Interest Rates. Why So Low?

[Anna B 1,401]

 

7 minutes ago, tinfoilhat said:

So, you're saying all these workers, working for companies who have taken all these loans out so they don't fold during  a pandemic would benefit from a big rise in interest rates?

 

You might need to walk me through this one.

No, of course not. We are living in unprecedented times. But no one has provided a satisfactory answer to what happened in the previous 11 years before the pandemic, when the rich were getting richer ( and still are,)

Edited January 22, 2021 by Anna B

[El Cid 214]

1 hour ago, Baron99 said:

Basically, low interest rates hopefully stimulate an economy while high interest rates slow it down.  Its all about controlling inflation. 

Economics is not like a science, I dont think economist agree on whether low interest rates do stimulate the economy. It hasnt worked in the UK.

Everythings revolves around stopping a housing crash, we could of course have different rates for mortgages, I believe.

2 minutes ago, Anna B said:

 

No, of course not. We are living in unprecedented times. But no one has provided a satisfactory answer to what happened in the previous 11 years when the rich were getting richer ( and still are,)

Interest rates rising would bring down house prices, which would be worst for the rich.

[tinfoilhat 11]

15 minutes ago, El Cid said:

Economics is not like a science, I dont think economist agree on whether low interest rates do stimulate the economy. It hasnt worked in the UK.

Everythings revolves around stopping a housing crash, we could of course have different rates for mortgages, I believe.

Interest rates rising would bring down house prices, which would be worst for the rich.

Why would it bring down house prices?

18 minutes ago, Anna B said:

 

No, of course not. We are living in unprecedented times. But no one has provided a satisfactory answer to what happened in the previous 11 years before the pandemic, when the rich were getting richer ( and still are,)

Musk and bezos have made billions over the last year, many many other companies have gone bust. 

[Anna B 1,401]

4 minutes ago, tinfoilhat said:

Why would it bring down house prices?

Musk and bezos have made billions over the last year, many many other companies have gone bust. 

Yes, so what's your point please? 

I have every sympathy with small businesses that are suffering terribly in this pandemic. I also have sympathy for companies that go bust, particularly through no fault of their own. 

But how many of the 0.01% like Musk and Bezos have gone bust and ended up back in a council house on benefits?

 

 

 

[tinfoilhat 11]

17 minutes ago, Anna B said:

Yes, so what's your point please? 

I have every sympathy with small businesses that are suffering terribly in this pandemic. I also have sympathy for companies that go bust, particularly through no fault of their own. 

But how many of the 0.01% like Musk and Bezos have gone bust and ended up back in a council house on benefits?

 

 

 

None. And they never will. It depends on how much hurt you want to dish out to get to them.

 

And you brought up low interest rates, not me!

Edited January 22, 2021 by tinfoilhat

[Annie Bynnol 612]

The aim of any Chancellor in any mixed economy in the world is a steadily growing economy with a strong currency , low inflation and low borrowing.  Interest rates are used to speed up, slow down the economy, but not without the risk of inflation and unemployment.

Successive UK Chancellors have instructed  the Bank of England to control inflation- which has a vastly more damaging impact on you savings.  During most of  this time the Government has let the BofE do this with a great deal of independence.

The Bank of England sets the interest rate and borrowers and lenders in the UK follow. 

 

Currently Government has far too many people, businesses and institutions  wanting to lend it money as its a safe place. It does not need to attract investment so can pay less (interest) for it.  Higher interest rates would end up as higher inflation and mass unemployment, foreclosures and bankruptcy.

At the moment the Government spending is cheap but investment in many business sectors is at an all time low.

 

Denis Healy wrote highly illuminating and entertaining texts about the foolishness of all economic theories and attempts at control or manipulation.

 

 

 

 

 

 

 

[El Cid 214]

4 hours ago, tinfoilhat said:

Musk and bezos have made billions over the last year, many many other companies have gone bust. 

If a person has a set amount to spend, say £500 per month, higher interest rates would mean that they can no longer affort that expensive house.

My interest rate is 3%, if it was 6% I could not have bought my house so easily.

[Anna B 1,401]

5 hours ago, Annie Bynnol said:

The aim of any Chancellor in any mixed economy in the world is a steadily growing economy with a strong currency , low inflation and low borrowing.  Interest rates are used to speed up, slow down the economy, but not without the risk of inflation and unemployment.

