Economics Nerd Central/ The Global Inflation Thread

Handy Run

Full Member
Am I positively or not at all affected by rising interest rates with a 20 year fixed mortgage?

All I can think of is if it stops inflation wiping out my pay increments then that's a plus.

Will reducing the supply of cheap credit really push down prices of everyday goods? Or is the fuel situation gonna rawdog us no matter what?
 

Roxetten

Full Member
Am I positively or not at all affected by rising interest rates with a 20 year fixed mortgage?

All I can think of is if it stops inflation wiping out my pay increments then that's a plus.

Will reducing the supply of cheap credit really push down prices of everyday goods? Or is the fuel situation gonna rawdog us no matter what?

Bandon gets it's gas supplies from Norway via the UK so you'll be grand.
 

How bad boy

Full Member
Am I positively or not at all affected by rising interest rates with a 20 year fixed mortgage?

All I can think of is if it stops inflation wiping out my pay increments then that's a plus.

Will reducing the supply of cheap credit really push down prices of everyday goods? Or is the fuel situation gonna rawdog us no matter what?
Well if you have a 20 year fixed rate, rising interest rates won't make a tack of difference there. If you have savings, it might shift the rates on them from "hahaha, fuck off" to "here's a pittance, and you'll be happy about it"

Depending on how well your salary tracks inflation, relatively high inflation can be pretty good, if you have a €300k mortgage on a €50k salary, that's a 6x multiple.

If you increase that by 10% this year, you're down to a 5.5x multiple straight away. Course, it's not even vaguely that simple, but it's worth keeping in mind that inflation can be good for some people.


Reducing the supply of cheap credit will reduce prices.

Take that example of a €300k mortgage on a €50k salary.
With a 3% mortgage over a 20 year term, that's €1,664 a month.
With a 5% mortgage over a 20 year term, it's €1,980 a month

Putting zero effort into it (i.e. single income family, not mucking about with tax allowances n all that), €50k is €3,394 a month take home from a random salary calculator on the web.

So you've gone from 49% of your income going on mortgage payments (possible but that's very high) to 58% of your income going on mortgage payments.

Makes it far more likely the punter with a €50k income won't be given that oversized mortgage.

And of course if, by some miracle, they do get approved for that mortgage, they have significantly less disposable income to spend on other stuff.

Fundamentally, if there's less money around to spend on stuff, and that money is more expensive to obtain. people won't be spending as much and that puts pressure on suppliers to drop their prices (or reduces how much they sell...)
 

Handy Run

Full Member
Rory Stewart on his podcast with Campbell reckons we're focked for the next decade. At least.
McWilliams isn't far behind him.

Could we start to see a reversion to revolution? The top 0.01% seem to be fucking it so hard that if people no longer have a stake in the game then they've nothing to lose by some disruption to the system.

If too many people have no mortgage or even a prospect of one, does that destabilise society? Especially in the Anglo world of no tenant protections?
 

How bad boy

Full Member
Rory Stewart on his podcast with Campbell reckons we're focked for the next decade. At least.
McWilliams isn't far behind him.

Could we start to see a reversion to revolution? The top 0.01% seem to be fucking it so hard that if people no longer have a stake in the game then they've nothing to lose by some disruption to the system.

If too many people have no mortgage or even a prospect of one, does that destabilise society? Especially in the Anglo world of no tenant protections?
Definitely.

I don't know why young folks in their 20s aren't already at that point in the UK. Housing is utterly unaffordable for them, they've been screwed by university debt, salaries haven't kept pace with inflation. Financially, they're fucked, the system is totally biased against them, primarily to keep well off voting baby boomers in the luxury to which they are accustomed.
When they have kids, good luck, shit gets worse, you have to survive 3 years with literally zero childcare support from the state, even when it does kick in, it's not vaguely enough for your average punter.

But no, no, no, we couldn't possibly increase inheritance tax.


The incentives in the UK are nuts. That's where I think labour should be making a strong case for the state to offer cheaper childcare, reducing university debt, building more housing, adult learning and ways for those who leave education without qualifications to be able to get ahead
 

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