Relevant FT article
UK’s mortgage relief measures risk a financial shortfall in later life
this post was submitted on 02 Jul 2023
10 points (100.0% liked)
United Kingdom
4077 readers
102 users here now
General community for news/discussion in the UK.
Less serious posts should go in [email protected] or [email protected]
More serious politics should go in [email protected].
Try not to spam the same link to multiple feddit.uk communities.
Pick the most appropriate, and put it there.
Posts should be related to UK-centric news, and should be either a link to a reputable source, or a text post on this community.
Opinion pieces are also allowed, provided they are not misleading/misrepresented/drivel, and have proper sources.
If you think "reputable news source" needs some definition, by all means start a meta thread.
Posts should be manually submitted, not by bot. Link titles should not be editorialised.
Disappointing comments will generally be left to fester in ratio, outright horrible comments will be removed.
Message the mods if you feel something really should be removed, or if a user seems to have a pattern of awful comments.
founded 1 year ago
MODERATORS
This is going to be a timebomb, I'm sure of it. Rates are not going back to sub-2% for a long time, and more people are going to be looking at interest-only.
The banks are perfectly happy with this, provided people have at least some equity in the property, as it means more money long-term for them. But it is going to mean a lot of people passing retirement age with large interest-only payments still coming out.
Rates are not going back to sub-2% for a long time
I disagree quite strongly.
Economies limping along at ~1% GDP growth per year and little or no GDP per capita growth can't handle larger base rates for long. It's a self-correcting cycle - if base rates remain elevated for too long discretionary spending will collapse and many, many businesses/loans/credit with it.
Rishi promised to half inflation not because he's a financial genius with a secret trick, but because he knows two things: 1) what I said above, 2) inflation is often given as a YoY measure, so by December 2023 we're measuring inflation above the 10% inflation of December last year, and the country can't afford 10% inflation per year for long either.
This is good advice 👍 in the medium to long-term, though, it's possible that rates won't be returning to ~2%, so these measures should just be considered as a way for borrowers to buy a little time.
view more: next ›