Interest rates could drop to 1% - what's the point of risking money in savings?

ian-d

I don't get this, they are considering lowering interest rates to improve borrowing, but wouldn't this ultimately lead to an increase in house prices again, followed by interest rate increases resulting in poor lending and many not able to remortgage at a higher rate etc?

Maisie11

My Mum is 76 and she belongs to a number of senior clubs. A number of her firends do not trust banks and have withdrawn their money. Mum didnt like to ask where they had put it but I think we can guess. They dont seem to realise that if they get burgled they wont be covered but would rather take the risk. How worrying.....

Primrose

Being retired, we rely heavily on the interest from our savings to top up our pensions. Interest rates falling to 1% would be a nightmare scenario.

mrposhman

ian-d wrote: »

I don't get this, they are considering lowering interest rates to improve borrowing, but wouldn't this ultimately lead to an increase in house prices again, followed by interest rate increases resulting in poor lending and many not able to remortgage at a higher rate etc?

if you'd noticed over the last few days, banks have performed probably slightly better than the ftse - my shares have anyway.

Theres a serious recession brewing and raising interest rates will only increase the power of it.

Increasing rates means more people save than spend and therefore retailers don't perform as well, reducing the interest rates is an attempt to get people to spend with retailers and holiday brokers etc as many people will not deem the savings "growth" to be worth it and would rather spend the cash.

The banks and the public will have learnt a lesson from the banking collapse that has caused so many problems and I would expect lending from banks to improve in terms of the realisation of what people can afford, this will be on both sides not just the banks.

GeorgeHowell

The talk of rates down to 1% is typical New Labour thinking. Firstly in their ageist, youth-obsessed world they are primarily concerned with the young, who are mostly in debt with large credit card balances, mortages etc. They overlook savers who tend to be older and who have most of the capital. And they overlook that trying to stimulate demand by giving the young more money will be offset by the older who won't have enough money to spend.

But their prime aim is to reduce the interest burden on government debt which had already spiralled out of control even before the banking crunch This is in large part because of Labour's obsession with "social justice", and their traditional inability to take on board any concept of sound public finance.

Hopefully they won't be in office long enough for such a low rate of interest to become a reality.

Oblivion

mrposhman wrote: »

The banks and the public will have learnt a lesson from the banking collapse that has caused so many problems and I would expect lending from banks to improve in terms of the realisation of what people can afford, this will be on both sides not just the banks.

I don't think any lessons have been learnt at all yet. What we need is an extended period of real financial pain to rid people's memories of the unsustainable bubble they've been so happy to ride on, until it burst.

Lowering interest rates this soon will simply fuel another borrowing frenzy with people wanting to buy what they can never realistically hope to afford, and with the banks milking it again for their own personal greed. It's time for a serious dose of reality.

Dave.

Primrose

I can't believe it, but last night there were still adverts on TV advertising credit cards and encouraging people they need to borrow more money to buy the good things in life.
Where have these advertisers been living in the past few weeks?

Saucepot

The bubble burst. Gordon and Alistar got a puncture repair kit from the bike shop for the princly sum of £37billion, now comes the attempt to reinflated the bubble.

wombat42_2

Cash will be entirely worthless and meaningless soon. Bartering will become the new cash http://en.wikipedia.org/wiki/Barter

CASH IS SO YESTERDAY

ian-d

Oblivion wrote: »

Lowering interest rates this soon will simply fuel another borrowing frenzy with people wanting to buy what they can never realistically hope to afford, and with the banks milking it again for their own personal greed. It's time for a serious dose of reality.

That's exactly the point I was trying to make. You just have a better way with words