Honestly, I’m not surprised. The interest rates were too low for years, which meant that property prices skyrocketed, leaving younger people like myself unable to buy a home due to wages not rising at the same rate.
The problem is that during economic downturns, interest rates are supposed to go down to encourage people to spend, but because interest rates were low everyone has a lot of extra debt and now can’t afford to spend any more.
The Current state of global finances is a complete clusterfuck, and can only be solved if the rich actually pay their dues
Pretty much 100% certain they will increase the rate to 4.5% today, and again to 4.75% on 22 June. I don’t think it will get to 5% though, as by 3rd August the energy cost increase will be flushed from the system
So Sunak says:
>We will halve inflation this year to ease the cost of living and give people financial security.
>
>We will grow the economy, creating better-paid jobs and opportunity right across the country.
Then Blackrock Investment Institute says today:
>”The economy is effectively overheating and so if the Bank wants to bring inflation down quickly, it has to generate some sort of growth weakness or continued growth weakness.
“How much growth weakness is it looking to tolerate? What price is it willing to pay to bring inflation down? That’s the thing where the market could do with a bit more guidance.”
Sunak is lying again?
12th increase in a row, at what point does this just become a meaningless excersise?
Sorry, I don’t really understand things like this. I take it this is bad? I’m literally talking to my estate agent now about buying my rented property as it’s going on the market; is this a bad idea now? Should I wait?
Apparently this Tory Gov’t has got the car stuck in reverse, first stop 2008 and the next stop 1951.
This was so stupid instead of going up a small amount each time which made no difference, we should take a big huge increase at once which would impact inflation by now.
I don’t get this at all. Interest rate rises work when there is too much money in the economy and demand increases, causing inflation. Rising interest rates is to encourage people to save instead of spend.
Inflation at the moment is being caused primarily by outside forces, principly fuel costs. The additional impact of increasing wage costs may also start to push prices up for localy produced goods and services. People are struggling to get by, they are not frivolously spending money on luxuries. Surely the main impact of interest rate rises is to push up production costs even further and putting more pressure on.labour costs as people demand wages sufficient to just get by. It’s also going to increase debt default and reduce basic spending to a point where businesses struggle to cover increasing costs.
The bank of England can only control one thing, are they being forced to do that thing, despite knowing it it unlikly to work the way it has traditionally worked because the government refuse to change the things they control?
I think most people knew it had to go back to pre 2008 levels, but why drag it out like this? Surely it would’ve done more good and got inflation under control sooner if they did larger leaps instead of gradually dragging it out?
Cry me a river Janice, this woman is sitting on decades of house price appreciation and is now bleating because her fixed rate is up
​
Edit: This has actually irritated me more now I think about it
Janice has two properties. And it’s probable that they’re both somewhere within the London area given she’s in Enfield. Both houses have had long term tenants, the shortest of which has been there for 10 years:
* The average price in Enfield for a semi-detached is ~£670k, 54% vs. 10 years ago, with a higher percentage gain for any other type of property, and 78% higher than 20 years ago
* Assuming the worst case of both properties being flats, the properties are probably worth £700k
* Assuming she had no tenant prior to the one she’s had for 10 years, she and her husband were given a large mortgage in their 60’s. The outstanding balance of the combined mortgages, after having 20 + 10 years of payments respectively, must be astronomical if the increase is in the region of £600 a month
I don’t know how detached from reality these people are
I’m no economist so perhaps someone smarter than me on that topic can help, but how does raising interest rates to curb inflation help if said inflation is primarily being driven by food and energy prices? I thought the whole point of rate hikes was to cool off the demand for things to allow inflation to ease, but I don’t see how that works for basic necessities like, y’know, staying alive.
Not surprised, The pandemic, brexit and politically induced exonomic instability have entered the chat.
I’m surprised that it hasn’t been much worse in all honesty.
This is the 12th increase in a row and we were told inflation would come down dramatically by now. At what point does BOE consider that their approach is not working and perhaps something else is at play here.
Any chance these rates significantly dropping in the next two years?
In the earlier words of chief economist Huw Pill who just voted to raise rates to 4.5%:
“what we’re facing now is that reluctance to accept that, yes, we’re all worse off, and we all have to take our share.”
