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38 minutes ago, doomed said:

I don't understand why anyone would keep anything more than immediate spending money in a bank. I mean how far do they have to push you?

We are going to hyperinflate as it is the least painful option to those in charge.

Harder to inflate wages as in previous eras. Few unions, offshoring and immigration  (which wont stop re brexit) has killed workers pricing power. Wage inflation is needed to pay the tax reciepts needed to pay down the govt debt

 

 

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3 hours ago, sammersmith said:

Nationwide just raised their top ISA rate from 0.25% to 0.4%. 

I nearly fell of my chair when I got that email yesterday.

Yes... it comes as a shock when rates move upwards - no matter by how little.

I noticed something funny, however.... Background:  I have sort-of decided to speculate in some equities (probably) within the next year, or so... but I don't know which equities yet.  Perhaps I'll change my mind - but that's my intension.  I know I would want any speculative gains to be tax free - so I'd want it in an ISA wrapper.  I believe I can transfer funds from a cash ISA to a self-select ISA wrapper without losing tax-free status.  For this reason, I want to put some money in a cash ISA this tax year (as the future is always uncertain - and I might want to protect more than my annual allowance if I leave it until after April.)

So... I was looking around at some Cash ISAs... and noticed that CynergyBank offering 0.5%.  I found it through some obvious financial-supermarket-site (I can't remember which) a few weeks ago.  Now the 'best buys' do not mention anything at 0.5% - whatsoever.  Now the best offer is from Nationwide at 0.4% - joint top (and mentioned before) Paragon (which, I remember as being the Britannia Building Society's sub-prime lending arm... though this isn't mentioned in their published history.)

The difference between 0.4% and 0.5% is not vastly important to me... but I am curious about how the best buy has stopped being the 0.5% from CynergyBank and become the 0.4% from Nationwide.  Might it be the influence of advertising revenue on MoneySupermarket?  Am I overlooking something about CynergyBank's 0.5% offering?

Edited by A.steve
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9 minutes ago, steve99 said:

Harder to inflate wages as in previous eras. Few unions, offshoring and immigration  (which wont stop re brexit) has killed workers pricing power. Wage inflation is needed to pay the tax reciepts needed to pay down the govt debt

 

 

Wages are not going to inflate for any job that is not in high demand, assets and necessities are though. You will own nothing and you will be happy.

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3 hours ago, Si1 said:

I'm getting 1% I think on nationwide HTB ISA. Seems strange. I guess they don't want to p1ss off a possible future mortgage customer.

Yeah, it was cut from 2.5% last year, they never particularly did answer why an 0.6% cut in BoE base rate caused a 1.5% cut in interest. It's about the best going, there was also a triple access ISA which started at 1% (for a year) then got cut for new accounts repeatedly to 0.25%, I've just looked and this appears to be the one the @sammersmith mentioned increasing to the giddy heights of 0.4%. Sadly the 1% on that expires shortly.

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4 hours ago, markyh said:

No chance, that was 2019 and before, it was cut to under 1% in 2020, cut again soon to under 1/2%.

You're right! 

Time flies. Now it's 0.6% soon too be 0.3%.

Flip side is that i only need the cash to get the house done which should yield double the cost of the works. 

After that it's sell the place and find another project house that could get me to be mortgage free. If not it'll be third time lucky. 

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6 hours ago, bartelbe said:

This is why I have my ISA invested in the stockmarket. Now lets be clear, for someone like me on a limited income, to gamble half my saving in stocks is mad but what choice do I have? If I use a normal bank account I will be effectively loosing money.

Pretty much the same situation for me.

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Frissers made a video about this not long back.

https://youtu.be/M0PQTyN8urc?t=39

In the '90s a 9% interest rate on savings was not uncommon. People's savings would grow. Houses were affordable. People invested in pensions with the expectation that they would grow vastly over time. There're no reliable measures, so there's no way to compare inflation now to inflation then. My feeling is that it was about the same or maybe even lower in the '90s.