Successive UK Chancellors have instructed  the Bank of England to control inflation- which has a vastly more damaging impact on you savings.  During most of  this time the Government has let the BofE do this with a great deal of independence.

The Bank of England sets the interest rate and borrowers and lenders in the UK follow. 

 

Currently Government has far too many people, businesses and institutions  wanting to lend it money as its a safe place. It does not need to attract investment so can pay less (interest) for it.  Higher interest rates would end up as higher inflation and mass unemployment, foreclosures and bankruptcy.

At the moment the Government spending is cheap but investment in many business sectors is at an all time low.

 

Denis Healy wrote highly illuminating and entertaining texts about the foolishness of all economic theories and attempts at control or manipulation.

 

 

 

 

 

 

 

 Average interest rates on a personal loan is 9.41%  (according to Experian data from Q2 2019.)

Depending on the lender, and the borrower's credit score and personal financial history, personal loan rates can range from 6% to 36%  

Student loans are currently 5.6% 

 

So not cheap.

 

But especially considering they are getting our money for free (almost 0% interest) when we lend it to them. Hardly seems fair.

 

Edited January 23, 2021 by Anna B

[Annie Bynnol 612]

5 hours ago, Anna B said:

 Average interest rates on a personal loan is 9.41%  (according to Experian data from Q2 2019.)

Depending on the lender, and the borrower's credit score and personal financial history, personal loan rates can range from 6% to 36%  

Student loans are currently 5.6% 

 

So not cheap.

 

But especially considering they are getting our money for free (almost 0% interest) when we lend it to them. Hardly seems fair.

 

Money has never been cheaper. 

Small unsecured money borrowing has always been expensive because the  businesses that lend money still have costs and profit to make and have to cover risks of default. Defaulters costs are not a problem if other borrowers are willing to pay such high interest rates. 

The Personal Loan market is riskier now, so if you are taking out a Personal Loan today you will be paying a premium to cover the default of others and the potential instability of the Pound. 

 

Your Student "Loans" interest rate figure is wrong does not reflect the real cost -which is far less.

The Government predicts that 25% of  students will pay off the "loan"-thus reducing the real interest considerably.

In reality far fewer will pay the full amount and many will pay nothing. 

The "Student Loan" is not a loan on a debt as the debt is wiped out eventually-most will just contribute towards the cost of their own higher education.

 

Repayments at a 9% rate only  begin when a threshold is crossed (England-£27,295 from April 2021)

A  £30000 pa job would mean an annual payment of about £700

A £27000 pa job -nothing.

 

(Repayments also depend on when you took the "loan").

 

 

 

 

 

 

[Anna B 1,401]

5 hours ago, Annie Bynnol said:

Money has never been cheaper. 

Small unsecured money borrowing has always been expensive because the  businesses that lend money still have costs and profit to make and have to cover risks of default. Defaulters costs are not a problem if other borrowers are willing to pay such high interest rates. 

The Personal Loan market is riskier now, so if you are taking out a Personal Loan today you will be paying a premium to cover the default of others and the potential instability of the Pound. 

 

Your Student "Loans" interest rate figure is wrong does not reflect the real cost -which is far less.

The Government predicts that 25% of  students will pay off the "loan"-thus reducing the real interest considerably.

In reality far fewer will pay the full amount and many will pay nothing. 

The "Student Loan" is not a loan on a debt as the debt is wiped out eventually-most will just contribute towards the cost of their own higher education.

 

Repayments at a 9% rate only  begin when a threshold is crossed (England-£27,295 from April 2021)

A  £30000 pa job would mean an annual payment of about £700

A £27000 pa job -nothing.

 

(Repayments also depend on when you took the "loan").

 

 

 

 

 

 

That doesn't take into accounts student living costs which are outside the student loan costs. Student accommodation has also been upgraded in many instances and is now very expensive. Students usually have to take on personal loans to pay these, and these costs have to be repaid in full plus (high rate) interest. 

[Waldo 96]

If I had masses of fiat currency, I'd be looking seriously to convert it to other stores of value.  Gov borrowing and spending due to pandemic, I can only think long term, is going to devalue our currency.

[tinfoilhat 11]

2 hours ago, Waldo said:

If I had masses of fiat currency, I'd be looking seriously to convert it to other stores of value.  Gov borrowing and spending due to pandemic, I can only think long term, is going to devalue our currency.

Compared with what? America, the EU - everyone is taking a hit.