Interest rates going up soon...
Discussion
garyhun said:
Welshbeef said:
So if you have an average car and only fill up on e a month that's £500-600 or multiples of that depending on how often you fill up.
I'd consider that not am insignificant amount like most people.
Half a tank is roughly £30-40. Hardly significant.I'd consider that not am insignificant amount like most people.
Half a tank on the Honda diesel is £40
Point is over a year it adds up - unless as I said say £600 doesn't matter to you that's just one fill a month if its two then your into £1.2k. I fill up my main car at least once a week so that's £2.4k... For me to earn that net I need to have a pay increase of at least £4k.
Could you take a £4k salary cut without any impact to your lifestyle? Or let's say that within 3 years rates have gone up further so that suddenly its actually the same as a tank in which case for me that on 1 car would be at least £8k extra salary to earn or cut back to sustain the same lifestyle.
Derek Chevalier said:
egor110 said:
economicpygmy said:
The problem with letting the housing market go nuts is unproductive captial. They want people spending in the wider economy. And as said above, the risk is future generations being completely locked out; rates going up is the lesser of two evils. That said, I dont believe they will before the election.
so mortgages go up, rent goes up and you kiss goodbye to spare cash that can be spent in the wider economy.Welshbeef said:
garyhun said:
Welshbeef said:
So if you have an average car and only fill up on e a month that's £500-600 or multiples of that depending on how often you fill up.
I'd consider that not am insignificant amount like most people.
Half a tank is roughly £30-40. Hardly significant.I'd consider that not am insignificant amount like most people.
Half a tank on the Honda diesel is £40
Point is over a year it adds up - unless as I said say £600 doesn't matter to you that's just one fill a month if its two then your into £1.2k. I fill up my main car at least once a week so that's £2.4k... For me to earn that net I need to have a pay increase of at least £4k.
Could you take a £4k salary cut without any impact to your lifestyle? Or let's say that within 3 years rates have gone up further so that suddenly its actually the same as a tank in which case for me that on 1 car would be at least £8k extra salary to earn or cut back to sustain the same lifestyle.
Next year there is a General Election. It is politically expedient to get the wholly independent BofE to talk about raising the interest rates so as to attract the pensioner vote. They are the largest demographic and the most cash rich. They have spent 7 years financing the catastrophic fallout of buying the youth and unemployed vote via 'no more boom and bust'.
Politically it would be very handy to have a rise before the election so as to crystallise the silver vote and also show the rest that they have saved the economy etc.
The real problem however is that large parts of the UK do require a rate rise but other significant parts don't as they haven't yet had the employment or wage recovery to handle it. Unfortunately for them they are mainly Labour areas and because they were artificially inflated economically they are not going to return to those levels until there is another feckless spending government. They had their decade of favouritism and the shoe is now on the other foot. Potentially.
But, capping and halting investment capital into the housing market would be a more balanced way of slowing house price inflation rather than earlier than needed rate rises for political expediency. But then you'd be crapping on your own electorate.
Politically it would be very handy to have a rise before the election so as to crystallise the silver vote and also show the rest that they have saved the economy etc.
The real problem however is that large parts of the UK do require a rate rise but other significant parts don't as they haven't yet had the employment or wage recovery to handle it. Unfortunately for them they are mainly Labour areas and because they were artificially inflated economically they are not going to return to those levels until there is another feckless spending government. They had their decade of favouritism and the shoe is now on the other foot. Potentially.
But, capping and halting investment capital into the housing market would be a more balanced way of slowing house price inflation rather than earlier than needed rate rises for political expediency. But then you'd be crapping on your own electorate.
superkartracer said:
Derek Chevalier said:
egor110 said:
economicpygmy said:
The problem with letting the housing market go nuts is unproductive captial. They want people spending in the wider economy. And as said above, the risk is future generations being completely locked out; rates going up is the lesser of two evils. That said, I dont believe they will before the election.
so mortgages go up, rent goes up and you kiss goodbye to spare cash that can be spent in the wider economy.Crafty_ said:
For reference I'm talking somewhere around £20-30 a month.
So a full tank of fuel for your car is £40-60 and you only use one a month? What sort of miles do you do. For you its £360pa net of tax so best case your taking a pay cut of £450pa or higher rate at least £600pa.
Welshbeef said:
Crafty_ said:
For reference I'm talking somewhere around £20-30 a month.
So a full tank of fuel for your car is £40-60 and you only use one a month? What sort of miles do you do. For you its £360pa net of tax so best case your taking a pay cut of £450pa or higher rate at least £600pa.
Tank of fuel ~£60-65 for super unleaded.
I didn't say how much fuel I used per month and wasn't trying to compare on that basis.
