The economic impact of Covid-19

[snowychap]

11 hours ago, chrisp65 said:

You’ve mentioned the stigma of social housing twice now. I don’t know where you live, if it’s a Midlands thing maybe? 

I grew up in a council house on a council estate, I don’t recall any stigma? Perhaps I was just too immersed to realise or a bit too thick skinned. I just don’t get this stigma thing. Is it something internal, or have you been victimised in some way?

Not a trap, genuinely interested.

It's been a part of national UK politics for the last few decades, at least since Thatch started the right to buy stuff (from the notion that someone owning thier own home would necessarily 'look after it better' to 'sink' estates and so on).

[snowychap]

12 hours ago, cheltenham_villa said:

One of the huge catastrophes you talk of could hit us soon. The maturity of interest only mortgages. A material amount of these are due to expire and many of these residents do not have the capital to repay the mortgage and will be forced into sales.

Without government intervention, this will likely see an increase in repossessions or sales below Market value. This could cause some of the house price crash that many are asking for, it comes with victims though. Unfortunately those victims are most likely to be close to retirement age with with a below average income where they believe an interest only mortgage was their best opportunity of owning a house.

As others have said, if this has been a long mortgage then whilsat it may lead to an increase in repossessions and sales below market value it's unlikely to lead to a crash, is it?

The numbers of people in that situation would have to be significant and the maturiy almost simultaneous for this to have such a negative effect, surely?

Also, as others have said, will it impact many people very hard if they've had these mortgages for a considerable time? As @Xela suggests, the most likely outcome would be some sort of downsizing, wouldn't it?

[cheltenham_villa]

5 minutes ago, snowychap said:

As others have said, if this has been a long mortgage then whilsat it may lead to an increase in repossessions and sales below market value it's unlikely to lead to a crash, is it?

The numbers of people in that situation would have to be significant and the maturiy almost simultaneous for this to have such a negative effect, surely?

Also, as others have said, will it impact many people very hard if they've had these mortgages for a considerable time? As @Xela suggests, the most likely outcome would be some sort of downsizing, wouldn't it?

I think it will be more of an indication of the governments intent in this space. Were coming upto 25 years since these mortgages were sold so it's the first time you will start mass maturity. C50k of them are due to mature in the UK this year. Lots of remedial action has been taken over the last few years to encourage people away but I suspect at least half of these will have a problem.

[snowychap]

3 minutes ago, cheltenham_villa said:

I think it will be more of an indication of the governments intent in this space. Were coming upto 25 years since these mortgages were sold so it's the first time you will start mass maturity. C50k of them are due to mature in the UK this year. Lots of remedial action has been taken over the last few years to encourage people away but I suspect at least half of these will have a problem.

Fair enough. Thanks for an indication of the numbers.

I guess we'll have to see what the inital outcome of it is and what action might need to be taken. My inklings lie with the probably not too much impact and a lot of downsizing (which could have the effect of an increased affordability of certain types of property rather than a wider impact) but your concerns may well turn out to be the more correct view of the situation.

[chrisp65]

I would suspect that someone that took out an interest only, and only paid interest and hasn’t saved, is going to be rescued to some degree by the housing market having gone up so much in 25 years.

If they are now 50, they will likely be able to remortgage as the house will be worth far more than the original debt. If they are closer to 60 or over, they will be enticed by one of those horrible equity release / reversion deals to buy your home and let you stay in it.

If you’ve gone interest only for 25 years, you might just be their target market.

 

[ml1dch]

20 minutes ago, chrisp65 said:

If they are now 50, they will likely be able to remortgage as the house will be worth far more than the original debt. If they are closer to 60 or over, they will be enticed by one of those horrible equity release / reversion deals to buy your home and let you stay in it.

Bingo. It's unlikely to lead to millions of repossessions, it's likely to lead to a boom time for the equity release industry and millions of people in their twenties through to their fifties not getting half as much inheritance as they thought they were going to.

