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Following the Bank of England’s decision to raise the Bank Rate by 0.15% to 0.25% in December 2021, Windfall Bond and Tracker Savings Bond rates increased by 0.15% from 1 January 2022. Tracker mortgages changed from 25 January and we have written to customers individually with revised payment details where the new rate exceeds the minimum rate (or ‘floor’) already applying to their mortgage. We will be considering our other savings and our variable mortgage rates after the Bank of England MPC meeting on 3 February. (Notice updated 19/01/22)
- Please note that the Premium Saver (5) has now been withdrawn from sale.
If you have opened an account, you may add funds until 3pm, 7 February 2022, after this no additions will be allowed.
Young people must come first
Covid-19 has hit the over 65s hard. It has also cut the ground from under the feet of the under 25s in particular but also Generation Y. And we are all going to be poorer for a long time.
We need to suck it up, plan on how to best deal with this new reality and move on. That’s for individuals, as well as governments. We need radical thinking and boldness. Like setting up the NHS after WW2. Nor can there be sacred cows.
If there’s a bright spot in this crisis, it is the clear demonstration that the UK has not lost its innovative spark. That spark might have spluttered over recent time with the suffocating burden of bureaucracy, but it has never been extinguished.
The NHS is remodelling how it operates. We can build intensive care facilities for thousands in weeks. New designs for medical equipment can be developed by using the talent of people fresh to the problem.
Even government, yes, I know, can do radical things. The Treasury mainly has had a good “war”, so far, with the furlough scheme and mortgage holidays national lifelines, thrown quickly and vigorously.
Now we in the private sector need to be as creative as possible for the nation as whole but also to try to deal with intergenerational fairness. What can we do to try to ease the burden on the young?
Here are some ideas. They may wilt under the gaze of the policy expert or vested interests, but the challenge then is “make something work if these don’t”. Let’s start with some things specially aimed to help the young.
Deal with Student Debt. Make it a policy from the Prudential Regulatory Authority that student debt should be ignored in mortgage affordability calculations. And while that’s going on central government should get the interest rate down to something reasonable – not the old RPI based rate.
Building societies are all about saving and spending. There isn’t enough saving going on. The reasons are legion and I don’t underplay them. The structure of our economy, low pay, high rent, globalisation. We can’t deal with them all overnight, but we can try new things.
How about a compulsory national savings scheme? This could be as important as the NHS. Like it or not the government gives you an individual account and you and it both contribute each month. How much and in what proportion depends on income, even on universal credit. A savings buffer is created for bad times. What’s a bad time? Good question. We know now but what about better times and individual circumstances. How draconian should government be?
There’s more. We must support the aspirations of young people. They want to own homes and build families. With interest rates as near to zero as a gnat’s whisker, the “boomer” generation should look at pledging their household equity to reduce loan to value rates. You may earn nothing on cash but you can save young people lots on monthly mortgage payments. And now is a good time for them to borrow.
Build in insurance protection in case of forced job change.
Stamp Duty is a disincentive to older people to right size. Most of the problems with the housing market are down to the supply side. Free it up. Let families who need four bedrooms have them, not clog up houses with those of us who need only two.
The government must also be radical with Stamp Duty Land Tax. The Family Building Society has been campaigning for change for a long time and we continue to call for it.
Have regional rates of Stamp Duty – everything is led by the London market because it’s a cash cow. If that’s the case, make it a special case and free up the rest of the country.
Let us for once really get to grips with building new homes. Give local authorities the power to grant time limited planning permission to developers. Use it completely or lose it. Or if they want to sit on land, OK, but they pay for it. That could help local authorities’ cash problems.
In terms of skills to meet the new circumstances, challenge the higher and vocational education authorities to develop programmes for young people to fill the skills gap. Dealing with the nuts and bolts of a broadband future is as important as the coding skills to capitalise on a knowledge economy. Subsidise them 100% (and while at it bring back nurse training bursaries).
Just writing these ideas and issues down presents a whole host of questions to be answered.
Well, that’s the point. Extraordinary times require extraordinary answers.
We will surprise ourselves if we start asking the questions and find the energy to deal with them not in a couple of decades but over the next Parliament. For those who enjoy wartime analogies it is worth remembering that while Churchill led the war effort the most radical education and health policies in a century were developed and are still with us.
A debt is owed to the younger generation which has been dealt such a cruel blow by the virus. There are challenges that as a society we must take up on behalf of all of us, but especially them.
Written by Steve McDowell
The content of this blog is Steve McDowell’s personal opinion and comment, and views expressed here are his and unless specifically stated, are not those of Family Building Society. The content on this page is not intended to be advice in any circumstances.