So apparently my taxes should pay your mortgage....

[DRFC_AjA]

...ok it's not quite like that but talk about a sense of entitlement that society has these days. Calls that the government "should" do something just because rates are about 6% ?? The low interest rate era was an anamolly, a blip, and things are returning to normal now. Why on earth should you me or the government be tapped up because some people maxed themselves out and spent more than they can afford 

[Mike_F]

100% agree with the sentiment there.

People need to take responsibility for their spending and when you're committing to a 20/25/30 year debt an element of planning for the worst while hoping for the best is surely the sensible option.

House prices need to come down significantly to make homes affordable for my kids' generation. Government subsidies on mortgages would just keep the bubble artificially inflated for longer.

[Nudga]

Mortgage

Death Pledge

[big fat yorkshire pudding]

Tend to agree. Mortgages shouldn't be subsidised unless the government take some equity.

Question though how house prices can come down with so many tied down to quite pricey houses.

[Filo]

Imagine how some of us felt when interest rates went to 15% all those years ago, no help but we managed and now mortgage free

[big fat yorkshire pudding]

Imagine how some of us felt when interest rates went to 15% all those years ago, no help but we managed and now mortgage free

Suppose you didn't have average house prices of £370k then though.

Found the below interesting, our company don't implement pay rises until next month so if others are similar it could continue.



In comments that are sure to raise eyebrows, a member of Chancellor Jeremy Hunt's economic advisory council has called for the Bank of England to "create a recession" to curb inflation.

JP Morgan's Karen Ward told BBC Radio 4's Today programme there are "certainly signs" that a price-wage spiral is emerging, which the central bank "has to nip in the bud".

"The difficulty for the Bank of England - I mean, no-one envies them their job at the moment - is they have to therefore create a recession.

"They have to create uncertainty and frailty, because it's only when companies feel nervous about the future that they will think 'Well, maybe I won't put through that price rise', or workers, when they're a little bit less confident about their job, think 'Oh, I won't push my boss for that higher pay'.

"It's that weakness in activity which eventually gets rid of inflation."

Ms Ward also said the Bank of England has "been too hesitant" about raising interest rates.

[GazLaz]

...ok it's not quite like that but talk about a sense of entitlement that society has these days. Calls that the government "should" do something just because rates are about 6% ?? The low interest rate era was an anamolly, a blip, and things are returning to normal now. Why on earth should you me or the government be tapped up because some people maxed themselves out and spent more than they can afford 

How long does something have to be the case before it becomes the norm?

[Sprotyrover]

Rents are Rocketing up too! Quite a few landlords own one property which is mortgaged, hence the increase!

[DRFC_AjA]

Used to be a landlord and never again. Despite the single mum with 10 kids sob stories that the media is full of the rules/odds are heavily stacked in favour of scummy tenants who don't pay rent. Mass exodus of landlords and therefore rentable property is just beginning now

[danumdon]

Defiantly a sense of self entitlement from people to even consider something as dramatic as mortgage relief now.

As others have alluded, far too many people now don't just expect but demand, the state into action.

That direction only leads one way and its the direction that these very same people would hate.

My advice, scrap university education for people who are patently not academically minded (so that's at least 50% of school leavers who can't muster top marks in their A Levels)

Give all STEM subject students very big discounts on their uni course costs.

Get the other 50% who do not meet the criteria to compete for a new modern apprenticeship(as in a full 3 ot 4 year course) in hands on trades that we desperately need, so that will be 30% of this cohort covered.

Make the remaining 20% have to complete an extra 2 years secondary education to bring them up to the desired level, most should be able to do it in 1 year.

Get the remaining 5% who just don't get school have to sign up to 2 years national service, then send them to all the worlds hotspots, when they return most will rush back to school for a decent education so they don't have to complete a tour again. Sorted.

[BillyStubbsTears]

Imagine how some of us felt when interest rates went to 15% all those years ago, no help but we managed and now mortgage free

You DID have Govt help though. You were refunded income tax on your interest payments.

[Filo]

Imagine how some of us felt when interest rates went to 15% all those years ago, no help but we managed and now mortgage free

You DID have Govt help though. You were refunded income tax on your interest payments.

Yes, and then screwed by the endowment fiddle where we were promised a lump some and the mortgage paid off at the end of the term, the reality was the endowment wouldn’t meet the mortgage and many like me had to switch to a repayment mortgage over a linger term, but we managed

[drfchound]

Imagine how some of us felt when interest rates went to 15% all those years ago, no help but we managed and now mortgage free

You DID have Govt help though. You were refunded income tax on your interest payments.

Yes, and then screwed by the endowment fiddle where we were promised a lump some and the mortgage paid off at the end of the term, the reality was the endowment wouldn’t meet the mortgage and many like me had to switch to a repayment mortgage over a linger term, but we managed

You must have been unlucky with that endowment Filo.
Mine paid seven times the amount I had borrowed when I cashed it in.

[BillyStubbsTears]

Imagine how some of us felt when interest rates went to 15% all those years ago, no help but we managed and now mortgage free

You DID have Govt help though. You were refunded income tax on your interest payments.

