The Conservative Party

[west didsblue]

I think the harsh reality is that people have got used to what by any historical norms, are spuriously low interest rates. 2.25% or even 5% or 6% are still low by historical standards, although returning to those latter levels would doubtless cause enormous difficulty for many people. I guess understandably desperate to get onto the housing ladder, many have borrowed more than they can afford unless the rates stay as low as they have been. They've basically gambled that rates would never go up, or that their income would go up fast enough to cover it if it did.

Hopefully the rates won't peak as high as people are suggesting and only a smaller number of people will find themselves in difficulty.

And, BTW, just as an aside, I have been campaigning strongly on here for the BoE to NOT raise interest rates, whereas in fact, higher rates would be good for me because I have long since paid my mortgage off and would just get a better rate on my savings. But this can't be right because I am just a selfish **** etc.

There's no good outcome as long as the Kwarteng plan is followed. The only thing that has stopped the pound falling further is the expectation of a significant interest rate rise. The expectation of a freeze of interest rates would cause the pound to plummet further which would push inflation even higher due to the increased costs of imports, and the fact that key commodities such as oil are priced in dollars. Although a very weak pound in theory would help exporters, that will only be the case where the raw materials and components all sourced in the UK otherwise the additional costs of importing would offset much of the benefits.

 

[supercity88]

I think the harsh reality is that people have got used to what by any historical norms, are spuriously low interest rates. 2.25% or even 5% or 6% are still low by historical standards, although returning to those latter levels would doubtless cause enormous difficulty for many people. I guess understandably desperate to get onto the housing ladder, many have borrowed more than they can afford unless the rates stay as low as they have been. They've basically gambled that rates would never go up, or that their income would go up fast enough to cover it if it did.

Hopefully the rates won't peak as high as people are suggesting and only a smaller number of people will find themselves in difficulty.

And, BTW, just as an aside, I have been campaigning strongly on here for the BoE to NOT raise interest rates, whereas in fact, higher rates would be good for me because I have long since paid my mortgage off and would just get a better rate on my savings. But this can't be right because I am just a selfish **** etc.

I think the average house price in England is now around £260k. If you imagine the majority of younger people have bought off a 5-10% deposit so are borrowing £240-250k over 35 years (realistically) then the impact of a small hike in interest can be huge.

Fixed at 2% (many will be much lower) you'd be paying £5,000 in interest a year on £250k. That's over £400 a month. Now imagine it goes to 4%... or 6%. That's crippling. Even more so against the backdrop of rising costs for food, fuel, energy and just about everything else!

I've just fixed my mortgage for another 5 years and managed to get a "decent" rate - higher than last time but not too bad considering where things might be. I think it's 0.5% higher interest and despite having 5 years of paying off the mortgage my monthly payments have gone up by £250. The younger generation have had to borrow up to their eyeballs just to get on the ladder. They've not been able to save deposits to purchase homes because of rising prices. That's why Help to Buy and Stamp Duty Holidays have been so positive for the market. The alternative is paying extortionate money on rents despite a lot of rental places being poorly maintained and sub-standard. There is no way the BoE can raise interest rates because of the destruction that will cause. You'll have the richest of the rich celebrating both a drop in tax and great rates on their savings. Then you'll have the other 99.9% of the country absolutely fucked and needing government bail outs.

They simply have to revise the rate drop and hope there's a positive rebound that stabilises the value of the £ and calms things. It's whether that would work, or people would just see an unstable government that could do anything at anytime and then reverse it, and it only make things worse. That's why, in my opinion, they're sat back watching to see how things play out and hoping in time things are calmer. Putin chatting shite might help distract people for a while.

 

[supercity88]

I know a few well off, there mortgages paid off, all they have in life is to get angry about Migrants, Meghan and Transexuals

they will continue voting Tory

Great name for a band.

 

[carlosthejackal]

I’m just glad that Andrew Bridgen has crawled out from beneath his stone and given us the benefit of his wisdom.

 

[mexico1970]

I know a few well off, there mortgages paid off, all they have in life is to get angry about Migrants, Meghan and Transexuals

they will continue voting Tory

Having a view on either of these things doesn't make a person angry, in fact everyone should have a view on these things.

 

[mayo31]

Having a view on either of these things doesn't make a person angry, in fact everyone should have a view on these things.

Why?

Not all of them may impact on you.

 

[Phil1]

Why?

Not all of them may impact on you.

Yeah tbf I doubt any of those subjects have ever given me a moments thought apart from when I see threads on here about them.

 

[bluethrunthru]

Why?

Not all of them may impact on you.

Its funny - I own my own house outright - I am reasonably well off and to be honest none of them impact on me. I live in the North East so no boats rock up on the beaches here but in my opinion we need the incomers to make up shortages in the jobs market that are holding this country back - Meghan, married to Harry, let them get on with their lives coz whatever they do doesn't impact me - Transexuals? So what? All the 3 points raised are just products of the so called culture wars - some people would get angry about golfers, horses and shrubbery if the "right" person kept cropping up on their time lines on various platforms railing about how those things were wrong, needed to be stopped and were a bad influence on their lives

 

[mexico1970]

Why?

Not all of them may impact on you.

You can have an opinion on anything, it doesn't matter if it impacts you at all. Should people just stay in their lanes and not have an opinion on things that don't affect them?

 

[Chippy_boy]

There's no good outcome as long as the Kwarteng plan is followed. The only thing that has stopped the pound falling further is the expectation of a significant interest rate rise. The expectation of a freeze of interest rates would cause the pound to plummet further which would push inflation even higher due to the increased costs of imports, and the fact that key commodities such as oil are priced in dollars. Although a very weak pound in theory would help exporters, that will only be the case where the raw materials and components all sourced in the UK otherwise the additional costs of importing would offset much of the benefits.

All very sound and logical thinking. However, your whole argument is predicated on the assumption that the markets will continue to look negatively upon the Tories' plan. I am not at all sure that this is the case. There was an initial shock and immediate drop in the value of the pound, but that quickly recovered. You might argue that is because of expectation of higher interest rates and that may well be a part of it. But on the other hand sudden drops (or rises) in the value of currencies (or stocks for that matter) are pretty much always followed by a swift movement in the opposite direction shortly afterwards. Markets usually overreact - you see it all the time. Something will be at say 10.00 one day, some news comes in and it drops to 9.00 immediately, and then next day it's back up to 9.8 (or whatever).

I don't think you can say with any certainty that the pound won't be moving upwards over the next few weeks. The BoE said it would act further if necessary. It may not be necessary.

Seems to me people on here are VERY much too quick to throw the towel in. People were calling the plan a failure after less than 1 working day, which IMO is a ridiculous attitude. Sure, you can disagree with it in any timescale you like, but you cannot call it a failure until its demonstrated to be a failure, and at best it will take several months - a year or more potentially - until we can see whether this is working or not. New investment into the UK and new confidence in the UK isn't something that you can magic up. You might argue it's never going to happen and you may well be right. But we don't know yet.

EDIT: You have also to consider that at some point speculators will start to think the pound is so low that buying Sterling is a good bet, and it will start to rise. Bear markets don't last forever and we've been in a Sterling bear market for the past 18 months. Ditto, many analysts are saying the dollar is over-valued and it's been on a bull run for too long.