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Link to this page: https://www.socialistparty.org.uk/issue/470/1973

From The Socialist newspaper, 18 January 2007

Interest rate hike pushes up costs

THE BANK of England monetary policy committee has put up interest rates to 5.25%. This move will add to the pressures on wages which are struggling to keep pace with price rises. Officially the annual inflation rate is around 3%. Unofficially it's around 4.9%, and with big rises in gas and electricity prices inflation is much worse the lower the level of pay.

This move was largely an attempt to 'take the heat out of the housing market'. In fact it will add even more to the burden of debt, especially in housing. The average mortgage payment for a two-person household on average income will rise to 14.6% of take-home pay.

That's similar to the level that caused so many repossessions in the early 1990s. The monthly cost of repaying a £200,000 mortgage, amazingly now the average, has gone up £32 through one government keystroke.

In the past ten years, house prices have far outstripped most people's incomes - the cost of buying a home has risen by 278%. This is made worse in London by the cornering of two-thirds of new homes by buy-to-let investors who stand to make big profits. Properties have increased greatly in value but most people still buy houses to live in and need to buy another property if they sell one.

Up to now, property repossessions have been at a low level - mortgage lenders have seized 'only' 8,000 properties in the first six months of 2006. But the extra cost could push the numbers up to the hundreds of thousands hit by the repossession crisis of the early 1990s under Thatcher and Major.

Housing is being pushed beyond the reach of many people. A socialist society could cancel local authority debts and offer mortgage-holders low interest loans.

New Labour have not only sent house prices rocketing and presided over a record low level of house building, they are also going hell for leather to sell off council housing that could offer a real alternative to the rule of profit in housing. Working people need a socialist housing policy.

See article on website: www.socialistparty.org.uk/2006/464/pp25.htm

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In The Socialist 18 January 2007:

Labour ministers make us sick!

Keep up the pressure for 3 March demo


Socialist Students

Anger against top-up fees grows


War and terrorism

Iraq: Bush continues his dangerous blunder

Blair's vision: 'wars without end'

The Trial of Tony Blair


International socialist news and analysis

"We're moving towards a socialist republic of Venezuela" - Hugo Chávez

The veil and Muslim women

Sri Lanka: Urgent action needed

Fighting for a socialist world


Socialist Party news and analysis

Interest rate hike pushes up costs

Academies myths

What's behind the school leaving proposals?

Campaign for a new workers' party


Socialist Party workplace news

PCS stands firm on pensions

Fight the government's sell-off plans

Strike ballot put on hold once again

Re-instate Unique workers!

British Airways pensions

Fujitsu workers strike

'Single status' battle in Manchester

UNISON NEC elections


 

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