Editorial: Political and economic refusal to take past financial pain is one reason for the current sharp interest rate rises

​On page 13 (of the print edition) we report on the government’s response to what is being described as the ‘mortgage crisis’. Some people face a huge imminent problem with their mortgage repayments, which will be about to shoot up in cost if they are on a fixed rate deal that is due to expire. This week the Bank of England raised rates by 0.5% to 5%, the 13th consecutive rise since rates were at 0.1% at the end of 2021.

But we need to be clear as a society why some of these problems have come about. The first is that we have treasured excessive house prices for decades, because they make us feel richer. But high property prices reward the older generations at the expense of the younger, who have to pay more to get on the housing ladder. This is why people now are getting ever older before they own their first home, if they ever do. It fuels resentment and means that people are reaching their 30s without the same feeling of having a stake in life that they would have done decades ago.

Northern Ireland has fallen prey to the high house price fantasy as much as any other part of the UK, yet we once saw the low house prices of the 1980s as a good thing that enabled people to spend money on other things, not just their mortgage. In the early 2000s, however, NI was utterly in thrall to soaring prices. And when it went bust in 2008, followed by protracted property recession, there was little consideration of the collective selfishness, even greed that led us to such disaster (so that some people today remain in negative equity, 15 years later). Another source of the current spike in interest rates was a political refusal to accept pain in the lean years. The economy was, instead, flooded with cheap money in the form of ultra low interest rates or money printing, that helped cause the inflation that now has to be tamed by these rapid increases to interest rates.