Boomer life according to the economist

I had a couple of low-cost endowment mortgages. At the time, they felt like a scam as it was pretty well the only way to get a mortgage - it's hard to imagine today, but then you almost had to know someone to get a mortgage, and money was released to a few applicants at a time, and if you missed out, you had to wait until the next release.

Our first low-cost endowment seemed brilliant - tax relief on the premiums (as well as the interest, with Miras, of course) and the policy included joint life assurance so the cost wasn;t much more than life assurance on its own. Was paying £25/mth. Sold after 6 yrs and cashed it in as needed the money towards the next house and got £3K. Second one was dearer and didnt have tax relief. It did more or less pay off the mortgage though.


Regarding inflation, I have colleagues in SE who did IO and found that even after inflation they still had hefty amounts to find at the end of their mortgages. I know two were relying on inheritances and both went wrong for them. My boss is IO but he bought a hefty place which has increased in value massively and he's always intended to down-size and retire when the mortgage is due - looks like that's worked well for him.

I also had a low cost endowment. It was the only mortgage I could get as was expected to pay out £40k. Thankfully I converted to a normal repayment after about five years, but kept the policy going. I think I got £18k in the end. No compensation was available as the IFA who sold the policy went bust. At the time, most building societies had a waiting list for mortgages, so the only way was to use an IFA who could pull strings.

You assume that your average person will be able to buy another (presumably bigger/better) house.

Based off the last 15 years, we've seen wage inflation lag behind CPI, and CPI lag behind house price inflation. Which, if that continues, means that it will get ever harder to get on the ladder and ever harder to move "up the chain" *, for pretty much everyone in the bottom 7-8 deciles, maybe more than that.

Hell, even IF house prices stagnate for a decade (as many of us on here hope is the bare minimum, but is unlikely to happen), that won't even half reverse the effect of the last 15 years.

You can no longer base future generations activities off what Boomers and Gen-X have enjoyed.



* That phrase now should be consigned to history - there is no chain for the majority of Gen-Y / -Z.

Poor Boomers…

'Our dream of retiring to our second home by the seaside is turning into a nightmare'

Fiona Wilson, 66, and her husband, David, 68, bought the seaside property in Whitby, North Yorkshire, 14 years ago as a rental opportunity - but now they face a 'punitive' tax rise

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A couple fear their dream of retiring in their £150,000 second home will be shattered due to 'punishing' new tax rules that could see their tax bill double.
Fiona Wilson, 66, and her husband David, 68, bought their seaside property in Whitby, 14 years ago as a rental opportunity. The property was an addition to their main home in Potto, North Yorkshire, which they bought for £205,000 in 1999.

However, after retiring, they decided to make the Whitby property their second home, looking forward to frequent coastal trips. Now, they face a "punitive" tax increase that could cost them thousands or force them to sell the three-bedroom property.

The couple bought the cottage for £150,000 in 2010 with the intention of renting it out to holidaymakers to supplement their retirement income. Fiona explained: "We were both working full time. I was a teacher and my husband was a pharmacist.

"We deliberately bought it as a source of extra income to be used to supplement our retirement as part of a retirement plan."
The couple enjoyed low tax while the property was rented out, thanks to 100 per cent business rate relief. Upon retirement, they chose to keep the cottage for personal use rather than continue renting it out.

However, they were shocked to learn that the annual tax of £1,800 is set to nearly double to £4,000 by April 2025. This increase is due to North Yorkshire Council's introduction of a 'second home premium' charge of 100%, as part of the Levelling Up Act (2023).

Faced with this steep rise, Fiona is contemplating selling the property. She said: "It's going to cost an awful lot of money to keep the two homes."
She predicts that the property will likely be bought by someone intending to use it as a holiday let, adding: "We think the policy is flawed. [It's designed] to encourage people with second homes to put them on the market."

Fiona, a life-long Conservative voter, voiced her disappointment with her MP, Sir Robert Goodwill.
"It's totally unfair. It's un-Conservative to punish people who have worked very hard," she said. "I have no problem paying tax but on this occasion, this is a punitive tax. We can afford to pay the double tax - we just think it's very unfair."
Gary Fielding, North Yorkshire Council's corporate director for strategic resources, defended the new tax: He said: "The new council tax premium on second homes is a key part of North Yorkshire Council's strategy to help provide good quality, sustainable properties for residents."
"Coming into force on April 1 next year, the new scheme will effectively double council tax bills for second homeowners and will generate between £11.5 million and £16.5 million in additional council tax revenue.
"The ultimate aim, however, is to bring second homes back into use in communities where many people have been priced out of the housing market.

Of course it won't. Until they invest in growth and economic opportunity in the local communities - this will do little more than marginally plug a funding gap in local council budgets - falling far short of investment.

As far as policy goes, F- for effort and attainment.

Who says owning two houses should be cheap / cost effective.

If the wealthy second home investors aren't buying, or are willing to pay less, then values of such properties will fall.

I do broadly agree.

HOWEVER...not everyone enjoys the sort of real-terms pay-rises that your average PHer has. Go to work in the public sector and without promotions / additional responsibility you'll find your real-terms salary going backwards. Same for a lot of manufacturing and retail jobs. 30-smth SiL is a pharmacy tech, left the NHS because of something like 4 years without a pay rise, then found herself facing similar issues working for GP practices and has since been put at risk and forced to take sttier terms for no more money (alternative was redundancy). She's still on less, real-terms, than she was ~7-8 years ago.

The world of work is not a friendly place for some.

I agree. Wages in real terms have fallen in recent years. People that have stood still in terms of promotions/etc in both the public & private sectors have seen falls in wages in real terms. In the current world if you are not prepared or able to run you will go backwards.

Maybe not most - even in more 'transactional' roles, you'll still get competent people who'll get promoted / get moved into a better role. For a while, at least.

...but certainly a large chunk of society. And I'd ask "is that the sort of world we WANT to live in?" Where you HAVE to run, to keep pushing yourself, just to stay ahead of this insidious drop in standard of living. And what happens when you hit 45 / 50 / 55 / 60 (will vary by person) and decide you've no longer got the energy or motivation to keep pushing? Where those coming up beneath you are more hungry (or desperate)?

I tend to agree, however:-
- Our wages HAVE been stagnating vs the USA and China in particular, and to a lesser degree (moreso post-Brexit) vs key EU nations also. So I'm not entirely sure how much worse it can get.
- Our government can choose policies (taxation, social, economic) which mitigate the effects. A decent transport system and a working social care system would be a good start.
- It was government policies that led to near-runaway house price inflation in the first place, as they thought it would be a good placebo effect to disguise the economic malaise we already facing.


...what I'm saying is that the Tories have over the last 15 years or so made this bed that we all need to lie in. While they and their rich mates are all much better off thank you very much and don't give two fks.