Why people want BoE rate to rise?

hearts

Thrugelmir wrote: »

Historical norms will mean an increase in bank margins if that is the case.

The days of below 2% above BOE base have passed. (putting lifetime trackers aside). The norm is more likely to be 2.5% - 3% above for average borrowers.

Rates are now about 5% for new mortgages with BOE at .5% . There is no way when BOE rates are back at 5% that mortgage suppliers will be looking for 4 1/2 points above base. So at some time when BOE rates begin to rise, mortgage suppliers will begin to lower the differential. They want profit but they don't want to frighten off custom. Also at some time between now and then, the business of mortgage lending will be back to levels of competition where far more products are available.

maveli

socrates wrote: »

Is that the one where you can pay £250 maximum per month and there is a monthly fee for the account?

Yes. But I got my other half as well into it and we put £500.00/month into it and no fee for that

Really2

Cannon_Fodder wrote: »

A) As for answering the myriad points you make, its not humanly possible to do so.

Still waiting for anyone to give a decent answer to;

"If these low rates are deliberate to stimulate consumption, what do we do when the savings run out"??

i.e. what will drive consumption then, will we get the dreaded double-dip recession...

A) Myriad well a few but this one is important and you seem scared to answer it.

Really2 wrote: »

What about the economy, jobs etc. do those people not count or should they all be sacreficed for [STRIKE]you[/STRIKE] pensioners?

It is a very serious one as it affects more people and could mean no pensioners getting a pension at all
EG Raising rates for no economic reason than for an emotive issue casuing business failures and mass unemployment.
That could mean the economy free falls and pensioners get no state help at all.
Or is that just expendable in your eyes to reach your goal.


When did you ask that? As far as I know Low IR is a reflection on what we forecast inflation to be and to help business (more competative exports and cheaper to service loans) thus helping the economy.
I think you fail to understand why they are low.

mewbie_2

Really2 wrote: »

I think you fail to understand why they are low.

They are low because we are in the worst financial mess since the Boe was founded in 1600 and something?

Really2

mewbie wrote: »

They are low because we are in the worst financial mess since the Boe was founded in 1600 and something?

Correct, and high IR was never the way out.
Perhaps someone may want to point out an economy which as been hit like ours which as not slashed rates or actually got out of recession by increasing them?

Thrugelmir

hearts wrote: »

Rates are now about 5% for new mortgages with BOE at .5% . There is no way when BOE rates are back at 5% that mortgage suppliers will be looking for 4 1/2 points above base. So at some time when BOE rates begin to rise, mortgage suppliers will begin to lower the differential. They want profit but they don't want to frighten off custom. Also at some time between now and then, the business of mortgage lending will be back to levels of competition where far more products are available.

at a base of of 5% this would make average SVR around 7.5%-8%.

Cannon_Fodder

Really2 wrote: »

A) Myriad well a few but this one is important and you seem scared to answer it.

It is a very serious one as it affects more people and could mean no pensioners getting a pension at all
EG Raising rates for no economic reason than for an emotive issue casuing business failures and mass unemployment.
That could mean the economy free falls and pensioners get no state help at all.
Or is that just expendable in your eyes to reach your goal.


When did you ask that? As far as I know Low IR is a reflection on what we forecast inflation to be and to help business (more competative exports and cheaper to service loans) thus helping the economy.
I think you fail to understand why they are low.

a) Its not about raising rates for no economic reason. Its was never ESSENTIAL to drops rates to where they are now. IMO, dropping to 2% would be enough to support businesses during the recession. As proven by the large margins on mortgages, the banks don't want to be as low as 0.5%. So its false for all but a few trackers/svrs with Ts&Cs that didn't foresee the future.

Months ago I asked if it was a necessity to be 0.5%, before QE. No-one answered. If it can be 0.5% instead of 0%, why not 0.75%, why not 1%, why not 2%....no-one knows.

If they wanted to print money they didn't have to decimate savings in the process, IMO.


b) I asked that on the first page, and ISTL sort of responded, but went off piste...!

Now, you talk of forecast inflation, exports, loans and you still haven't answered the question - focus now - "when the savings (encouraged to be spent by low IRS) are exhausted, what will stimulate consumption"...?

Not why is it done. Not what it was done for. Its done, fine.

But when, whether in 2 years, or 10 years like Japan, we run out of savings, "WHAT WILL REPLACE SAVINGS TO PROVIDE A SOURCE OF CONSUMPTION"...?

brit1234

I want rates higher for 2 reasons.

1, My house saving deposit is getting hardly any interest now losing myself many hundreds of pounds each year. I can lock it into a fixed account as I need the money free to buy a property.

2, Its encouraging people to buy overvalued property and now leading to price increases. Its extending this recesion longer and longer and going to make it worse in the long run.

Really2

Cannon_Fodder wrote: »

a) I"when the savings (encouraged to be spent by low IRS) are exhausted, what will stimulate consumption"...?

Savings are not being spent it is disposible income!
If that is not the case can you give some proof that everyone is spending their savings and not saving more and paying off debt?

Unless you think the pensioners are spending on items that grow the economy and not on subsidising their living expenses! (and that pensioners can sustain the economy)

Or perhaps you think all the people with savings have now gone consumption mad?

Have you spent all your saving? Can you tell how many people have?

IT WILL BE GROWTH THAT STIMULATES THE ECONOMY NOT SAVINGS. (And that is why I pointed out exports, economy etc. etc.

I thought you were clever enough to know that.

Also considering more are saving and repaying with the LOW IR than when rates were 5.75% your point makes no sense what soever.

purch

brit1234 wrote: »

I want rates higher for 2 reasons.


Its extending this recesion longer and longer and going to make it worse in the long run.

The 1/2 % Base Rate is Extending the recession ??

Now that's a new one :eek:

It's about time people realised that House Prices are a by product of our Economy not the be all and end all !!!!