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9 hours ago, spacedin said:

I'm still getting 1.7% interest on the Halifax Help to Buy ISA. Not sure why that hasn't been reduced like the others. The regular rate is 0.20

 

Not anymore - the rate on your Halifax help to buy isa has been cut to 1% from today. You should have been notified about that reduction - check your emails!

https://www.halifax.co.uk/isas/cash-isas/help-to-buy-isa.html

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21 hours ago, doomed said:

I don't understand why anyone would keep anything more than immediate spending money in a bank. I mean how far do they have to push you?

We are going to hyperinflate as it is the least painful option to those in charge.

Hyperinflation was the prediction on every HPC thread for a while in 2008-9, never happened.

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2 hours ago, Dorkins said:

Hyperinflation was the prediction on every HPC thread for a while in 2008-9, never happened.

It will eventually come as a hockey stick moment. In Weimar in the years leading up to people walking around with wheel barrows full of cash there was a rise in asset prices that everyone thought to be unsustainable.

Edited by doomed
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1 minute ago, doomed said:

Might not have been hyper yet but wages have massively shrunk vs cost of living in that time.

I don't agree with this, the cost of actually living is low and going nowhere. Food is dirt cheap (£4/kg bacon or frozen chicken breast, tens of p/kg root vegetables, even bananas/apples/oranges/pears are sub-£2/kg), gas for heating a few pence/kWh, 100Mbps fibre broadband £20/mo, cotton clothing stitched in Asia and manufactured stuff in general too cheap to meter and a roaring secondhand trade via ebay and facebook marketplace, private rents basically flat for the last 6-7 years in SE England. Probably luxuries have gone up but can't say I really care what people are paying for pedigree pets, takeaway coffee or beauty treatments.

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2 hours ago, Dorkins said:

I don't agree with this, the cost of actually living is low and going nowhere. Food is dirt cheap (£4/kg bacon or frozen chicken breast, tens of p/kg root vegetables, even bananas/apples/oranges/pears are sub-£2/kg), gas for heating a few pence/kWh, 100Mbps fibre broadband £20/mo, cotton clothing stitched in Asia and manufactured stuff in general too cheap to meter and a roaring secondhand trade via ebay and facebook marketplace, private rents basically flat for the last 6-7 years in SE England. Probably luxuries have gone up but can't say I really care what people are paying for pedigree pets, takeaway coffee or beauty treatments.

That is my view too. Inflation in staples has either been low, non-existent or deflation. That is because humans improve production and distribution every year.

The inflation has all been in asset prices as the money looks for a home. 

Think of inflation in house prices this way:

- If you bought in the 90s, you probably saw your equity increase dramatically, your monthly payments fall dramatically. You could have overpaid and been mortgage free in (roughly) 15 years.

- If you buy in 2021 you are very unlikely to see rates go much lower, your term is probably 35 years, your monthly payments are not going to fall much during the lifetime of that 35 years and you will therefore not have the abilitiy to overpay as much. With some overpayments you could possibly be mortgage free in (roughly) 25 years.

You've lost 10 years of potential financial freedom and better lifestyle. That is real inflation to me.

Edited by dugsbody
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14 minutes ago, dugsbody said:

You've lost 10 years of potential financial freedom and better lifestyle. That is real inflation to me.

This fits with my rough calculation too, that a worker buying a house today is at least 10 years of working life poorer than his/her equivalent from 25 years ago.

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1 hour ago, Dorkins said:

I don't agree with this, the cost of actually living is low and going nowhere. Food is dirt cheap (£4/kg bacon or frozen chicken breast, tens of p/kg root vegetables, even bananas/apples/oranges/pears are sub-£2/kg), gas for heating a few pence/kWh, 100Mbps fibre broadband £20/mo, cotton clothing stitched in Asia and manufactured stuff in general too cheap to meter and a roaring secondhand trade via ebay and facebook marketplace, private rents basically flat for the last 6-7 years in SE England. Probably luxuries have gone up but can't say I really care what people are paying for pedigree pets, takeaway coffee or beauty treatments.

I believe this point could be argued either way and deleted that statement before I had seen this reply.

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47 minutes ago, Dorkins said:

This fits with my rough calculation too, that a worker buying a house today is at least 10 years of working life poorer than his/her equivalent from 25 years ago.

