Inflation - Interest Rates

SilverStandard

Leeds Building Society has just offered me a 5 year bond fixed at 6%.

The banks all know that interest rates will be sky high by then.

What will inflation be by then? The amount of money being added into the system all around the world is off the charts, incomprehendable. How could we not have big time inflation?

Thrugelmir

SilverStandard wrote: »

Leeds Building Society has just offered me a 5 year bond fixed at 6%.

The banks all know that interest rates will be sky high by then.

What will inflation be by then? The amount of money being added into the system all around the world is off the charts, incomprehendable. How could we not have big time inflation?

What rate can you get elsewhere?

hearts

What makes you think Interest Rates will be sky high in 5 years. I think otherwise ;-)

SilverStandard

hearts wrote: »

What makes you think Interest Rates will be sky high in 5 years. I think otherwise ;-)

Thants what the Government/banks want you to think.

So you think it would be good to go for 6% fixed for 5yrs?
Wow you are smarter than the banks :rotfl:

Generali

SilverStandard wrote: »

Thants what the Government/banks want you to think.

So you think it would be good to go for 6% fixed for 5yrs?
Wow you are smarter than the banks :rotfl:

It looks like you have the questions and the answers. You should set up a private board for yourself.

Really2

SilverStandard wrote: »

Leeds Building Society has just offered me a 5 year bond fixed at 6%.

The banks all know that interest rates will be sky high by then.

What will inflation be by then? The amount of money being added into the system all around the world is off the charts, incomprehendable. How could we not have big time inflation?

And their 5 years fixed rate mortgage is 6.64% APR. so they make 0.64% on savings.

It's not crystal ball territory, they are charging borrowers more than savers, that is how they are making the money. not predicting the future.

inspector_monkfish

SilverStandard wrote: »

The banks all know that interest rates will be sky high by then.
QUOTE]

How do the Banks know this?
How do you know this?
Have I missed something?

ad9898_3

I think we all know the base rate will go up at some point in the future, the issue is when it does will the banks add the base rate rises to their products or will they absorb the costs, time will tell but they are likely to at least add at some of the cost of those base rate rises. Mortgage rates of 8-10% are not out of the question in the future.

The other issue is your own mortgage, if you've only 4-5 years left on it then you're laughing as even if they go up the pain you will have to endure will be short lived, on the other hand if you have a 20+ years mortgage left the future is much more uncertain, especially if you borrowed a lot at the height of the boom.

JonnyBravo

From your signature:

ad9898 wrote: »

My father rode a camel,
I drive a Rolls Royce,
My son flies a jet aircraft,
His son will ride a camel.

Old arabic proverb, regarding the end of the oil age.

Just how "old" is that proverb? :rolleyes:

Dan:_4

ad9898 wrote: »

I think we all know the base rate will go up at some point in the future, the issue is when it does will the banks add the base rate rises to their products or will they absorb the costs, time will tell but they are likely to at least add at some of the cost of those base rate rises. Mortgage rates of 8-10% are not out of the question in the future.

Good point. Mortgage rates [fixed] are currently well above the base rate, so when base rates increase banks may not increase their rates considerably, especially if they are fighting for business (and the chances are they will be if the base rate is on the up).

ad9898 wrote: »

The other issue is your own mortgage, if you've only 4-5 years left on it then you're laughing as even if they go up the pain you will have to endure will be short lived, on the other hand if you have a 20+ years mortgage left the future is much more uncertain, especially if you borrowed a lot at the height of the boom.

20+ years is a long time - you will have wage inflation, HPI etc, so really nothing to worry about.

Thrugelmir

Dan: wrote: »

Good point. Mortgage rates [fixed] are currently well above the base rate, so when base rates increase banks may not increase their rates considerably, especially if they are fighting for business (and the chances are they will be if the base rate is on the up).

The banks and building societies are fighting for deposits to fund mortgages. Not to lend money.

Take a look through the weekend press and see how many financial institutions are looking for fixed term deposits.