How very apt to compare the rises in interest rates on mortgages with other European countries (Report, 20 June). In any other aspect of life, taking on a loan when you do not know what the future repayments will be would be very bad financial practice. Yet when homebuyers take on what is likely to be by far their biggest loan, the best they can hope for is a fixed term of two or, at best, five years – thereafter they are at the mercy of the financial markets and government policy. Why? The mortgage company does not need to raise more cash for their loan, so raising the interest rate during the term of a mortgage seems to be out-and-out profiteering.
A fixed-term, 30-year mortgage seems to be far more sensible, and gives homeowners confidence and security. When will we start adopting a system that is fair to all?
Tom Carr
Newcastle upon Tyne
• One way to relieve the burden on those not on (or coming off) fixed-rate mortgages would be to cap the rates that a bank can charge at 1% above their best instant access savings rate. Most banks routinely make billions in profit from interest-bearing debt. They can afford a haircut for a while much more easily than homeowners can bear the costs of relentless rises. Like the energy price cap, the costs should be borne for a period by those best able to absorb them.
Dave Hunter
Bristol
• I’m no economist, but I’m also not a complete fool. The idea that what we are seeing is an economy that’s overheating and needs lassoing with brutal interest rate rises is simply nonsense. Prices here in the UK are soaring because companies, manufacturers, food producers and, crucially, banks themselves are gouging prices for all they’re worth. This free-for-all is happening behind the dense smokescreen of Putin’s war and the consequences of Brexit. In reality, banks that for a decade have seen their ability to coin it in curtailed by low interest rates are making hay.
Paul Greer
Southampton
• If high inflation requires that money should be extracted from the public, raising the rate of interest is an irrational way to set about it. The logical way to do it is by raising the rate of income tax, so that the burden is shared across the community in a structured way rather than falling on a section only. Of course that would require a government being honest with the public, and facing the hostility that this would bring, both within parliament and beyond.
Kevin McGrath
Harlow, Essex
• There is a strange Bank of England dogma that attacking inflation requires a continual increase in interest rates. Yet the rapid increase in mortgage costs and, by association, rents, is of itself inflationary. How much interest rates bear on energy and food costs, two of the major causes of inflation, is also doubtful. If higher interest rates put firms off borrowing for expansion or acquisitions, I cannot see how that helps either.
Jerry Stuart
London
• The problem for the Bank of England is that it has only one tool to control inflation – and if the only tool you have is a hammer, then every problem looks like a nail. Price controls were necessary to bring inflation down in the last century. Why are these not being discussed?
Ian Sumner
Warrington, Cheshire
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