What can the government actually do? If they subsidised peoples mortgages, surely the bank would need to increase rates further?
I’m not sure raising interest rates even has any major efficacy with current inflation because it’s not driven by people borrowing cheap money, it’s goods and energy which is driving it, or if you’re a Tory, it’s the working and middle classes getting payrises.
Country is majorly fucked.
What do people expect? They do this on purpose to help banks entering residential market to snap up bargain properties, so why would they help anybody? That would be counter productive.
Tories are a neo-liberalism economic party. This means minimal government and no state handouts. So of you over mortgaged, Tories say “your fault peasant ”
To an extent inflation and rates of 6% are a product of an extended period of bad government, and Rishi has the power to restore confidence in the UK’s Economy, by resigning.
And of course nothing about us renters who are now stuck renting for another few years because we can’t afford the huge new interest rates on mortgages.
What are we expecting the interest rate to be in 2027?
Because I’m fucking dreading it.
I’m happy to bash the Conservatives any time they deserve it, which is often. But for this? Why would anyone expect this or any other government to act differently?
The bitter truth is that interest rate rises act, in part, to reduce consumer spending, by both encouraging saving and also increasing costs on borrowing. Committing goodness knows how many billions to helping mortgage payers and only mortgage payers would undo that and cause worse downstream impact in the long run.
As much as I hate the Tories I wouldn’t expect a government to step in at this point regarding rates and mortgages. That’s in the remit of the BoE and it seems inevitable that any government action to make mortgages more affordable would be countered immediately by the BoE raising rates again to make them less affordable. Rates is one of the only weapons the BoE has against inflation and although it’s maybe not the best way to counter inflation it’s the room that the BoE will continue to use. It’s not as though they have a plethora of choices. The main alternative is to do nothing and let things run their course
He’s quite correct.
Any government intervention will be inflationary and necessitate further base rate rises.
The can kicking appears to be at an end.
THE GREAT HOUSING DOOM OF OUR TIME IS UPON US!
Move to pay interest only until the rates go down again. If the forecast is bleak then downsize or take on a lodger.
WIll be interesting to see how it pans out if/when we get headlines about tens of thousands of homeless families.
I remember when an energy bill subisdy was laughable, and then it started to really enter mainstream discourse. Death toll predictions and tales of individual woe really started hitting the headlines.
​
While the idea of a taxpayer subsidy to private mortgages is pretty sickening to me (and I’m one of those mortgage holders!) keep in mind that public perception is the main guiding force of the government.
​
As others have pointed out, we *could* buy gas from Russia, re-enter the EU, let loads of immigrants in quickly and raise public sector pay.
The barrier to doing those things is the collective public opinion about it.
Public opinion is an incredibly strong force. When it changed over energy subsidies, our “conservative” government was driven to the largest ever peacetime non-means-tested handout in history. Public perception can make a government completely abandon its ideals and precedent.
The mere fact it’s being ruled out right now means it’s already of significant public interest, and the government feels the tension.
​
It’s not completely unimaginable that public outcry in the autumn may force the government to u-turn.
Mortgages are unaffordable. Even with a 30k deposit and a 27k salary I can’t afford a house over 110k (most homes in my area are 130k+) and afford to live after paying for it. Well I can but it will be most of my money going to it. It’s hard for single people to buy homes.
What do people expect? A mortgage has nothing to do with the government. The government have no control on interest rates and although people will complain that it’s a result of the government, do you care to explain why interest rates are increasing across the world? Surely Liz Truss’s plans didn’t affect Canada or the US’s interest rate, did they?
Interest rates are subject to change, complaining that your mortgage has gone up when you’re well aware it can is nonsense, and to expect tax payers (many who can’t even get a mortgage) to subsidise people who do have mortgages is comical.
I’m not a Tory fan at all but this is not the hill that you should die on when slating Sunak.
Whole thing is bs.
Pensioners getting inflation matching increases – not inflationary.
Workers getting below inflation wage increases – inflationary, just be poorer.
When people who are now pensioners had a mortgage crisis (it wasn’t as bad as this due to the earnings:house price ratio they had), MIRAS existed which took a huge burden off of them. Us lot? Nah.
Meanwhile I hear more articles about the poor landlords than regular homeowners suffering from the rate rises.
Apparently only the young(ish) have to suffer.
When did the UK become a country where everyone expects the government to save them from everything?
Seriously, when you took out your mortgage to pay 500 grand for some drab semi in the suburbs of wherever, did you not think that it might be a bit much? Did you not test to see if you could afford the repayments even if interest rates went up? Or did u think near zero interest rates would go on forever with no economic consequences?