Thanks Huw for asking me to accept being poorer due in part to your interest rate decisions since September 2021. /s
So I guess now would be a bad time to take a loan out so I can pay my energy bills?
I’m down with stopping the growth rate, so let’s hit the businesses that seem to be growing off the back of others misery.
Let’s stop the growth rate of the high earners and let them burden it.
There are people put there on 4 times the average salary and they aren’t even the wealthy.
They’re making it hard for the old folks at work to say they had it worse. High interest rates was their final reasoning.
Half the banks in the USA are insolvent by raising interest rates currently. If they get bailed out, it does not matter what our government does, Inflation will increase for us pretty fast with that amount of liquidity needed.
I was feeling crap that I had to remortgage as my fixed rate ran out last month. I was on 1.55%
I was pissed my rate no the new fixed deal (which just started this month) was as high as 4.45%
But now… ooohhh… nevermind eh.
And yet saving accounts, even locked yearly ones, are still in the low single digits.
Interest up does not reduce inflation! Morons! Costs go up not down
So who gets to keep the £600 a month extra I’ve now got to pay for my very average 3 bed house ?
Will the banks now be repaying all the money that was given to them when they needed bailing out 15 years ago?
26 comments
[deleted]
Honestly, I’m not surprised. The interest rates were too low for years, which meant that property prices skyrocketed, leaving younger people like myself unable to buy a home due to wages not rising at the same rate.
The problem is that during economic downturns, interest rates are supposed to go down to encourage people to spend, but because interest rates were low everyone has a lot of extra debt and now can’t afford to spend any more.
The Current state of global finances is a complete clusterfuck, and can only be solved if the rich actually pay their dues
Pretty much 100% certain they will increase the rate to 4.5% today, and again to 4.75% on 22 June. I don’t think it will get to 5% though, as by 3rd August the energy cost increase will be flushed from the system
So Sunak says:
>We will halve inflation this year to ease the cost of living and give people financial security.
>
>We will grow the economy, creating better-paid jobs and opportunity right across the country.
Then Blackrock Investment Institute says today:
>”The economy is effectively overheating and so if the Bank wants to bring inflation down quickly, it has to generate some sort of growth weakness or continued growth weakness.
“How much growth weakness is it looking to tolerate? What price is it willing to pay to bring inflation down? That’s the thing where the market could do with a bit more guidance.”
Sunak is lying again?
12th increase in a row, at what point does this just become a meaningless excersise?
Sorry, I don’t really understand things like this. I take it this is bad? I’m literally talking to my estate agent now about buying my rented property as it’s going on the market; is this a bad idea now? Should I wait?
Apparently this Tory Gov’t has got the car stuck in reverse, first stop 2008 and the next stop 1951.
This was so stupid instead of going up a small amount each time which made no difference, we should take a big huge increase at once which would impact inflation by now.
I don’t get this at all. Interest rate rises work when there is too much money in the economy and demand increases, causing inflation. Rising interest rates is to encourage people to save instead of spend.
Inflation at the moment is being caused primarily by outside forces, principly fuel costs. The additional impact of increasing wage costs may also start to push prices up for localy produced goods and services. People are struggling to get by, they are not frivolously spending money on luxuries. Surely the main impact of interest rate rises is to push up production costs even further and putting more pressure on.labour costs as people demand wages sufficient to just get by. It’s also going to increase debt default and reduce basic spending to a point where businesses struggle to cover increasing costs.
The bank of England can only control one thing, are they being forced to do that thing, despite knowing it it unlikly to work the way it has traditionally worked because the government refuse to change the things they control?
I think most people knew it had to go back to pre 2008 levels, but why drag it out like this? Surely it would’ve done more good and got inflation under control sooner if they did larger leaps instead of gradually dragging it out?
>[This BBC comment](https://www.bbc.co.uk/news/live/business-65551151?ns_mchannel=social&ns_source=twitter&ns_campaign=bbc_live&ns_linkname=645cb80f588b295993d1afb1%26Our%20tenants%27%20rent%20may%20not%20cover%20the%20mortgage%20-%20landlord%262023-05-11T10%3A37%3A13.721Z&ns_fee=0&pinned_post_locator=urn:asset:2416eda3-6fd4-4476-990b-1135fbaf370a&pinned_post_asset_id=645cb80f588b295993d1afb1&pinned_post_type=share)
>
>Janice and her husband, both in their 70s, are private landlords form Enfield, North London, with two properties they were hoping would fund their retirement.
