Why people want BoE rate to rise?

Really2

brit1234 wrote: »

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.

Perhaps this is the best answer to all of us, apparently banks take money off you when we have low IR.:rolleyes:

"I deserve it" culture is still alive and kicking and is trying to move in near you.

I don't think one bear as given a good reason why rates should go up other than to serve them.

Even the pensioner debate was quashed by a pensioner.

Old_Slaphead wrote: »

Anybody with a bit of nous should have been getting 6-7% interset on savings until fairly recently. Even now 3.3% for instant access is available. Shouldn't need to forgo a cruise this year

new_home_owner_3

Its obvious who want rates to rise

1. people who want to buy houses, hoping it will force sellers to sell at cheap prices as they will not be able to pay their mortgage payments, driving house prices down.
2. people who have long fixed rates, to make them feel better about doing it.
3. Savers

The problem is if interest rates go up house prices will fall but mortgage rates will go up.

You will probably find most people on here want rates to go up as they are first time buyers, its just a shame that if rates do go up to over 5% they will have to have mortagages of probably 7-8%.

IveSeenTheLight

brit1234 wrote: »

House Prices down Both Rightmove & Auctions last 2 months:eek:

Sort your signature out.
rightmove is not down the last 2 months :rolleyes:

http://www.rightmove.co.uk/news/house-price-index/september-2009-national-trends

chucky

mewbie wrote: »

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

how very true - if they were still at 5% you'd could be sitting on a park bench homeless and begging without that nice job and your family living in that tent right behind you...

rates were dropped for good reason to 'try' to help the economy out of the financial mess

skap7309

Really2 wrote: »

I don't think one bear as given a good reason why rates should go up other than to serve them.

Brilliant Really2, despite the thread starting with;

Isn't it good that they stay low? In most developed countries (Japan, USA etc.) they are very low as well.

Disclaimer: I'm on a tracker mortgage. :cool:

You bulls really have got it tough haven't you? :rotfl:

Thrugelmir

new_home_owner wrote: »

Its obvious who want rates to rise

1. people who want to buy houses, hoping it will force sellers to sell at cheap prices as they will not be able to pay their mortgage payments, driving house prices down.

But if interest rates rise, those buying will pay more for the house in the longer term.

A £150,000 house (assuming a 100% mortgasge for simplicity) would cost £263,000 at an average rate of 5% for a 25 year repayment mortgage

The same house at a cost of £130,000 would cost £301,000 at an average rate of 8% for a 25 year repayment mortgage.

An increase of £58,000 in interest over 25 years.

In laymans terms an additional £127 net per month outgoing.


So a 13% fall in prices does not compensate for a 3% average higher interest rate.

Really2

skap7309 wrote: »

Brilliant Really2, despite the thread starting with;

Isn't it good that they stay low? In most developed countries (Japan, USA etc.) they are very low as well.

Disclaimer: I'm on a tracker mortgage. :cool:

You bulls really have got it tough haven't you? :rotfl:

To be fair the guy was not sure about why they are low.

It can not be argued against really that the base rate is low for the benefit of the economy not mortgage holders.

It seems to be most think base rate is some kind of Punishment/Reward sword.

It is not it is a reflection of inflation and the state of the economy.

I still stick with no bear as given a good reason why they should be higher.;):)

Old_Slaphead

Really2 wrote: »

Even the pensioner debate was quashed by a pensioner.

Do you mind......I'm not a pensioner !

Really2

Old_Slaphead wrote: »

Do you mind......I'm not a pensioner !

Sorry bud.:o

Cannon_Fodder

Really2 wrote: »

IT WILL BE GROWTH THAT STIMULATES THE ECONOMY NOT SAVINGS.
Also considering more are saving and repaying with the LOW IR than when rates were 5.75% your point makes no sense what soever.

So, is it magic fairy dust that they sprinkle on the factories, and hey presto there is "GROWTH" ?

For there to be growth, there has to be consumption/demand. It might feel like it sort of automatically happens, in a macroeconomic fashion, but at a nuts and bolts level, someone has to demand a product (when they didn't before) and pay for it.

Re savings. Yes, they are increasing right now. I never said they weren't. People save as they worry for their jobs, always have. When the job losses ease that sentiment will shift. And we were already at the bottom of a 30yr trough of low saving when we entered the crunch, so the recent uptick isn't that much to get excited about.

I wasn't saying it would happen today or tomorrow, I was asking what happens when the savings run out - in 2 or 10 years...

...many people have been predicting a period of deflation and IRs where they are for 3+ years, in which case growth is going to be muted at best. And something needs to support fragile recovery. That could well have to be those affected by pay freezes going out and spending their "job-loss-cushion" savings when they think they are out of the woods.

And then what do they spend, after that, with their savings gone, when the taxes rises have hit, the public sector job losses kick in, etc etc...

(You might in your head think of your lower mortgage payment and the overpaying that allows as "saving", but its not. Its just paying down debt.)

As for the pensioner debate being quashed by "you can get better rates". Its the pensioners that are not computer literate, who do not want to trust technology, who precisely because they are pensioners are not comfortable with chopping and changing from establishments they have brand loyalty with, that are not getting rates as suggested. And unless you have power of attorney to do it for them, you can hardly frogmarch them to the bank to fill out the forms...