Does that include the years lost trying to save a deposit?

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4 hours ago, Dorkins said:

I don't agree with this, the cost of actually living is low and going nowhere. Food is dirt cheap (£4/kg bacon or frozen chicken breast, tens of p/kg root vegetables, even bananas/apples/oranges/pears are sub-£2/kg), gas for heating a few pence/kWh, 100Mbps fibre broadband £20/mo, cotton clothing stitched in Asia and manufactured stuff in general too cheap to meter and a roaring secondhand trade via ebay and facebook marketplace, private rents basically flat for the last 6-7 years in SE England. Probably luxuries have gone up but can't say I really care what people are paying for pedigree pets, takeaway coffee or beauty treatments.

This is a fantastic post.

 

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4 hours ago, dugsbody said:

- If you bought in the 90s, you probably saw your equity increase dramatically, your monthly payments fall dramatically. You could have overpaid and been mortgage free in (roughly) 15 years.

- If you buy in 2021 you are very unlikely to see rates go much lower, your term is probably 35 years, your monthly payments are not going to fall much during the lifetime of that 35 years and you will therefore not have the abilitiy to overpay as much. With some overpayments you could possibly be mortgage free in (roughly) 25 years.

You've lost 10 years of potential financial freedom and better lifestyle. That is real inflation to me.

Spot on. Energy/Water/Council tax keep rising as well.

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25 minutes ago, goldbug9999 said:

Spot on. Energy/Water/Council tax keep rising as well.

It's not really council tax that makes up the bulk of the rise, it's the Health and Social Care element the Tories introduced a few years ago when they underfunded the NHS and local councils. That one can go up by 5% per year, the other can only go up a few percent.

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1 hour ago, spacedin said:

It's not really council tax that makes up the bulk of the rise, it's the Health and Social Care element the Tories introduced a few years ago when they underfunded the NHS and local councils. That one can go up by 5% per year, the other can only go up a few percent.

Council tax rises are a good thing if you're a private renter, more money for services and helps keeps the rent down. Roll on £5k pa council tax, that would smash private rents into the floor.

Edited by Dorkins
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9 minutes ago, Dorkins said:

Council tax rises are a good thing if you're a private renter, more money for services and helps keeps the rent down. Roll on £5k pa council tax, that would smash private rents into the floor.

Saying that I mean in monetary terms it may go up more. Depends on your local council I guess. Lots of unitary authorities get screwed over as they have seen the biggest cuts, have the highest density populations and have seen a bit increase in crime (especially antisocial behaviour) since May cut the police force to barebones.

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1 hour ago, Dorkins said:

Council tax rises are a good thing if you're a private renter, more money for services and helps keeps the rent down. Roll on £5k pa council tax, that would smash private rents into the floor.

Not sure about that.  Rents are not limited by ability to pay as many believe.   In conditions of scarcity and competitive bidding rents can increase because those winning the bidding are prepare to share with another family.

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14 minutes ago, Wayward said:

Not sure about that.  Rents are not limited by ability to pay as many believe.   In conditions of scarcity and competitive bidding rents can increase because those winning the bidding are prepare to share with another family.

Supply of housing is fixed (only one housing stock), demand for housing decreases as price increases. Council tax is a tax on the buyer of the good (housing):

Quote

Now consider the imposition of a tax on the buyer, as illustrated in Figure 5.2 "Effect of a tax on demand". In this case, the buyer pays the price of the good, p, plus the tax, t. This reduces the willingness to pay for any given unit by the amount of the tax, thus shifting down the demand curve by the amount of the tax.

Figure 5.2 Effect of a tax on demand

3ef8023b1d0a7bbfcc0ada4bd59d4468.jpg

https://saylordotorg.github.io/text_introduction-to-economic-analysis/s06-01-effects-of-taxes.html#:~:text=Key Takeaways-,The effect of the tax on the supply-demand equilibrium,by less than the tax.

 

Therefore if demand drops due to imposition of a tax but supply stays the same then the price (rent) drops.

image.png.c64160d73aa1c03ee218060973f19c17.png

 

Edited by Dorkins
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