Historically 6% is still pretty low, and yet everyone’s carrying on as if the sky’s falling in. How do you want to get poorer? By rampant inflation or higher mortgage repayments and lower property values. Those are the only two options by the way.
Good. All of the redditors angry about this are too thick to realise that “help with mortgages” means that renters would be paying taxes to support homeowners.
We have to change the way property is done in this country – house prices and rents are spiralling out of control and far outpacing wages.
We need to build more social housing, ensure empty homes are lived in or rented out, and limit the amount of additional houses people can buy. I would say a second home as a max until housing is properly fixed.
“But but social media told me that housing always goes up”…. Yeah over a 50 year period, the value of the asset has increased, that’s historical truth.
However when interest rates go up being able to afford the monthly payment may be an issue, a significant group of people haven’t thought of that. The next 18 months are going to be frightening for those covid upgraders who went big on 2 year fixed.
1. Income is low
2. Prices are high
3. Interest rates are high
One of these needs to change. We are about to blow the proverbial lid off any day now.
It’s not even just housing. Strikes etc are also getting more and more common. People are fed up.
To put it mildly I am no fan of this government and will be voting to boot them out asap. However, by helping pay mortgages to offset BoE rate rises, they would be enacting another insane policy like the stamp duty holiday – a policy that directly led to many people now finding themselves in a precarious situation.
And this isn’t the wisdom of hindsight. We wanted to move at the time, but prices shot up to a ridiculous degree (far more than the stamp duty cost) and we abandoned the idea because we didn’t want to be massively indebted at historically low interest rates that had nowhere to go but up. I even was appalled that our own modest terraced house (not in London) was confidently valued by multiple agents at 12-13x the average UK salary, which is just crazy.
There is a thread on r/UKHousing here asking how are people managing to afford the sudden increase in mortgage payments and the majority of people have responded with “we are managing by tightening our belts, spending and saving less”. So in that respect the rate rises are having their desired effect. Simply pumping money back into the pockets of people who overstretched themselves at the worst possible time will – like almost every decision this government has ever made – create more problems than it solves.
Good. If they take renters taxes and give it to mortgage owners, after literally decades of no help for the people who need it more, I might burst into flames.
Much as I hate the Tories, they absolutely shouldn’t step in on the majority of mortgages.
Perhaps they should for the disabled, but not for a the vast majority.
I say this as someone who has a mortgage who will be fucked by these intrest rates.
Good! No way should mortgage payments be socialised in the form of government handouts.
Will have to start making room for unborn grandchildren as the kids will never be able to move out.
I don’t know why so many people are giving the Government a pass here on what is a terrible system. Other countries have mortgages fixed for the lifetime of the mortgage so a 25 year fix. Japan allows you to extend from 25 years to 35 or 50 – 100 as needed. We have a bad system which has now exposed many people to extreme rate volatility.
Help to Buy was a disaster for anybody who wanted to get on the property ladder.
The government should not be shovelling cash into the mortgage market because it just makes the bubble bigger when it eventually bursts, which hurts everyone.
Glad I moved to the US our mortgage is 2.25% fixed for 25 years
Well yes, everybody should knuckle down, grit their teeth and figure out how to solve their own problems just like he didn’t.
It’s a Ponzi x9 or 10 income is craziness and the banks know it. They also know they will be bailed out!
The Accidental Prime Minister with a pea-sized brain hasn’t a clue what to do.
Good, why the fuck would homeowners expect the government to directly subsidise their mortgage. People need to understand debt is a personal risk they are taking, it’s not like we’re talking about unsecured loans taken to feed the family.
I am speaking as a homeowner who’s mortgage has gone up.
Help lol, that would be ridiculous and it’s the right decision. That would be unfair for renters, it would be unfair for frugal people who bought a house they can afford and didn’t max out their loan potential
While plenty of people have made the point that the government is really legally not allowed to do anything about the interest rates, it is really symptomatic of a Conservative government that has presided over the largest collapse in living standards I think since the second world war that they have to announce they’re powerless to help people who have had their mortgage costs rise by multiples.
Remember this started entirely because of Liz Truss and Kwasi Kwarteng’s nuts “budget”. Prior to this mortgage costs were relatively stable even if they were slowly increasing. This foolish budget spooked the markets and made them withdraw a bunch of cheaper mortgage products. So while they have no ability to make anything better, they certainly have the power to make things worse.
34 comments
What can the government actually do? If they subsidised peoples mortgages, surely the bank would need to increase rates further?
