixed rate due to post Grenfell cladding issues so, basically this in combination with my housing authority upping my rent (I’m a part buy, part mortgage kinda guy) by £100 pm means I am SERIOUSLY concerned about losing my flat.
Fun fun fun.
Not enough. MPC have bottled it badly
It is depressingly long until we can even try to get rid of these people. I want to strike, or protest, or SOMETHING, but I would be risking what little food security I have left to do it.
I reckon the pound is in a death spiral.
There’s a study showing the average age of a fiat currency is 35 years that gets thrown about. I’m not sure about the exact numbers, but an inflationary spiral followed by a new currency isn’t uncommon. Germany had three or four currencies in the 20th century, Brazil has had six.
The thing that stops a currency spiralling out is either being backed by a finite commodity (and the UK left the gold standard in 1931) or restraint from money printing (and we’ve doubled the amount of £ in supply since the 2008 crisis).
So for me, the pound (and a lot of other currencies) now have no safety net, and have commenced a steep inflationary cycle with huge QE.
We’ve now backed ourselves into a corner to the point that we’d need to raise interest rates to 8% at the very least in order to stop the currency inflating, yet we can’t do that because it’ll crash house prices. And we need to be constantly selling government bonds to pay our existing debts. So we can’t tolerate inflation, but we can’t reduce it, nor can we pause it. It’s a three-way catch-22.
​
We’re seeing some countries struggling to sell bonds, paying very high rates just to fund their debt, I think we’re getting quite close to entering a rapid inflation spiral. Maybe hyperinflation, or maybe just serious stagflation.
Either way, I think we backed into this catch-22 back in 2008 and we’ve been walking an unsustainable tightrope ever since. But I think this year may be the year it all falls apart.
People banded around “the great reset” and that all the world leaders where in on it.
As I understood it, it was the put the working classes back in their place because too many had got a university education and were earning too much money.
At the time I rolled my eyes and just thought it was nutty conspiracy theorists. And I love a good conspiracy…
Now it seems as though that doesn’t seem as far fetched as I thought.
Making university more and more unattainable for the working class.
Wages frozen for years, because they got lucky with a pandemic (was it really as bad as they said? Or was it the fear factor?”.
Slowly eeking out every last penny,so the working class don’t have spare cash for the inevitable private health care.
Human rights out the window, so slave labour is a thing again (hence them trying to smash the RMT union).
If it isn’t any of this and just an evil tory government raping the country of all its money (yet somehow getting peoples to STILL blame Labour from 12 years ago), then I’m not sure what’s worse.
Either way, people need to kick off sooner rather than later.
For every 1% rise in interest rates, the UK loses around £11 Billion – the interest on QE which is why we see tiny ineffective rises.
HelloOOOoOo recession!
So dear bank, can my saving account interest now raise from 0.01% to 0.02%?
Still a long way from where it needs to be to make a dent
Only about 30 more to go.
God fucking dammit. I’m 32 and 2 years ago I finally, *finally* saved enough and bought my first home solo income after living at home for far longer than my mental health could deal with, working my arse off and saving every penny I could.
And now what happens? Everything gets jacked up to ludicrous levels. Heaven forbid millennials get a win. I’ve done everything right, went to university, got a decent paying job, saved and scrimped AND I was lucky enough to have parents who understand and helped me. We *literally* cannot win.
(my parents are lovely, people but being 30 and living with parents is just draining on morale)
(And no, before anyone asks, I’ve never voted Tory.)
Remember 2007ish when interest rates were 2-3% and that seemed low. Now people go crazy when it goes above 1.
The housing market is literally a ball and chain around the UK’s ankle nowadays. We have, through completely intentional processes, allowed the market to get entirely out of control – and as a result are now unable to even use the most basic of levers to tackle the rampant inflation.
I’m just about to take on a fixed 5 year mortgage at 2.9%
How fucked am I gonna be?
This seems points. If interest rate hikes work then it probably should have been higher. But if they don’t work then this still does nothing.
It just seems like a half baked change.
Every 3 months +0.25% for the next 2 years or so I would imagine.
We have tied the entire integrity of the UK economy to the housing market. Absolutely anything that could threaten house prices – notably increasing interest rates too far – will cause the entire thing to collapse. This has left us unable to respond to inflation.