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Cost of Living

Elephant Pyjamas said:
Are Truss and Kwarteng no longer to blame?
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The instant affect of their actions were felt by everyone, but essentially most countries who did the post credit crunch low rate thing are experiencing much the same thing.

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I’m not defending them for a second and yes we have had it worse than most. It would be nice to shaft them for causing the issue globally too, but to be honest the point was as much about the inevitability the sharp rises would eventually happen as it was the specific reasons behind them.
 
Elephant Pyjamas said:
Are Truss and Kwarteng no longer to blame?
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They have to take their share of the blame but interest rates would have risen even without her ludicrously being given the keys to 10 Downing Street. What she did was effectively to create chaos in the markets that led to horrendous volatility in rates and lenders pulling the plugs on offers at the drop of a hat. Even when the Bank of England rates hadn't risen lenders were raising rates to respond to the market volatility. If Sunak was in charge I am sure that it would have been a more managed increased in rates by the lenders as there would have been a degree of confidence in his approach.

If you had to renew a mortgage in the middle of her short reign and the immediate aftermath you would have ended up paying far more because of her. Rates remaining stubbornly high now are to do with a number of other factors. I don't think that slowly cutting interest rates now would do any harm but there seems to be a reluctance by the BofE to do it too soon in the fear of getting it wrong again as they were slow on raising them previously.
 
I think the thing with Truss and Kwarteng was they put hundreds of pounds a month on millions of people's bills overnight...for ABSOLUTELY NO FUCKING REASON AND WITH NO POSSIBLE GAIN AT ALL. Plus anyone halfway versed in the markets could have told them this would happen.

The worldwide cost of borrowing would have risen anyway due to a variety of factors but that's nothing like in the same sphere.

A footballing analogy would be Southampton last season. They might have gone down anyway, they weren't very good and had been declining steadily for a while, a club that size is always vulnerable to a bad season costing them, the owners strategy in the market didn't seem the best and if they had survived then they'd likely have been in trouble again this year. However that doesn't mean you can appoint a religious lunatic with bizarre tactics and a CV that is miles off that of a PL manager, have to sack him inside weeks before he got sectioned, and then say 'well, anyone would probably have had a job keeping us up'.
 
Deutsch Wolf said:
I think the thing with Truss and Kwarteng was they put hundreds of pounds a month on millions of people's bills overnight...for ABSOLUTELY NO FUCKING REASON AND WITH NO POSSIBLE GAIN AT ALL. Plus anyone halfway versed in the markets could have told them this would happen.

The worldwide cost of borrowing would have risen anyway due to a variety of factors but that's nothing like in the same sphere.

A footballing analogy would be Southampton last season. They might have gone down anyway, they weren't very good and had been declining steadily for a while, a club that size is always vulnerable to a bad season costing them, the owners strategy in the market didn't seem the best and if they had survived then they'd likely have been in trouble again this year. However that doesn't mean you can appoint a religious lunatic with bizarre tactics and a CV that is miles off that of a PL manager, have to sack him inside weeks before he got sectioned, and then say 'well, anyone would probably have had a job keeping us up'.
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What is more incredulous is that she still claims that those at the Treasury didn't advise her that this would happen. Its not surprising really is it Truss when you sacked the top civil servant at the Treasury, just because you could, and that would have created a culture of fear for anyone speaking out against her plans (which she wouldn't have listened to anyway). It was still her job to surround herself with competent people and a chancellor who would have seen all this coming. She ignored the OBR and is on record as not being a fan of the Governor of the Bank of England so wouldn't have sought his advice either.
The brass neck of her still makes my blood boil.
 