[cheltenham_villa]

3 hours ago, ml1dch said:

Bingo. It's unlikely to lead to millions of repossessions, it's likely to lead to a boom time for the equity release industry and millions of people in their twenties through to their fifties not getting half as much inheritance as they thought they were going to.

100% it's not going to lead to a house market crash, it's more the first large scale event of this type that will likely require a large scale response.

For wider context, significant focus has gone into this group for a number of years.  The 50k are the 50k that remain following significant effort to encourage remortgaging, pay down capital. 

So for these people they are struggling, likely because they are close to retirement age and they have balances of 60-100k to pay off, you cant remortgage past retirement age.

As you say, the likely impact is downsizing but suddenly 50k more houses on sale who need to complete a sale in a small period of time is for me quite likely to have some impact on the sale price. Add in the context of a global pandemic, job insecurity and tightened mortgage lending.

For context about 60k house get sold in the UK every month. 

Not saying its huge, just saying it's the start of some interesting times. 

 

[Demitri_C]

19 hours ago, cheltenham_villa said:

100% it's not going to lead to a house market crash, it's more the first large scale event of this type that will likely require a large scale response.

For wider context, significant focus has gone into this group for a number of years.  The 50k are the 50k that remain following significant effort to encourage remortgaging, pay down capital. 

So for these people they are struggling, likely because they are close to retirement age and they have balances of 60-100k to pay off, you cant remortgage past retirement age.

As you say, the likely impact is downsizing but suddenly 50k more houses on sale who need to complete a sale in a small period of time is for me quite likely to have some impact on the sale price. Add in the context of a global pandemic, job insecurity and tightened mortgage lending.

For context about 60k house get sold in the UK every month. 

Not saying its huge, just saying it's the start of some interesting times. 

 

I cant speak for every area but houses in the areas i am looking at are selling very quickly. Even the ones going ul that are really expensive between 700k-650k

Its mad

[Demitri_C]

Are banks extending mortgage agreements for those impacted by covid19? Seems a lot of conflicting info out there on this

[ml1dch]

 

[chrisp65]

There does appear to be a class of commentator, politician and ‘boss’ that have decided the masses need to work one way, whilst they can obviously do something quite different and more suited to their status.

It’s basically the core of what this particular Johnson administration is all about, get in to power promising a great ‘levelling up’ and then double down on the old one rule for them and one rule for us.

There was a guy on Newsnight last night saying it was far better if we all went back to working in office. They asked him if he was in the office and he said yes. Yes, he was in his office, on his boat, In the Med.

I find it odd that when the steel industry or shipbuilding are struggling, we need to embrace the new economy. But weirdly, when Pret A Manger and the inner city office landlords are struggling, we all have to revert back to the old model of working. 

[Amsterdam_Neil_D]

5 minutes ago, chrisp65 said:

There was a guy on Newsnight last night saying it was far better if we all went back to working in office.

They are panicking that people will see the office for what it is.  The utter misery of travel and the costs are not justifiable reasons to be present in an office and that is not even including Covid.

It is now proved that it is not required every single day.  I can see 1 day a week becoming the norm.

It's a difficult sell,  lose 2 or 3 hours sleep a day to stand on a train that you pay a astonishing rate for that is overcrowded or even worse you have to drive in and park. 

Then some people can get home at 7 or later,  say night night to the kids and so we go again.  The government would be the real gainers from everyone going back to the office as the money would start flowing in from the travel and the coffee and the parking and the congestion charge.  Don't do it.  I think they put up train tickets as well in a pandemic,  free until xmas for everyone would have been the move but no,  put the prices up with a straight face, the words removed.

 

 

[Genie]

I’m really hoping my WFH arrangement is made more permanent, ideally 80% home office / 20% work office.

[chrisp65]

The communal coffee shop in our shared office space is obviously struggling, and it is sad. Genuinely.

