Are savings rates on their way down?

Albermarle

Ocelot said:

Patr100 said:

EssexHebridean said:

Lovely as those savings rates are, the corresponding mortgage rates were rather more of an issue as I recall! 

First time buyer in the mid 90s, pretty much the  direction of travel was to fix for up to  5 years or so  if you could - Only towards the middle/end of my 25 year term did I stick with the variable rate.
Also remember though that while mortgage rates were high, they were more affordable in relation to earnings
compared to current situation. In short, as long as you were in work, and avoided negative equity, it was a stretch at times
but it was usually doable. 

I was a FTB in 1997 and I believe my mortgage rate was around 9%, but the remnants of MIRAS still existed then. Also, average semi-detached houses in Surrey were 60-90k then, now 450-900k.

Although houses in leafy Surrey have gone up a lot in 25 years, I do not think by 750 to1000%  = 35% pa !

happybagger

Patr100 said:

and as I have said, in a recession, central banks/Govts want to encourage spending
and discourage saving.

While conversely, when inflation is high, they try to discourage spending to reduce demand to reduce prices.

Herein lies their problem.

And no doubt the BoE will be considering today's retail spending data, which shows that despite the "cost of living crisis" people are still spending, and some.

EssexHebridean

Albermarle said:

Ocelot said:

Patr100 said:

EssexHebridean said:

Lovely as those savings rates are, the corresponding mortgage rates were rather more of an issue as I recall! 

First time buyer in the mid 90s, pretty much the  direction of travel was to fix for up to  5 years or so  if you could - Only towards the middle/end of my 25 year term did I stick with the variable rate.
Also remember though that while mortgage rates were high, they were more affordable in relation to earnings
compared to current situation. In short, as long as you were in work, and avoided negative equity, it was a stretch at times
but it was usually doable. 

I was a FTB in 1997 and I believe my mortgage rate was around 9%, but the remnants of MIRAS still existed then. Also, average semi-detached houses in Surrey were 60-90k then, now 450-900k.

Although houses in leafy Surrey have gone up a lot in 25 years, I do not think by 750 to1000%  = 35% pa !

I happened to be looking at something a few days back and noted that had we bought our current property (2 bed flat, in the bit of Essex which is nearly London and not quite Hertfordshire) in 1997, we could have paid around £38k. When we actually bought it in 2003 we paid £93.5k, and if we were to sell it now we would get anywhere between £180k-£200k. While the increase since we purchased is surprising, the increase in the 6 year period between '97 > '03 is even more startling. 

Albermarle

EssexHebridean said:

Albermarle said:

Ocelot said:

Patr100 said:

EssexHebridean said:

Lovely as those savings rates are, the corresponding mortgage rates were rather more of an issue as I recall! 

First time buyer in the mid 90s, pretty much the  direction of travel was to fix for up to  5 years or so  if you could - Only towards the middle/end of my 25 year term did I stick with the variable rate.
Also remember though that while mortgage rates were high, they were more affordable in relation to earnings
compared to current situation. In short, as long as you were in work, and avoided negative equity, it was a stretch at times
but it was usually doable. 

I was a FTB in 1997 and I believe my mortgage rate was around 9%, but the remnants of MIRAS still existed then. Also, average semi-detached houses in Surrey were 60-90k then, now 450-900k.

Although houses in leafy Surrey have gone up a lot in 25 years, I do not think by 750 to1000%  = 35% pa !

I happened to be looking at something a few days back and noted that had we bought our current property (2 bed flat, in the bit of Essex which is nearly London and not quite Hertfordshire) in 1997, we could have paid around £38k. When we actually bought it in 2003 we paid £93.5k, and if we were to sell it now we would get anywhere between £180k-£200k. While the increase since we purchased is surprising, the increase in the 6 year period between '97 > '03 is even more startling. 

So about a 500% increase in 25 years, which sounds about right for the South East. I am stretching my memory a bit but I think prices were depressed for the first part of the 1990's, with negative equity a big issue for some. but bounced back strongly at the end of decade.

Patr100

happybagger said:

Patr100 said:

and as I have said, in a recession, central banks/Govts want to encourage spending
and discourage saving.

While conversely, when inflation is high, they try to discourage spending to reduce demand to reduce prices.

Herein lies their problem.