Sniffer said:
What is more incredulous is that she still claims that those at the Treasury didn't advise her that this would happen. Its not surprising really is it Truss when you sacked the top civil servant at the Treasury, just because you could, and that would have created a culture of fear for anyone speaking out against her plans (which she wouldn't have listened to anyway). It was still her job to surround herself with competent people and a chancellor who would have seen all this coming. She ignored the OBR and is on record as not being a fan of the Governor of the Bank of England so wouldn't have sought his advice either.
The brass neck of her still makes my blood boil.
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Didn't Sunak also tell her it was a bad idea?
 
sycophantia said:
Didn't Sunak also tell her it was a bad idea?
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Yes but those who voted for her loved her Maggie impressions, her being willing to pretend that the leader of France was a foe, that it would be jam for everyone and that she wasn't the child of an immigrant.
 
Got a mortgage for the house I still live at in 1987, in 1989 I was paying about 15% interest.
 
Elephant Pyjamas said:
How much did the house cost compared to your salary?
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The interest was eye watering then (we bought in 1985) but you're right wages as a percentage of house prices was much, much higher.
e.g. we had a £20,000 mortgage, my salary was,about £8,500 which was adequate then, think you were allowed 3.5 times your salary.
When I finished work 3 years ago my salary was about 20,000 (similar grade job to 1985) and my house is currently worth about 240,000 so no chance we could have bought a house today.
 
House cost £25,500, difficult to remember salary, about £7,000/£7,500 maybe.
 
ROVERT47 said:
House cost £25,500, difficult to remember salary, about £7,000/£7,500 maybe.
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Ours was £29k in 1989 at 11.75% ,and we fixed that rate for three years !
I'm always available for sound financial advice, if anyone needs it :)
 
Paul said:
Ours was £29k in 1989 at 11.75% ,and we fixed that rate for three years !
I'm always available for sound financial advice, if anyone needs it :)
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It's hard to predict the future, fixing at something you know you can afford isn't the worst idea in the world.
 
AndyWolves said:
It's hard to predict the future, fixing at something you know you can afford isn't the worst idea in the world.
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That was our thinking, as I was a lorry driver at the time and earning less than £200 a week, it made sense, the fact the interest rate plummeted within twelve months of us taking it out was purely the story of my life :)
 
No doubt at all it’s much harder now but whilst most people who’ve owned property for a long time have done very well, it’s worth remembering they will have ridden some rollercoasters that took them to the edge too.

There is the massive interest rate fluctuations already spoken about by others, at least two property crashes putting millions into negative equity, then there’s the disaster of endowment mortgages not generating enough to clear the balance at maturity. Anyone of those things would’ve been enough to see some people off and it certainly wasn’t plain sailing.

Looking back I once sold a house that lost me £15000, but moved to much bigger place where the owner had lost nearly £40000. It was a bizarre world where you could gain by losing less than the other guy. If I recall the previous owner paid £122,000 and sold it to us 2 years later for £84,000. Can you imagine a world where you’d lost a third of the value of your home in 24 months?

To be clear, yes long term owners have done very well and yes, it is much MUCH harder to get started now, but it’s by no means been a smooth journey and the current interest rate hikes will be part of the next journey which hopefully people can get through and look back on too.
 
Tbf while house prices and rents are much more expensive now as a proportion of earnings than 30 years ago, young people do benefit in the comparison of wages (no minimum rate back then) so earnings at the bottom end of the social ladder are better than they were. The big bonus kids have over my generation is the amount of opportunities available, so many different types of working andvof course there was no chance I could go to university (even had I wanted to).
Obviously there is a downside to uni with the amount you have to borrow to get through it.
 
Tredman said:
If only there were council houses for the young to live in while on short wages. Not sure what happened to them 🙄
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I don't mind council houses being sold off, when we bought our house it was 20,000, the council house we were living in was available for about 7000, it was a good house too, unfortunately my missus didn't want to stay there after a couple of break ins.
The issue was with selling off council house stock was that the profits should have gone back into building more council houses, we all know what happened.
 
I honestly don't know how today's youth have any optimism about the future, home ownership and raising children present very significant financial challenges.
 
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