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Interest rates to head upwards
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Posts: 164 Forum Member
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http://uk.finance.yahoo.com/news/Homeowners-Beware-Rate-Rise-skynews-2288976234.html?x=0
And not berfore time, I have a savings to maintain!
And not berfore time, I have a savings to maintain!
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And anyone relying on the interest rate paid by Banks for their income and thinks higher rates mean they are 'better off' in real terms might consider buying a bridge.
People that were careless and took out risky steep mortgages are enjoying low repayment rates.
Whereas those of us with savings (which Cameron recently said while in China that we need to save more in the UK) are getting near enough shafted.
You'd need 5% indefinitely just to break even. At the present rate your savings (and mine) will be worth half of their present buying power in ten years' time.
Quite how a bank rate of 0.5% benefits us all is a mystery to me. With the current CPi, it's no good for savers or councils.
If they don't we will end up with inflation above 10% which will screw the recovery also, if you can call it a recovery, flatlining under 1% growth
Why, when did he say the rate of 5% would be reached?
Capitalist economies do not work if people save their money .
Capitalism is dependant on people spending.
So why are we being told that capitalism has failed... in a decade when savings rates fell to all time low?
Capitalism needs both saving and spending. Unfortunately, Western governments (particularly Labour), encouraged way too much spending.
Depends on how your economy makes its money.
E.g. a Service based economy that sells its services largely domestically. If the domestic consumers stop spending, then things get tougher.
VS
a Manufacturing based economy that sells its goods largely to consumers abroad. If the domestic consumers stop spending, you aren't that worried.
Wrong. The clue is in the word capitalism, it requires capital provided by others as an investment or in other words savings.
As for savings - if you have a good amount, there are some high interest accounts that are above the base rate. Santander, for example, offer one that's 4% above, which at the moment is 4.5% but would go up to 9%, which is almost £10,000 a year on £100,000, so a good income really.
How on earth is it good news for the housing market?
It will bring prices down.
But nobody will be able to get a decent mortgage
Falling prices mean you don't need to borrow so much.
In any case you can't run an economy solely on the basis of how much mortgage interest rates are while completely ignoring savers and inflation.
Which will bring prices down. If people can only smaller mortgages, houses which are overpriced won't sell, so prices will fall.
The Bank of England have explicitly said in the past that one of the factors in keeping interest rates so low was to avoid crashing the housing market.
They can only avoid doing the right thing for so long, and they're talking about it now to soften the blow when they do.
100% fully agree with you sir.
Aye but Santander have abysmal service.
First Direct have a savings account that gives you 8%, providing you have a current account with them and pay into it (the current account) at least £1,500 a month. Money Saving Expert has it on there somewhere
I didn't say you could I said I did not believe it would be good for the housing market if people are looking at huge interest rates on mortgages.
So putting them up risks crashing it? How is that good for it?
A correction in prices would mean...
1. Cheaper upsizing
2. More first time buyers
3. Higher disposable incomes
4. FTBs without parental help are now 37. This would come down.
5. More money directed towards pension saving, helping avert a future retirement crisis.
6. More capital directed towards business and enterprise rather than interest payments and socially damaging rent seeking.
7. Social equality will rise.
I'm sure there's a good few more.
Why would it mean more first time buyers if the interest rates on mortgages are huge?
Higher disposable incomes? Anybody with a mortgage is going to get screwed into the floor
No it isn't but the likely scenario is a gradual increase in interest rates up to a level of around 5% as opposed to a shock increase to that level or above. There does appear to be a pre-occupation with the housing market or more accurately one in which prices are rising to the detriment of much else.
The UK base rate fell from 5% in Aug 08 to 0.5% in Mar 09 and has remained there since but it can't remain there forever and the only way is up.
I agree they need to go up, but I think the likely outcome for the economy is negligible, with flatlining growth.
Anybody middle income with a mortgage currently has a bit extra at the moment, they will just stop spending that next year to cover extra mortgage payments.
What's huge? Mortgage rates were hardly massive when the BoE rate was at 5%. Mortgages rates are based on savings pool, money market availability and risk.
If you believe a return to more normal rates levels will screw things up, that should tell you mortgage borrowing is too high.
Recent buyers with low deposits on variable rates mortgages may suffer if rates hit 5%. Most others are either mortgage free are on fixed rates. More importantly, all future buyers (and consumers) will benefit.
Like the politicians, you're thinking short term.