When will interest rates go up?
Discussion
I was asked this question in a BBC interview 10 years ago when others were speculating perhaps 2 years back then.
I said at least 10 or more years and people thought I was crazy.
I think that answer stands correct today, at least regarding a return to "normal" levels.
A 5% base rate would push a huge number of people over the edge with mortgage costs and we have a generation of home owners (well, renting off the bank at the moment!) who have never known anything but this.
I said at least 10 or more years and people thought I was crazy.
I think that answer stands correct today, at least regarding a return to "normal" levels.
A 5% base rate would push a huge number of people over the edge with mortgage costs and we have a generation of home owners (well, renting off the bank at the moment!) who have never known anything but this.
Not in our financial lifetime (i.e. say 25 years) baring a huge unexpected change of events imho.
Rumours of Fed cuts, uk isnt going anywhere, look at 30 year euro swap curves.
Plus the inconvenient truth that in order to be more environmentally friendly we need to consume and so buy less 'stuff', which is at complete opposition to the modern western economic growth models means forget 5% 'normals', the new normal is circa -1/+1%.
Its just taken most people 10 years to realise this is the new paradigm.
Rumours of Fed cuts, uk isnt going anywhere, look at 30 year euro swap curves.
Plus the inconvenient truth that in order to be more environmentally friendly we need to consume and so buy less 'stuff', which is at complete opposition to the modern western economic growth models means forget 5% 'normals', the new normal is circa -1/+1%.
Its just taken most people 10 years to realise this is the new paradigm.
Low interest rates will be here forever now. Are they any longer a tool to cool or stimulate the economy any more? We've had a decent economy before all the Brexit nonsense and they weren't raised much in that time. It's only going to be the same or worse from now on. In the meantime with a decade for low rates to become normal you have a generation of homeowners that won't be able to withstand big rate increases. Young working couples are ok but throw in some kids and one parent dropping to part time and it's a lot of people will be wiped out by even 5% base rates.
GregK2 said:
As mentioned, not in the foreseeable future.
I'm curious what will be used to counter a future recession given that interest rates now live on the floor though.
Still lots of scope to loosen monetary policy using unconventional tools such as QE. Interest rates were always a blunt weapon and policy makers now have a much wider tool set to play with post the financial crisis.I'm curious what will be used to counter a future recession given that interest rates now live on the floor though.
Given the virus is now been used as a tool to magic up even more fake money, do we think interest rates are going to go back down in this crazy world right now??
Speaking purely from a selfish point of view in deciding when to apply for additional mortgage borrowing for a house extension.
Though am not sure how much lower they can go, Barclays will offer me £130k+ additional borrowing for 1.57% fixed for 5 years.....
Speaking purely from a selfish point of view in deciding when to apply for additional mortgage borrowing for a house extension.
Though am not sure how much lower they can go, Barclays will offer me £130k+ additional borrowing for 1.57% fixed for 5 years.....
Edited by gangzoom on Friday 6th March 06:32
fesuvious said:
I'm wondering if your 'inherently weird' is more accurately described as 'life support'
To me it's like since we didn't allow various economies to 'reset' back in 2008 (and yes I know how horrific it would have been) it's like we fiddled with the fabric, natural order and progression. We went off on a tangent.
It still feels wrong
Cash is valueless now, unless you have a lot, which you can then buy assets with the generate an roi. The comments sections of articles circa 2009 were interesting, some people were overjoyed at zirp, to bash 'the rich' and stop people hoarding money. They weren't as happy when they realised this capital was being parked in assets such as housing. To me it's like since we didn't allow various economies to 'reset' back in 2008 (and yes I know how horrific it would have been) it's like we fiddled with the fabric, natural order and progression. We went off on a tangent.
It still feels wrong
anonymous said:
[redacted]
Thats what am banking on, even lower interest rates would make borrowing for the house extensions even cheaper than now. A below 1% 5 year fixed would be utter madness and almost begs the question why wouldn't everyone take out more mortgage borrowing providing you are spending the money on things like property?
markcoznottz said:
Cash is valueless now, unless you have a lot, which you can then buy assets with the generate an roi. The comments sections of articles circa 2009 were interesting, some people were overjoyed at zirp, to bash 'the rich' and stop people hoarding money. They weren't as happy when they realised this capital was being parked in assets such as housing.
This, and the more money printing quantitative easing we have, the less value it will have. I have a decent five figure amount in cash, but really it is no use to me at all. I get 1.3% interest on it, but as inflation is higher than this I am actually losing money. It is not enough to buy a property, and frankly I am not sure I want to the hassle of another BTL considering the amount of secondary stamp duty I will have to pay.I could put it in a vanguard lifestrategy account, but considering the fund has dropped over 10% before the bloodbath today I think that would not be the smartest move.
It's a nice fluffy comfort blanket to look at, but in reality £50k or even £100K is pretty useless, even though for the average earner that is years and years or scrimping and saving.
Maybe the YOLO credit junkies have a point.
Gassing Station | Finance | Top of Page | What's New | My Stuff