>
>Speaking to Radio 5 Live’s Nicky Campbell, she says they have always seen themselves as “good landlords” and have kept the rent as low as they possibly can, but will have to put rents up by £600 a month on both properties after their fixed-rate mortgages end in October.
>
>”Because we’ve kept the rents low, both tenants have lived in our houses long-term, one has lived there 20 years and the other for 10,” she says.
>
>Their tenants have agreed to paying the £600 rent rise in October as they can’t find other accommodation for a comparable price, but Janice says today’s expected announcement may mean that increase won’t cover the cost of the mortgage.
Cry me a river Janice, this woman is sitting on decades of house price appreciation and is now bleating because her fixed rate is up
​
Edit: This has actually irritated me more now I think about it
Janice has two properties. And it’s probable that they’re both somewhere within the London area given she’s in Enfield. Both houses have had long term tenants, the shortest of which has been there for 10 years:
* The average price in Enfield for a semi-detached is ~£670k, 54% vs. 10 years ago, with a higher percentage gain for any other type of property, and 78% higher than 20 years ago
* Assuming the worst case of both properties being flats, the properties are probably worth £700k
* Assuming she had no tenant prior to the one she’s had for 10 years, she and her husband were given a large mortgage in their 60’s. The outstanding balance of the combined mortgages, after having 20 + 10 years of payments respectively, must be astronomical if the increase is in the region of £600 a month
I don’t know how detached from reality these people are
I’m no economist so perhaps someone smarter than me on that topic can help, but how does raising interest rates to curb inflation help if said inflation is primarily being driven by food and energy prices? I thought the whole point of rate hikes was to cool off the demand for things to allow inflation to ease, but I don’t see how that works for basic necessities like, y’know, staying alive.
Not surprised, The pandemic, brexit and politically induced exonomic instability have entered the chat.
I’m surprised that it hasn’t been much worse in all honesty.
This is the 12th increase in a row and we were told inflation would come down dramatically by now. At what point does BOE consider that their approach is not working and perhaps something else is at play here.
Any chance these rates significantly dropping in the next two years?
In the earlier words of chief economist Huw Pill who just voted to raise rates to 4.5%:
“what we’re facing now is that reluctance to accept that, yes, we’re all worse off, and we all have to take our share.”
Thanks Huw for asking me to accept being poorer due in part to your interest rate decisions since September 2021. /s
So I guess now would be a bad time to take a loan out so I can pay my energy bills?
I’m down with stopping the growth rate, so let’s hit the businesses that seem to be growing off the back of others misery.
Let’s stop the growth rate of the high earners and let them burden it.
There are people put there on 4 times the average salary and they aren’t even the wealthy.
So few people seem to connect inflation with global warming. Climate events (droughts, fires, floods, storms) are costing billions of damage to global economies and are destroying industries. This is only going to get worse. Additionally, oil is getting harder and more expensive to extract. This is also only going to get worse. Raising interest rates only makes people suffer more.
https://www.theguardian.com/business/2022/jun/11/climate-crisis-inflation-economy-climatenomics-book
https://thehill.com/changing-america/sustainability/climate-change/3673368-how-climate-change-is-likely-to-worsen-inflation/
“Supply chain disruption” is a term that will increasingly actually mean “supply decimated by global warming”.
They’re making it hard for the old folks at work to say they had it worse. High interest rates was their final reasoning.
Half the banks in the USA are insolvent by raising interest rates currently. If they get bailed out, it does not matter what our government does, Inflation will increase for us pretty fast with that amount of liquidity needed.
I was feeling crap that I had to remortgage as my fixed rate ran out last month. I was on 1.55%
I was pissed my rate no the new fixed deal (which just started this month) was as high as 4.45%
But now… ooohhh… nevermind eh.
And yet saving accounts, even locked yearly ones, are still in the low single digits.
Interest up does not reduce inflation! Morons! Costs go up not down
So who gets to keep the £600 a month extra I’ve now got to pay for my very average 3 bed house ?
Will the banks now be repaying all the money that was given to them when they needed bailing out 15 years ago?