And no doubt the BoE will be considering today's retail spending data, which shows that despite the "cost of living crisis" people are still spending, and some.

Yes, on the economy for the BoE, the problem is that the usual remedies are in conflict because we have inflation and a recession overlapping and the main tool they have is interest rates . So raising rates to suppress inflation strangles the revival of investment and the economy. Though if inflation is considered to have reached a peak then the emphasis will then likely be on reviving/resuscitating the economy.

Johnjdc

Albermarle said:

Ocelot said:

Patr100 said:

EssexHebridean said:

Lovely as those savings rates are, the corresponding mortgage rates were rather more of an issue as I recall! 

First time buyer in the mid 90s, pretty much the  direction of travel was to fix for up to  5 years or so  if you could - Only towards the middle/end of my 25 year term did I stick with the variable rate.
Also remember though that while mortgage rates were high, they were more affordable in relation to earnings
compared to current situation. In short, as long as you were in work, and avoided negative equity, it was a stretch at times
but it was usually doable. 

I was a FTB in 1997 and I believe my mortgage rate was around 9%, but the remnants of MIRAS still existed then. Also, average semi-detached houses in Surrey were 60-90k then, now 450-900k.

Although houses in leafy Surrey have gone up a lot in 25 years, I do not think by 750 to1000%  = 35% pa !

35% a year would be 54,000% in 25 years. Compound interest and all that.

1000% is 10.1% a year for 25 years. 750% is 8.8% a year.

Ocelot

Albermarle said:

Ocelot said:

Patr100 said:

EssexHebridean said:

Lovely as those savings rates are, the corresponding mortgage rates were rather more of an issue as I recall! 

First time buyer in the mid 90s, pretty much the  direction of travel was to fix for up to  5 years or so  if you could - Only towards the middle/end of my 25 year term did I stick with the variable rate.
Also remember though that while mortgage rates were high, they were more affordable in relation to earnings
compared to current situation. In short, as long as you were in work, and avoided negative equity, it was a stretch at times
but it was usually doable. 

I was a FTB in 1997 and I believe my mortgage rate was around 9%, but the remnants of MIRAS still existed then. Also, average semi-detached houses in Surrey were 60-90k then, now 450-900k.

Although houses in leafy Surrey have gone up a lot in 25 years, I do not think by 750 to1000%  = 35% pa !

They were definitely 60-90k in 1997, now a 2 bed in an average area is around 500k.

The 900k ones now were, to be fair, probably way more than 90k at the time.

London is a lot worse, though. I remember 4 bed end terraces for sale in Stratford for 69,950 at the time, 2 bed terrace in Ealing for 90k , a 4 bed detached in Catford for 60k and a 2 bed flat in Maida Vale for 92k. These London properties were bought colleagues at the time.

I remember thinking 'You're paying 92k for a flat! How expensive.'

bd10

Looks like Atombank cut their fixes by 20bp. Their instant saver remains unchanged. We've got a nice little recession coming our way. TLT.O up 13% from the Nov lows.

Oasis1

Bobajobbob said:

Data set was pretty horrible but here are the graphs. One dodgy data element in the ISA 2Yr graph to ignore.

Wish MSE could make live graphs that mimic these brilliant ones.

Albermarle

Johnjdc said:

Albermarle said:

Ocelot said:

Patr100 said:

EssexHebridean said:

Lovely as those savings rates are, the corresponding mortgage rates were rather more of an issue as I recall! 

First time buyer in the mid 90s, pretty much the  direction of travel was to fix for up to  5 years or so  if you could - Only towards the middle/end of my 25 year term did I stick with the variable rate.
Also remember though that while mortgage rates were high, they were more affordable in relation to earnings
compared to current situation. In short, as long as you were in work, and avoided negative equity, it was a stretch at times
but it was usually doable. 

I was a FTB in 1997 and I believe my mortgage rate was around 9%, but the remnants of MIRAS still existed then. Also, average semi-detached houses in Surrey were 60-90k then, now 450-900k.

Although houses in leafy Surrey have gone up a lot in 25 years, I do not think by 750 to1000%  = 35% pa !

35% a year would be 54,000% in 25 years. Compound interest and all that.

1000% is 10.1% a year for 25 years. 750% is 8.8% a year.

Yes good point !