I’m not sure raising interest rates even has any major efficacy with current inflation because it’s not driven by people borrowing cheap money, it’s goods and energy which is driving it, or if you’re a Tory, it’s the working and middle classes getting payrises.
Country is majorly fucked.
What do people expect? They do this on purpose to help banks entering residential market to snap up bargain properties, so why would they help anybody? That would be counter productive.
Tories are a neo-liberalism economic party. This means minimal government and no state handouts. So of you over mortgaged, Tories say “your fault peasant ”
People vote for them and don’t get this???
Damn, it’s almost like [a group of landlords](https://www.opendemocracy.net/en/dark-money-investigations/quarter-tory-mps-are-private-landlords/) are trying to make everyone default on their mortgage and lose their homes just so they can buy the properties for cheap and add them to their portfolio. Crazy
To an extent inflation and rates of 6% are a product of an extended period of bad government, and Rishi has the power to restore confidence in the UK’s Economy, by resigning.
And of course nothing about us renters who are now stuck renting for another few years because we can’t afford the huge new interest rates on mortgages.
What are we expecting the interest rate to be in 2027?
Because I’m fucking dreading it.
I’m happy to bash the Conservatives any time they deserve it, which is often. But for this? Why would anyone expect this or any other government to act differently?
The bitter truth is that interest rate rises act, in part, to reduce consumer spending, by both encouraging saving and also increasing costs on borrowing. Committing goodness knows how many billions to helping mortgage payers and only mortgage payers would undo that and cause worse downstream impact in the long run.
As much as I hate the Tories I wouldn’t expect a government to step in at this point regarding rates and mortgages. That’s in the remit of the BoE and it seems inevitable that any government action to make mortgages more affordable would be countered immediately by the BoE raising rates again to make them less affordable. Rates is one of the only weapons the BoE has against inflation and although it’s maybe not the best way to counter inflation it’s the room that the BoE will continue to use. It’s not as though they have a plethora of choices. The main alternative is to do nothing and let things run their course
He’s quite correct.
Any government intervention will be inflationary and necessitate further base rate rises.
The can kicking appears to be at an end.
THE GREAT HOUSING DOOM OF OUR TIME IS UPON US!
Move to pay interest only until the rates go down again. If the forecast is bleak then downsize or take on a lodger.
WIll be interesting to see how it pans out if/when we get headlines about tens of thousands of homeless families.
I remember when an energy bill subisdy was laughable, and then it started to really enter mainstream discourse. Death toll predictions and tales of individual woe really started hitting the headlines.
​
While the idea of a taxpayer subsidy to private mortgages is pretty sickening to me (and I’m one of those mortgage holders!) keep in mind that public perception is the main guiding force of the government.
​
As others have pointed out, we *could* buy gas from Russia, re-enter the EU, let loads of immigrants in quickly and raise public sector pay.
The barrier to doing those things is the collective public opinion about it.
Public opinion is an incredibly strong force. When it changed over energy subsidies, our “conservative” government was driven to the largest ever peacetime non-means-tested handout in history. Public perception can make a government completely abandon its ideals and precedent.
The mere fact it’s being ruled out right now means it’s already of significant public interest, and the government feels the tension.
​
It’s not completely unimaginable that public outcry in the autumn may force the government to u-turn.
Mortgages are unaffordable. Even with a 30k deposit and a 27k salary I can’t afford a house over 110k (most homes in my area are 130k+) and afford to live after paying for it. Well I can but it will be most of my money going to it. It’s hard for single people to buy homes.
What do people expect? A mortgage has nothing to do with the government. The government have no control on interest rates and although people will complain that it’s a result of the government, do you care to explain why interest rates are increasing across the world? Surely Liz Truss’s plans didn’t affect Canada or the US’s interest rate, did they?
Interest rates are subject to change, complaining that your mortgage has gone up when you’re well aware it can is nonsense, and to expect tax payers (many who can’t even get a mortgage) to subsidise people who do have mortgages is comical.
I’m not a Tory fan at all but this is not the hill that you should die on when slating Sunak.
Whole thing is bs.
Pensioners getting inflation matching increases – not inflationary.
Workers getting below inflation wage increases – inflationary, just be poorer.
When people who are now pensioners had a mortgage crisis (it wasn’t as bad as this due to the earnings:house price ratio they had), MIRAS existed which took a huge burden off of them. Us lot? Nah.
Meanwhile I hear more articles about the poor landlords than regular homeowners suffering from the rate rises.
Apparently only the young(ish) have to suffer.
When did the UK become a country where everyone expects the government to save them from everything?
