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British pound hits record low against the dollar

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Re: British pound hits record low against the dollar

#331

Post by jamiek88 »

everybodyknows wrote: post #284
kypro wrote: post #252

So the bigger news here imo is what's happening in the bond market. It's now expected that the BoE will increase rates above 6% by the middle of next year. Most people in the UK are on fixed rate mortgages, most of which are 2-3 year fixes. Those who brought a home during the pandemic or fixed at a low rate typically fixed at around 1-2%. I personally fixed for 2 years at a rate of 1.7% just over a year a go when I m…

> 500,000 people are in a similar position to me. Do not despair; watch for hints of a coming bailout. Bankrupting half a million voters has to look like poison to elected officials. One more economically rational option in future, for example, would be imposing a principal "haircut" on lenders, down to some assessment of the by that time reduced market prices of comparable homes.

I would be astounded if the current zeitgeist allowed that. Historically that has been a non starter too.

Re: British pound hits record low against the dollar

#332

Post by kypro »

theGnuMe wrote: post #271
kypro wrote: post #252

So the bigger news here imo is what's happening in the bond market. It's now expected that the BoE will increase rates above 6% by the middle of next year. Most people in the UK are on fixed rate mortgages, most of which are 2-3 year fixes. Those who brought a home during the pandemic or fixed at a low rate typically fixed at around 1-2%. I personally fixed for 2 years at a rate of 1.7% just over a year a go when I m…

The UK has longer fixed rate mortgages right? Can you refinance now?

I'll speak with my lender this week. I don't think I can refinance for another few months without fees and at this point there's a significant risk in taking out a longer-term fix anyway because this move could be temporary and a fix would be locking in the higher rate.

There's really no good options. The right answer would have been to try to find a 10 year fix when I took out the mortgage but as I've explained in another comment they're very unfavourable for many reasons in the UK. You basically pay a premium on current market expectations for the fix and have early repayment fees were you to want to sell your home.

Re: British pound hits record low against the dollar

#333

Post by xtracto »

0xffff2 wrote: post #312
pjc50 wrote: post #299

Earlier quoted context omitted.

That is literally how they are marketed, and the rate is fixed for N years.

It's a seemingly rare case where the US terminology makes more sense than the rest of the world. In the US, a "fixed" mortgage is a fixed rate for the entire term of the loan (usually 30 years). Anything else is called an ARM (adjustable rate mortgage), even if it has a fixed component (e.g. a 5-year ARM has a fixed rate for 5 years and then becomes adjustable for the remainder of the term). As I understand it, what…

Here in Mexico we have the same: A fixed rate for a mortgage is the rate you will pay for the 20-30 years that your mortgage lasts. Of course over here, the cheapest rate you will historically find is around 7%.

Re: British pound hits record low against the dollar

#334

Post by yuan43 »

kypro wrote: post #252

So the bigger news here imo is what's happening in the bond market. It's now expected that the BoE will increase rates above 6% by the middle of next year. Most people in the UK are on fixed rate mortgages, most of which are 2-3 year fixes. Those who brought a home during the pandemic or fixed at a low rate typically fixed at around 1-2%. I personally fixed for 2 years at a rate of 1.7% just over a year a go when I m…

> ... do understand this is my fault, but it sucks because I've also let my family down big time by deciding to buy a house. I'm not sure of the exact numbers, but I believe around 500,000 people are in a similar position to me.

The political consequences should not be underestimated. Parent is actually taking responsibility, something I doubt many in the same position will. There will be scapegoats.

Re: British pound hits record low against the dollar

#335

Post by Gibbon1 »

kergonath wrote: post #318
alexisread wrote: post #150

Earlier quoted context omitted.

Thatcher implemented a windfall tax, LT is not even that. UK residents are paying twice for their energy consumption as a result. Nose was in the trough 3 days into her premiership when the top treasury official got fired, to make way for these tax cuts. Guess the Conservatives figure they are going to lose the next election...

> Thatcher implemented a windfall tax, LT is not even that. You’re right. She’s a parody of Thatcher. Thatcher at least had a long-term strategy (London becoming the economic centre of Europe, even if it means hell for the rest of the country). She’s Thatcher with all the greed and none of the vision.