Yes, and then screwed by the endowment fiddle where we were promised a lump some and the mortgage paid off at the end of the term, the reality was the endowment wouldn’t meet the mortgage and many like me had to switch to a repayment mortgage over a linger term, but we managed

Imagine how some of us felt when interest rates went to 15% all those years ago, no help but we managed and now mortgage free

You DID have Govt help though. You were refunded income tax on your interest payments.

Yes, and then screwed by the endowment fiddle where we were promised a lump some and the mortgage paid off at the end of the term, the reality was the endowment wouldn’t meet the mortgage and many like me had to switch to a repayment mortgage over a linger term, but we managed

That's true Filo, and by the 90s, the endowment issue was a massive scandal. I too lost out hugely through it.

But that shouldn't belittle the problem for today's borrowers.

They've had the misfortune to come of age in an era where house prices as a ratio of average earnings are at utterly obscene levels. If a young person has wanted to buy a property, they've effectively been transferring many, many multiples of their average wage to the older generations (because generally, sellers are older than buyers).

That has only been possible because interest rates have been so low.

Now follow the logic.

If interest rates hadn't been so low, house prices could never have hit these levels. Because buyers wouldn't have been able to afford the mortgages.

House prices rose because interest rates were rock bottom. So if it was morally wrong for borrowers to borrow to buy those houses, it was equally morally wrong for sellers to profit from selling those houses at extortionate levels.

Follow the logic further. The truly fair thing to do now would be to put a massive tax on those who paid off mortgages at low rates, and use it to subsidise those who now have unaffordable mortgages.

There's no political judgement or bias in there. Just cold logic.

The alternative?

You let those who be benefitted from paying off their mortgages at low interest-to-salary fractions pocket the (unearned) wealth that they have been fortunate to accumulate by the mad increase in house prices, and you leave the poor f**kers who were left exposed when the music stopped lose their homes.

That logic is impermeable. But it won't convince people. So, look at it a simpler way. What right does one generation have to profit from the unearned wealth of house price increase, while the next generation has to face hitherto never experienced levels of mortgage payment to average salary? It is a direct transfer of wealth from younger to older generations, which the older generations have done precisely zero to earn.

I'm speaking here by the way as one of the luckier older ones. And I would vote for any party that proposed a wealth tax of 25% on the stupid amount that my house has gone up by over the past decade or so.

[drfchound]

I once asked a friend of mine whether he had any investments to provide for his future.
He said yes he had, it was his parents house.
He was happy to plod along for the time being.

[Bristol Red Rover]

One way to solve this is to have a sliding scale of death duty, eg starting at the level it is and going up to 99% by... £5m? No off shore etc loopholes, plus a "Rishi" windfall tax on the likes of Rishi.

Whilst I agree with what BST says above,  it's a fact that our economic system has created an ever widening wealth gap which is at least somewhat responsible for the inflated house price bubble.

[idler]

The problem with the endowment plan was how it was sold.
If you had a mortgage of £10,000 and a policy that would mature at £10,000 that was fine but the premiums would be high.
The problem was that for a lower premium you could have a policy maturing at say £6,000 and you have the rest made up of bonuses.
That's not good when you have a few years of poor bonuses and a low terminal bonus leaving a shortfall.
That should have been explained when the policy was sold.

[Filo]

The problem with the endowment plan was how it was sold.
If you had a mortgage of £10,000 and a policy that would mature at £10,000 that was fine but the premiums would be high.
The problem was that for a lower premium you could have a policy maturing at say £6,000 and you have the rest made up of bonuses.
That's not good when you have a few years of poor bonuses and a low terminal bonus leaving a shortfall.
That should have been explained when the policy was sold.

The selling point for me back in 1988 was that they said there would be enought to pay the mortgage off and around £20k left for us, as it transpired the endowment wasn’t going to make half of the mortgage, so I switched to a repayment mortgage and added 5 yeas to the term and cashed the endowments in

[DRFC_AjA]

Imagine how some of us felt when interest rates went to 15% all those years ago, no help but we managed and now mortgage free

You DID have Govt help though. You were refunded income tax on your interest payments.

Yes, and then screwed by the endowment fiddle where we were promised a lump some and the mortgage paid off at the end of the term, the reality was the endowment wouldn’t meet the mortgage and many like me had to switch to a repayment mortgage over a linger term, but we managed

Imagine how some of us felt when interest rates went to 15% all those years ago, no help but we managed and now mortgage free

You DID have Govt help though. You were refunded income tax on your interest payments.

Yes, and then screwed by the endowment fiddle where we were promised a lump some and the mortgage paid off at the end of the term, the reality was the endowment wouldn’t meet the mortgage and many like me had to switch to a repayment mortgage over a linger term, but we managed

That's true Filo, and by the 90s, the endowment issue was a massive scandal. I too lost out hugely through it.

But that shouldn't belittle the problem for today's borrowers.