The coffee was £2.50 a go for decent coffee. They’ve reduced their prices... it’s now £2.00

I go in to the office on Mondays, I take a flask.

 

[Genie]

3 minutes ago, chrisp65 said:

The communal coffee shop in our shared office space is obviously struggling, and it is sad. Genuinely.

The coffee was £2.50 a go for decent coffee. They’ve reduced their prices... it’s now £2.00

I go in to the office on Mondays, I take a flask.

 

I was spending a fortune.

£50 a week in diesel, I’d get a Costa first thing with a pal/colleague (quite cheap, £1.80). Then I’d often buy a sandwich or jacket potato at lunchtime. Another costa coffee in afternoon if I was struggling. 

£300-£400 a month saved there. Plus 10 hours a week less driving. 5 hours a week more sleeping. Seeing the kids before school. Picking them up from school. Much less wear and tear on my car.

and I can honestly say the level of getting stuff done is unchanged. 

[Demitri_C]

2 hours ago, Genie said:

I was spending a fortune.

£50 a week in diesel, I’d get a Costa first thing with a pal/colleague (quite cheap, £1.80). Then I’d often buy a sandwich or jacket potato at lunchtime. Another costa coffee in afternoon if I was struggling. 

£300-£400 a month saved there. Plus 10 hours a week less driving. 5 hours a week more sleeping. Seeing the kids before school. Picking them up from school. Much less wear and tear on my car.

and I can honestly say the level of getting stuff done is unchanged. 

Honestly since working from i have saved £300 a month frkm.habits like this

[Davkaus]

I agree, I've saved a fortune. And I'm not spending it on other things due to economic uncertainty, I've been padding out my emergency fund. The problem is, this is the exact opposite of what the government wants us to do.

Frivolous spending to stimulate the economy is what they need, not people hoarding cash in their savings account.

[Stevo985]

2 hours ago, Genie said:

I was spending a fortune.

£50 a week in diesel, I’d get a Costa first thing with a pal/colleague (quite cheap, £1.80). Then I’d often buy a sandwich or jacket potato at lunchtime. Another costa coffee in afternoon if I was struggling. 

£300-£400 a month saved there. Plus 10 hours a week less driving. 5 hours a week more sleeping. Seeing the kids before school. Picking them up from school. Much less wear and tear on my car.

and I can honestly say the level of getting stuff done is unchanged. 

 

17 minutes ago, Demitri_C said:

Honestly since working from i have saved £300 a month frkm.habits like this

Yep same.

Fuel was probably £150 a month for me. A coffee nearly every day probably about £60 a month. Lunch most days so probably £100 a month. 

So yeah probably like you guys about £300 a month.

[Demitri_C]

11 minutes ago, Stevo985 said:

 

Yep same.

Fuel was probably £150 a month for me. A coffee nearly every day probably about £60 a month. Lunch most days so probably £100 a month. 

So yeah probably like you guys about £300 a month.

You returning to the office any time soon? Im not sure to be honest if i want to go back.

Only downside is you become abit lazier and eat more. But other than that working from home isnt that bad

 

[Stevo985]

2 minutes ago, Demitri_C said:

You returning to the office any time soon? Im not sure to be honest if i want to go back.

Only downside is you become abit lazier and eat more. But other than that working from home isnt that bad

 

Nope. We have the option of going in but it's controlled by a central list so they can make sure there's not too many people in the office at once.

But there's no pressure to be in. It's our decision.

I'm going in a day a week at the moment and may increase it to two. I'm ok working from home but do find I hit little walls of laziness and procrastination so I tend to go into the office the next day to give myself a kick up the arse

Edit: I'm actually about 2 stone lighter than I was at the start of lockdown so the eating more doesn't apply to me! Quite the opposite in fact. I find it far easier to control what I eat and not be tempted by lunchtime trips to greggs or costa

Edited August 28, 2020 by Stevo985