The Last 5 Major Uk Recessions

kennyboy66_2

The major 5 UK recessions of the 20th Century were 1920-21, 1929-33, 1973-75, 79-82 & 1989-1991.

Here is what happened to interest rates during those periods, peak to trough.

http://www.bankofengland.co.uk/statistics/rates/baserate.pdf

Has BoE rates going back to 1694

1920-1921 7%

---

3%
1929-1933 6.5%

---

2.5%
1973-1975 13%

---

9.75%
1979-1982 17%

---

9.125%
1989-1992 14.75%

---

5.375%

2008- ??? 5.75%

---

I am not saying that history always repeats itself, but makes sense to try and learn from history rather than just ignore it.

With this in mind, does anyone really think rates should go up ?

Is there anyone out there who actually think rates will go up ?

Realy

kennyboy66 wrote: »

The major 5 UK recessions of the 20th Century were 1920-21, 1929-33, 1973-75, 79-82 & 1989-1991.

Here is what happened to interest rates during those periods, peak to trough.

http://www.bankofengland.co.uk/statistics/rates/baserate.pdf

Has BoE rates going back to 1694

1920-1921 7%

---

3%
1929-1933 6.5%

---

2.5%
1973-1975 13%

---

9.75%
1979-1982 17%

---

9.125%
1989-1992 14.75%

---

5.375%

2008- ??? 5.75%

---

I am not saying that history always repeats itself, but makes sense to try and learn from history rather than just ignore it.

With this in mind, does anyone really think rates should go up ?

Is there anyone out there who actually think rates will go up ?

Looks like anything from 25-60% I think we will be looking at around 40% drop so 3.5% ish but you never know we could be looking at 2.5%.

PS drops to lowest level not straight away.

Cannon_Fodder

Not up. Agree.

The difference is that the crunch has frozen funds/liquidity/trust/confidence within Banking.

Rates could be zero and there would be virtually no change in money supplied from Banks.

Once banks are back around 75% of what they used to do, give it 3 months for the effect to start hitting. 4.5% is pretty benign after all, affordability is not the issue.

Then drop a bit more if necessary. Maybe another 0.5%.

Realy

Cannon_Fodder wrote: »

Not up. Agree.

The difference is that the crunch has frozen funds/liquidity/trust/confidence within Banking.

Rates could be zero and there would be virtually no change in money supplied from Banks.

Once banks are back around 75% of what they used to do, give it 3 months for the effect to start hitting. 4.5% is pretty benign after all, affordability is not the issue.

Then drop a bit more if necessary. Maybe another 0.5%.

To Go on that I have a BOE tracker if rates did get down to a low of 2.5% I would start to repay nearly £1K per month (actualy repay not repay+interest).
I think historicly when times are hard people overpay their debts so low rates could help liquidity over time as I am sure many like me will use the opertunity to get their mortgages paid down.

But you are right it will not increase lending just make current debts slightly cheaper to service.

JayScottGreenspan

kennyboy66 wrote: »

The major 5 UK recessions of the 20th Century were 1920-21, 1929-33, 1973-75, 79-82 & 1989-1991.

Here is what happened to interest rates during those periods, peak to trough.

http://www.bankofengland.co.uk/statistics/rates/baserate.pdf

Has BoE rates going back to 1694

1920-1921 7%

---

3%
1929-1933 6.5%

---

2.5%
1973-1975 13%

---

9.75%
1979-1982 17%

---

9.125%
1989-1992 14.75%

---

5.375%

2008- ??? 5.75%

---

I am not saying that history always repeats itself, but makes sense to try and learn from history rather than just ignore it.

With this in mind, does anyone really think rates should go up ?

Is there anyone out there who actually think rates will go up ?

Rates should come down and will come down.
Lenders won't pass all the cuts on, but I expect mortgages to get a bit cheaper.

Won't save the housing market, IMO. As long as house prices are falling banks will demand low LTVs and FTBs will shun buying into a crashing asset. This feedback loop will continue until prices are so low that lenders and borrowers believe they just can't get any cheaper.

Realy

JayScottGreenspan wrote: »

Rates should come down and will come down.
Lenders won't pass all the cuts on, but I expect mortgages to get a bit cheaper.

Won't save the housing market, IMO. As long as house prices are falling banks will demand low LTVs and FTBs will shun buying into a crashing asset. This feedback loop will continue until prices are so low that lenders and borrowers believe they just can't get any cheaper.

Or until First Time Buyers have saved sufficient deposits and if it works out cheaper than renting?

moanymoany

It will go down, those who have mortgages that go down with it will find themselves like Realy who intend to pay more off the basic sum of their mortgage will benefit - and good for them. It will be good to see someone benefit.

WTF?_2

moanymoany wrote: »

It will go down, those who have mortgages that go down with it will find themselves like Realy who intend to pay more off the basic sum of their mortgage will benefit - and good for them. It will be good to see someone benefit.

BoE trackers should go down.

Don't expect SVRs to see the same amount of reduction or new fixed rate deals to be much more favourable though.

Credit cards, personal loans - not a whole lot less interest to pay I would have thought.

Savings rates - almost certainly lower in direct proportion to headline rate reductions though there should be a few banks desperate enough for cash to offer decent deals. Depends on whether you want to risk waiting for the FSCS to pay out if we get into another banking pickle.

WTF?_2

kennyboy66 wrote: »

The major 5 UK recessions of the 20th Century were 1920-21, 1929-33, 1973-75, 79-82 & 1989-1991.

Here is what happened to interest rates during those periods, peak to trough.

http://www.bankofengland.co.uk/statistics/rates/baserate.pdf

Has BoE rates going back to 1694

1920-1921 7%

---

3%
1929-1933 6.5%

---

2.5%
1973-1975 13%

---

9.75%
1979-1982 17%

---

9.125%
1989-1992 14.75%

---

5.375%

2008- ??? 5.75%

---

I am not saying that history always repeats itself, but makes sense to try and learn from history rather than just ignore it.

With this in mind, does anyone really think rates should go up ?

Is there anyone out there who actually think rates will go up ?

+1 for digging out some figures.

However, previously rates were raised to combat inflation and then there was scope for substantial cuts when the recession hit.

This time around, rates were kept too low too long during the boom. Should be interesting to see what happens as the cheap imported stuff used to keep CPI figures low gets more expensive due to the collapsing pound.

History teaches us that when you don't raise rates to the proper level, you pay for it down the line and have to raise them or keep them higher than you'd like.

JayScottGreenspan

Realy wrote: »

Or until First Time Buyers have saved sufficient deposits and if it works out cheaper than renting?

That too. And the economy will probably be on the up again at the same time. Year end 2011, I would guess.

JayScottGreenspan

!!!!!!? wrote: »

+1 for digging out some figures.
This time around, rates were kept too low too long during the boom. Should be interesting to see what happens as the cheap imported stuff used to keep CPI figures low gets more expensive due to the collapsing pound.

History teaches us that when you don't raise rates to the proper level, you pay for it down the line and have to raise them or keep them higher than you'd like.

Good point. If inflation doesn't magically fall away as everyone is predicting (hoping!), then the UK is stuffed.