James Heming

Some still writing things like 'people still splurging amid mortgage crisis' as an argument that things aren't so bad. Yet of course that's happening - we have a split society. From a consumer perspective the mortgage crisis disproportionately falls on relatively few shoulders. Roughly 1/3 of the population has mortgage, a third rent, and a third owns their house outright. Of the third with a mortgage, many are still on long-term fixes. This means the bank of England's deliberate policy to increase the cost of borrowing in order to squeeze disposable incomes, and take money out of the economy, is only really very directly hitting likely under 20% of the population. So their incomes need to be really squeezed in order for it to work. Of course there's also a squeeze on renters where costs are rocketing, some of it an indirect and painful knock on from the mortgage rate hikes, but also from the other big inflations in energy and food prices. That's one part of our polarized society. The other includes those who own outright, some of whom will have gained from the £150 billion pounds of extra savings that built up during the pandemic. And while there's some hit there due to energy and other inflation, it will be offset by benefitting from interest rates going up, as savers get more income. So the idea that the mortgage squeeze means pan society everybody stops spending is nonsense. What we're actually doing is trying to fix the whole economy by making a disproportionate squeeze on a relatively limited number of people. Of course interest rate rises impact business too. Yet that's not my bag.