They've had the misfortune to come of age in an era where house prices as a ratio of average earnings are at utterly obscene levels. If a young person has wanted to buy a property, they've effectively been transferring many, many multiples of their average wage to the older generations (because generally, sellers are older than buyers).

That has only been possible because interest rates have been so low.

Now follow the logic.

If interest rates hadn't been so low, house prices could never have hit these levels. Because buyers wouldn't have been able to afford the mortgages.

House prices rose because interest rates were rock bottom. So if it was morally wrong for borrowers to borrow to buy those houses, it was equally morally wrong for sellers to profit from selling those houses at extortionate levels.

Follow the logic further. The truly fair thing to do now would be to put a massive tax on those who paid off mortgages at low rates, and use it to subsidise those who now have unaffordable mortgages.

There's no political judgement or bias in there. Just cold logic.

The alternative?

You let those who be benefitted from paying off their mortgages at low interest-to-salary fractions pocket the (unearned) wealth that they have been fortunate to accumulate by the mad increase in house prices, and you leave the poor f**kers who were left exposed when the music stopped lose their homes.

That logic is impermeable. But it won't convince people. So, look at it a simpler way. What right does one generation have to profit from the unearned wealth of house price increase, while the next generation has to face hitherto never experienced levels of mortgage payment to average salary? It is a direct transfer of wealth from younger to older generations, which the older generations have done precisely zero to earn.

I'm speaking here by the way as one of the luckier older ones. And I would vote for any party that proposed a wealth tax of 25% on the stupid amount that my house has gone up by over the past decade or so.

Wouldn't necessarily agree it was morally wrong to borrow at low levels, after all that was the point of low rates to spur the economy after the 08 crash. However, the tale as old as time is don't borrrrow beyond your means. When you get a mortgage you even get given an example that says if interest rates rise to x% then your repayment will be £yyy and are you financially ok with that? I think my example was 8%

Nobody held a gun to anyone's head and said you must max yourself out at 1.5% and not care about the consequences when rates will inevitably go up. To then call for the government, or old people, to bail you out creates moral hazard and you'll just do it again knowing you'll get nailed out again.....yes the banks did this in 08 and that was wrong but not going to start on that

I want a new car, but guess what, can't afford one so won't get. Or maybe I should have got one at 1.5% and to heck with the consequences because if I complain and winge and blame someone else then I'll get bailed out.....and I'll get a new one every 3 years because that's the norm these days, as opposed to the older generation who may have held their cars for a much longer period of time. Also have to have 2 hols a year, all to keep up with the Jones's, but again it's not my fault I'm broke I'll blame someone else

[big fat yorkshire pudding]

I agree, how is it morally wrong?  How strong are your morals BST?  You say you've benefitted from the market, are you going to sell your house at what you deem a morally acceptable level or would you sell it for what you can get and the market value?

I tend to agree with Aja, but then I'd also say it shows a lack of financial understanding throughout society as really you should plan for the risk of interest rate rises.

I also don't really fully agree with Labour's call to move people to interest only mortgages.  Would that be means tested, judgemental or blanket across the board? The financially savvy would use that to their advantage without a doubt.  There has to be some form of testing/tolerance on that.  I've already changed mine to lose 66% of the payment because I'm on a very low fix.  That's making me a good amount of money in interest over the remainder of the fix.  If I could drop it further to interest only, I'd jump on it.  It shouldn't be applicable to those who can afford it, I'm surprised how easy it was to drop the payment so much.

[danumdon]

What the government and any interested parties should be pushing for is that six form pupils are mandated to undertake financial planning education.

Fat too many kids leaving school, moving onto uni and not having the absolute minimum understanding in how to manage their finances, if they have parents who have been very lax and up to their neck in debt through poor money management then they have no chance of starting out on an even keel.

Results in kids, young students and adults starting out in life getting absolutely creamed by the financial industry, resulting in them having very poor credit ratings, massive overdrafts, credit card and numerous debts before they even start to look at mortgages, if they're lucky enough to even get the opportunity to be considered for a mortgage they will be hammered with vastly enhanced interest rates due to their poor credit ratings.

The blind and stupid lead by the greedy, only ends one way.

[Glyn_Wigley]

It's all  very reminiscent of the whining from the people who lost their shirt at Lloyds when they thought it was easy money with no risk attached. When reality intervened they expected someone else to take the hit for them.

[colfromdonny]

When the max you could borrow was  3x (4x?) the mans wage plus the wifes wage it set the basic price for a property but when this was stopped banks were asking 'what is the max you can pay back?' this started the rise in house prices.

[Sprotyrover]

Simple solution, Govt buy by compulsory purchase some of the 90% of land not built on and owned by the Privileged few and sell it on at reasonable prices to Joe Public to build on, similar thing happened in Germany made house prices realistic.

[wilts rover]

Simple solution, Govt buy by compulsory purchase some of the 90% of land not built on and owned by the Privileged few and sell it on at reasonable prices to Joe Public to build on, similar thing happened in Germany made house prices realistic.

Otherwise known as socialism.

This government buys land at market value and sells it on to its mates at knockdown prices for them to make a killing (Teeside).