You can see where Thatcher was coming from and why her bets failed. True north sea oil meant Britain could ditch coal. True selling off publicly owned assets, especially housing at fire sale prices would be wildly popular. But the strategy of crushing unions to lower labor costs in order to attract manufacturing jobs from Europe floundered because those jobs went to the Far East. That wrecked the countries economic foundations.

But 40 years on it's just frog mouthed cargo culting to double down on those policies.

Re: British pound hits record low against the dollar

#336

Post by cannabis_sam »

kypro wrote: post #252

So the bigger news here imo is what's happening in the bond market. It's now expected that the BoE will increase rates above 6% by the middle of next year. Most people in the UK are on fixed rate mortgages, most of which are 2-3 year fixes. Those who brought a home during the pandemic or fixed at a low rate typically fixed at around 1-2%. I personally fixed for 2 years at a rate of 1.7% just over a year a go when I m…

>I'm reading online that I was stupid for buying a house in a bubble and that rates need to go up and house prices need to fall.

Would you rather have perpetually increasing housing prices?

Wouldn’t that be even worse for your younger and future family members?

I don’t think you’re stupid, but this does seem like shortsighted thinking.

(I do hope you manage to get through this as unscathed as possible)

Re: British pound hits record low against the dollar

#337

Post by wonnor »

lottin wrote: post #269
currenciessfe wrote: post #207

Earlier quoted context omitted.

Read again carefully what you quoted. It exactly supports my claim. > Export dependent nations may actively encourage a weak currency in order to boost their exports. > A weak currency may help a country's exports gain market share when its goods are less expensive compared to goods priced in stronger currencies. The increase in sales may boost economic growth and jobs while increasing profits for companies conductin…

Do you read your own quotes? Where does it support your claim that a weakened currency does not affect the price of exports? It says the exact opposite. Exports increase because they become less expensive: > A weak currency may help a country's exports gain market share when its goods are less expensive compared to goods priced in stronger currencies. The increase in sales may boost economic growth and jobs while inc…

The person you are arguing with said this:

>But then you can invest that extra profit in decreasing your foreign currency price, thus becoming more competitive.

Re: British pound hits record low against the dollar

#338

Post by nathanasmith »

ctrlmeta wrote: post #213
ndsipa_pomu wrote: post #203

Not really surprising that there's a lack of confidence in the untested combination of reducing tax (for high earners) and increasing borrowing. At first glance, that would seem to be a recipe for high inflation.

It does seem like a recipe for high inflation. But I want to understand why they chose this combination? Why play such a big gamble? There has to be some logic behind making this choice. But what is it? Were there other safer alternatives that they could have gone with? What could be the reasons for choosing this combination over those safer alternatives?

My only guess is it's an attempt to tackle inflation by stimulating the supply side. That's the most charitable explanation I can come up with for the reasoning.

Re: British pound hits record low against the dollar

#339

Post by sloucher »

kypro wrote: post #252

So the bigger news here imo is what's happening in the bond market. It's now expected that the BoE will increase rates above 6% by the middle of next year. Most people in the UK are on fixed rate mortgages, most of which are 2-3 year fixes. Those who brought a home during the pandemic or fixed at a low rate typically fixed at around 1-2%. I personally fixed for 2 years at a rate of 1.7% just over a year a go when I m…

> I believe this is actually the fastest rise in rates ever.

Why do you believe that?

https://www.propertyinvestmentproject.co.uk/property-statist...

Re: British pound hits record low against the dollar

#340

Post by tjvc »

kypro wrote: post #252

So the bigger news here imo is what's happening in the bond market. It's now expected that the BoE will increase rates above 6% by the middle of next year. Most people in the UK are on fixed rate mortgages, most of which are 2-3 year fixes. Those who brought a home during the pandemic or fixed at a low rate typically fixed at around 1-2%. I personally fixed for 2 years at a rate of 1.7% just over a year a go when I m…

> I'm reading online that I was stupid for buying a house in a bubble and that rates need to go up and house prices need to fall.

I don't think you're stupid. You couldn't have foreseen the sequence of events that has produced this situation. For what it's worth I did a very similar stress test, with similar assumptions, when I bought my home. I feel like this volatility is something of a rude awakening for our generation.

What does the 500,000 figure represent? There will be many people whose fixed-term mortgage rates expire in a now much higher-rate environment, including those on longer-term fixes negotiated before the pandemic.

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