Jump to content

First interest rise in ten years

Recommended Posts

It's been a long time but interest is going up again. Is it going to solve matters or are we stuck now?

Share this post


Link to post
Share on other sites

I dont believe almost zero interest rates have helped ordinary people. It has allowed house prices to increase, and more borrowing; are either of those good things?

Share this post


Link to post
Share on other sites
It's been a long time but interest is going up again. Is it going to solve matters or are we stuck now?
No, and no.

 

That rate hike is too insubstantial-

 

to have any substantial effect on the current level of inflation (which is, in very simplified terms, the consequence of the 15% drop in value of the Pound Sterling of last year, now fully percolating through everyday items, services and other living expenses across the board, top-to-bottom of supply chains),

 

to have any substantial effect on personal indebtment levels (British productivity is still too low to 'eat' into the above £-value/cost of imports differential, and balance the issue with higher wages),

 

to have any effect on house prices or rent levels (over 57% of British mortgagees are already in fixed term mortgages, even if only short-term ones, and only about 11% of mortgagees on SVR are going to experience that rate hike immediately; the average net effect to landlords using interest-only mortgages is something like £40 per month),

 

to bootstrap interest on savings (0.25% more interest on e.g. £1,000 is £2,50 more. So now you get £5 interest on £1,000 after a year, instead of £2,50. Woop-de-doo).

 

This rate rise comes too little, too late; it's akin to peeing or throwing a bucket of water on an house fire, when what you really need is a high-pressure hose.

 

It should have taken place sometime between 2012 and 2014, when the economy was reasonably back on track. It might have bootstrapped a 'proper' recovery out of the low-wage recovery that had been going on since 2009 (-and has been going on ever since: that's the biggest problem by far, now compounded by Brexit-related uncertainty since June 2016).

 

We're not "stuck" however, since the BoE forecasts another 2 to 3 rate hikes by March 2019, up to a base rate of potentially up to 3% by 2020.

 

But, personally, I think inflation is going to go much higher than 3% over the next 5 years, and likewise the BoE base rate to try and snuff it. Make no mistake, this is going to hurt eventually, and hurt good. Just pray it doesn't get up to 80s-bad.

Edited by L00b

Share this post


Link to post
Share on other sites
It's been a long time but interest is going up again. Is it going to solve matters or are we stuck now?

 

It's a small movement, and it's long over due.

I don't think it will be enough to bring inflation under control though, and it will be up again, I can't say when, it should be quickly, but then they should have gone up 5 years ago, so who knows.

Share this post


Link to post
Share on other sites

About time too,i would like to see 15 percent again.I am fed up of giving the bank my money every month for them to give me a pitiful amount of interest back.I saw on the news that there are 45 million savers in britain losing out to save the backsides of the 7 million who have no savings and who are in massive debt as well.Sacrificing the majority to save the few,sounds like winston churchills speech but the other way round.

Share this post


Link to post
Share on other sites
About time too,i would like to see 15 percent again.I am fed up of giving the bank my money every month for them to give me a pitiful amount of interest back.I saw on the news that there are 45 million savers in britain losing out to save the backsides of the 7 million who have no savings and who are in massive debt as well.Sacrificing the majority to save the few,sounds like winston churchills speech but the other way round.

 

So you think that 6 times more people have savings than people who have debt?

I can’t believe that is true.

I expect more people benefit from low interest than the other way round, due to mortgage burden and other debts.

Share this post


Link to post
Share on other sites
So you think that 6 times more people have savings than people who have debt?

I can’t believe that is true.

The real question is 'how much savings', and I find area51's 45m claim a bit hard to believe as well, in view of that link which claims that 1 in 3 UK adults has savings of less than £100 (I find that figure itself a bit hard to believe, but then...) :|

 

Now, area51, wishing for 15% interest rates to return? Really?!? Have you thought at all about what the consequences would be for, well, just about everybody (bar the 1% who doesn't really need that extra 15%)? :|

Edited by L00b

Share this post


Link to post
Share on other sites

I heard the sane statistic about numbers of savers/borrowers on the radio yesterday. Banks were quick to raise their mortgage rates but very quiet about raising savings rates...

Share this post


Link to post
Share on other sites
So you think that 6 times more people have savings than people who have debt?

I can’t believe that is true.

I expect more people benefit from low interest than the other way round, due to mortgage burden and other debts.

 

If we have very low interest rates, people have more money to spend, which means house prices increase, so they are back to square one.

 

Is the main reason for low interest rates for businesses to invest, at low cost?

Share this post


Link to post
Share on other sites

Low interest rates discourage saving and encourage borrowing at both personal and business levels.

Share this post


Link to post
Share on other sites

I still find it sickening that a so called conservative government did away with index linked national savings. At the time it was called,:A kick in the teeth for savers:, which sums it up for me.

Share this post


Link to post
Share on other sites
About time too,i would like to see 15 percent again.I am fed up of giving the bank my money every month for them to give me a pitiful amount of interest back.I saw on the news that there are 45 million savers in britain losing out to save the backsides of the 7 million who have no savings and who are in massive debt as well.Sacrificing the majority to save the few,sounds like winston churchills speech but the other way round.

 

People can have savings and also mortgages...just saying

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.