Increase in costs is obviously not a good thing, but some of my acquaintances will suffer much more than I, as they have larger mortgages.
I think the fuel cost example was more about framing the increase in mortgage repayments as an annual increase in liabilities / commitments, or an annual decrease in disposable income
To say a 2/3 increase roughly equivalent to half a tank for fuel does not sound significant
But to say it another way, families tied into mortgages with incomes already squeezed and higher outstanding mortgage balances are facing the prospect of needing to find an extra couple of grand a year depending on how much and how quickly rates increase
menousername said:
But to say it another way, families tied into mortgages with incomes already squeezed and higher outstanding mortgage balances are facing the prospect of needing to find an extra couple of grand a year depending on how much and how quickly rates increase
Exactly. The "half-a-tank-of-fuel" comment is only relevant to that poster. It'll cost me even less - nothing to be precise, as I don't have a mortgage. Yay both of us.But increasing interest rates will be painful for many people.
Derek Chevalier said:
superkartracer said:
Derek Chevalier said:
egor110 said:
economicpygmy said:
The problem with letting the housing market go nuts is unproductive captial. They want people spending in the wider economy. And as said above, the risk is future generations being completely locked out; rates going up is the lesser of two evils. That said, I dont believe they will before the election.
so mortgages go up, rent goes up and you kiss goodbye to spare cash that can be spent in the wider economy.I'm a landlord and I can't see that high house prices help anyone other than someone out to make a fast buck.
egor110 said:
economicpygmy said:
The problem with letting the housing market go nuts is unproductive captial. They want people spending in the wider economy. And as said above, the risk is future generations being completely locked out; rates going up is the lesser of two evils. That said, I dont believe they will before the election.
so mortgages go up, rent goes up and you kiss goodbye to spare cash that can be spent in the wider economy.The BOEs primary concern is nothing todo with future generations not being able to afford houses, although Carneys speech on inclusive capitalism was interesting. They care about the risk of deflation and the deficit.
Edited by economicpygmy on Sunday 15th June 11:39
rollondeath said:
markcoznottz said:
Political class all have housing portfolios, look at what they do rather than what they say, they would have done it by now. Maybe in years, literally 8-10 years. Till then bluff, and keep the can rolling.
Serious? This speech was to prepare the country for the forthcoming rises. 2015 0.25% rise per quarter. Fancy a wager?98elise said:
Derek Chevalier said:
superkartracer said:
Derek Chevalier said:
egor110 said:
economicpygmy said:
The problem with letting the housing market go nuts is unproductive captial. They want people spending in the wider economy. And as said above, the risk is future generations being completely locked out; rates going up is the lesser of two evils. That said, I dont believe they will before the election.
so mortgages go up, rent goes up and you kiss goodbye to spare cash that can be spent in the wider economy.I'm a landlord and I can't see that high house prices help anyone other than someone out to make a fast buck.
markcoznottz said:
Il take that bet. There has been an almost daily press release from the BOE for 5 years saying rates 'could go up soon'. In fact they are losing credibility by briefing so much. There will not be a 'right' day to do it, either do it or stfu . I can't see a lib-lab coalition or lab government putting them up its much easier to tinker nowadays with help to buy or similar. As regards mass social house building, if it didn't happen under a lab majority last time why would it now but that's a different story for another time. Seems to me politicians haven't grasped that everything changed in 2007, there is no long term desicion making at all now.
If you follow the currency markets you will have noticed that an interest raise hike has been expected for a while, which is a major part of the reason the GBP is at 5 year highs of around 1.70 to the USD. I don't think anyone at the BoE or Government wants to see rates rise, but I can see no good reason for them to stay at virtually zero for much longer, they never have before.One thing against raising of base rate is that the average salary increases are barely above inflation so if rates were increased it would mean less money spent in the economy people choosing to save less people choosing to pay down less debt people choosing not to invest in pensions.
If inflation was 1.5% and average salary increases were 2.5% then there is room to do something.
Another upcoming inflation pressure will be oil price speculation re Iraq
If inflation was 1.5% and average salary increases were 2.5% then there is room to do something.
Another upcoming inflation pressure will be oil price speculation re Iraq
Derek Chevalier said:
98elise said:
Derek Chevalier said:
superkartracer said:
Derek Chevalier said:
egor110 said:
economicpygmy said:
The problem with letting the housing market go nuts is unproductive captial. They want people spending in the wider economy. And as said above, the risk is future generations being completely locked out; rates going up is the lesser of two evils. That said, I dont believe they will before the election.
so mortgages go up, rent goes up and you kiss goodbye to spare cash that can be spent in the wider economy.I'm a landlord and I can't see that high house prices help anyone other than someone out to make a fast buck.
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