| Topic: | Re:Re:Re:Re:Re:Re:Re:Re:Re:Warning from the Bank of England | |
| Posted by: | Colin Jordan | |
| Date/Time: | 22/07/15 07:56:00 |
| I agree that there needs to be much more emphasis on house-building to alleviate the current shortage of accommodation, and the rental industry needs to have a lot more control exerted on it. However, I query Teja's assertion that 'For most of the 70’s inflation was higher than mortgage interest rates. So inflation paid off (or at least reduced) your mortgage faster than the cost of borrowing (i.e. interest). The more you borrowed, the more you benefitted from inflation. That generation got rich on inflation. And of course house prices increased even faster than general inflation.' This is precisely the sort of statistical juggling that ignores the reality of life as most people lived it. The plain fact is that if you had a mortgage at the time when the mortgage rate went up to 16 or 17%, your monthly payments took a bloody great chunk out of your salary, whatever economists said about the 'benefits' of inflation on your mortgage. Many people, in fact, ended up putting the keys through the letter-box and abandoning the homes they could no longer afford to pay for. So please, no more glib talk like 'That generation got rich on inflation'. We struggled then just as younger people do today, and by the way, everyone didn't expect to buy a house by the time they reached the age of 25. |