Seriously, when you took out your mortgage to pay 500 grand for some drab semi in the suburbs of wherever, did you not think that it might be a bit much? Did you not test to see if you could afford the repayments even if interest rates went up? Or did u think near zero interest rates would go on forever with no economic consequences?
Historically 6% is still pretty low, and yet everyone’s carrying on as if the sky’s falling in. How do you want to get poorer? By rampant inflation or higher mortgage repayments and lower property values. Those are the only two options by the way.
Good. All of the redditors angry about this are too thick to realise that “help with mortgages” means that renters would be paying taxes to support homeowners.
We have to change the way property is done in this country – house prices and rents are spiralling out of control and far outpacing wages.
We need to build more social housing, ensure empty homes are lived in or rented out, and limit the amount of additional houses people can buy. I would say a second home as a max until housing is properly fixed.
“But but social media told me that housing always goes up”…. Yeah over a 50 year period, the value of the asset has increased, that’s historical truth.
However when interest rates go up being able to afford the monthly payment may be an issue, a significant group of people haven’t thought of that. The next 18 months are going to be frightening for those covid upgraders who went big on 2 year fixed.
1. Income is low
2. Prices are high
3. Interest rates are high
One of these needs to change. We are about to blow the proverbial lid off any day now.
It’s not even just housing. Strikes etc are also getting more and more common. People are fed up.
To put it mildly I am no fan of this government and will be voting to boot them out asap. However, by helping pay mortgages to offset BoE rate rises, they would be enacting another insane policy like the stamp duty holiday – a policy that directly led to many people now finding themselves in a precarious situation.
And this isn’t the wisdom of hindsight. We wanted to move at the time, but prices shot up to a ridiculous degree (far more than the stamp duty cost) and we abandoned the idea because we didn’t want to be massively indebted at historically low interest rates that had nowhere to go but up. I even was appalled that our own modest terraced house (not in London) was confidently valued by multiple agents at 12-13x the average UK salary, which is just crazy.
There is a thread on r/UKHousing here asking how are people managing to afford the sudden increase in mortgage payments and the majority of people have responded with “we are managing by tightening our belts, spending and saving less”. So in that respect the rate rises are having their desired effect. Simply pumping money back into the pockets of people who overstretched themselves at the worst possible time will – like almost every decision this government has ever made – create more problems than it solves.
Good. If they take renters taxes and give it to mortgage owners, after literally decades of no help for the people who need it more, I might burst into flames.
Much as I hate the Tories, they absolutely shouldn’t step in on the majority of mortgages.
Perhaps they should for the disabled, but not for a the vast majority.
I say this as someone who has a mortgage who will be fucked by these intrest rates.
Good! No way should mortgage payments be socialised in the form of government handouts.
Will have to start making room for unborn grandchildren as the kids will never be able to move out.
I don’t know why so many people are giving the Government a pass here on what is a terrible system. Other countries have mortgages fixed for the lifetime of the mortgage so a 25 year fix. Japan allows you to extend from 25 years to 35 or 50 – 100 as needed. We have a bad system which has now exposed many people to extreme rate volatility.
Help to Buy was a disaster for anybody who wanted to get on the property ladder.
The government should not be shovelling cash into the mortgage market because it just makes the bubble bigger when it eventually bursts, which hurts everyone.
Glad I moved to the US our mortgage is 2.25% fixed for 25 years
Well yes, everybody should knuckle down, grit their teeth and figure out how to solve their own problems just like he didn’t.
It’s a Ponzi x9 or 10 income is craziness and the banks know it. They also know they will be bailed out!
The Accidental Prime Minister with a pea-sized brain hasn’t a clue what to do.
Good, why the fuck would homeowners expect the government to directly subsidise their mortgage. People need to understand debt is a personal risk they are taking, it’s not like we’re talking about unsecured loans taken to feed the family.
I am speaking as a homeowner who’s mortgage has gone up.
Help lol, that would be ridiculous and it’s the right decision. That would be unfair for renters, it would be unfair for frugal people who bought a house they can afford and didn’t max out their loan potential
While plenty of people have made the point that the government is really legally not allowed to do anything about the interest rates, it is really symptomatic of a Conservative government that has presided over the largest collapse in living standards I think since the second world war that they have to announce they’re powerless to help people who have had their mortgage costs rise by multiples.
Remember this started entirely because of Liz Truss and Kwasi Kwarteng’s nuts “budget”. Prior to this mortgage costs were relatively stable even if they were slowly increasing. This foolish budget spooked the markets and made them withdraw a bunch of cheaper mortgage products. So while they have no ability to make anything better, they certainly have the power to make things worse.