Gordon acts against savers again........

Idiophreak

pattycake wrote: »

When we were paying a mortgage it was at 15%. Now we are mortgage free with a good pot of savings but the income we can get from those savings is declining rapidly. Where is the justice in this? We have worked hard all our lives, paid our way and our taxes and now as we are approaching pension age our nestegg is being eroded to support people who just "wanted" without thought for how it was going to be paid for

I very much doubt house prices were as overinflated when you bought as they have been in recent years - interest rates and house prices being so strongly interlinked. The low interest rate now will only help a little for people with huge mortgages. So your "suffering" at 15% was really no greater than anyone elses.

At the end of the day, we're heading hard into a recession and you're in a position where you own your home and have some savings for a rainy day, which is a much better place to be than halfway through paying your mortgage with no savings and jobs being shed all over the place.

Don't get me wrong, I'm no fan of this government's redistribution of wealth, it's not capitalism as I see it, but sometimes you have to take a step back and see what you've got...

Old_Slaphead

Allegedly there are 7 savers for every borrower.

Many savers are trying to accumulate some wealth for their old age to try and give them some independance from the state.

Many of the borrowers are not in dire straights, have plenty of equity in the house but are simply getting a windfall.

I've a few bob saved but then again, I don't have a nice new kitchen, flashy new car and haven't had expensive holidays (or expensive kids). I simply don't see why I should subsidised those that have.

Saviing & borrowing is a zero sum game (or at least it should be). If borrowers want to borrow then they should pay a market rate and not an artificial one designed to help the governments popularity.

Idiophreak

Old_Slaphead wrote: »

I've a few bob saved but then again, I don't have a nice new kitchen, flashy new car and haven't had expensive holidays (or expensive kids). I simply don't see why I should subsidised those that have.

Sorry to say it, but subsidising someone means giving them money...You're not (here) giving anyone money, you're just getting less growth in your savings. Obviously, as a tax payer, you've effectively subsidised a lot of people, now the government owns half the banks, but that's a bit off topic. You getting less interest and other people borrowing at lower rates...that's not subsidy, that's economics...

UnhappyHarry

There's something here that I'm not quite understanding....

The majority of people in the country, who aren't in financial difficulties, but are heavily in debt through mortgages etc. (their choice), and are coping well, have just been thrown a lifeline that they didn't need. Inflation should drop; probably prices too, so their cost of living will not rise as much as expected, but their interest rates on their repayments are being slashed, so they'll probably spend more of their now expendable income.

Meanwhile the debt-free savers are seeing their income from their capital drastically reduced, so they'll stop spending, because they can no longer afford it.

Isn't there something wrong here? The problem was caused by excessive borrowing, so those that didn't borrow are now paying the price. Is that fair?

SGE1

UnhappyHarry wrote: »

There's something here that I'm not quite understanding....

The majority of people in the country, who aren't in financial difficulties, but are heavily in debt through mortgages etc. (their choice), and are coping well, have just been thrown a lifeline that they didn't need.

Not entirely true - redundancies etc mean that even those that did borrow sensibly might find themselves in trouble.

UnhappyHarry

SGE1 wrote: »

Not entirely true - redundancies etc mean that even those that did borrow sensibly might find themselves in trouble.

I did actually say that I was talking about the people who weren't in financial difficulties.

Idiophreak

UnhappyHarry wrote: »

but their interest rates on their repayments are being slashed, so they'll probably spend more of their now expendable income.

Meanwhile the debt-free savers are seeing their income from their capital drastically reduced, so they'll stop spending, because they can no longer afford it.

Isn't there something wrong here? The problem was caused by excessive borrowing, so those that didn't borrow are now paying the price. Is that fair?

What price are you paying? Getting less return on your investment? That's perfectly fair. Things work both ways round...people were having to borrow at higher rates to fund your high interest savings...How do you see that as being fair, exactly?

You've had your good times, now the bad times are coming...you can't say "that's not fair" - everyone knows good things don't last forever...

As for people spending more of their disposable income, that's *exactly* what the government are trying to achieve. Money is like the economies blood - there may be plenty of it about, but if it isn't moving anywhere, the economy dies. So everyone (individuals, and banks) sitting and holding onto their money for dear life, just makes things worse.

Idiophreak

Old_Slaphead wrote: »

Allegedly there are 7 savers for every borrower.
...

If borrowers want to borrow then they should pay a market rate and not an artificial one designed to help the governments popularity.

If the government are doing this for popularity, wouldn't they be sucking up to the 7, not the 1?

KTM_Gordo

The likely impact of not reducing lending rates is a significant rise in houses being repossessed. People losing their home and being put out on the street.

The impact of reducing savings rates is.... well, nothing really - a few quid.

I know a lot of people on here have either no mortgage or a small, affordable mortgage, but put yourself in the position of a significant mortgage and the very real threat of losing your home - puts it into perspective, doesn't it?

You're not going to go hungry or lose your home just because you're not getting as much interest on your savings.

pattycake

SGE1 wrote: »

Hold on a minute... you're complaining, yet you've just stated that you are mortgage free and have a good pot of savings. Good for you, you've obviously managed your finances well - but do you honestly believe that you're the losers here?

I'm afraid I really don't feel sorry for you!

I am not looking for your sympathy. I am simply asking for a system which is fair to all. In actual fact we did buy our present house at the height of the market in the early 1990s. Within two months of moving in and taking a much larger mortgage, I was made redundant when the company I worked for went bust. Sounds familiar? There is nothing new in the world. We had two kids, big mortgage and one income. We did not expect help from the government. We just got on with it. Tightened our belts and survived. We were lucky (or wise) enough not to have other debts and we only had what we could afford.

The mortgage is now paid off and so we have a lot of money tied up in our home but we have not made the mega bucks that we see on the TV of people in the south of England. Plus, it is our home.

We have been prudent and expected to have a comfortable retirement but that is now in doubt in the present climate.