Interest rates 'may hit 8pc' in two years

ILW

HAMISH_MCTAVISH wrote: »

The 300 year plus historical average interest rate is around 4.9%.

The rates of the 70's, 80's and 90's were the highest interest rates in history, and were abnormal.

The rates of the last decade, of around 5%, are very much the historical "normal".

Which is 10 times what some people seem to have got used to!

Cleaver

ILW wrote: »

Which is 10 times what some people seem to have got used to!

The interest rate thing is a weird one. Yes, there's a minority of people on trackers who are on an interest rate 'ten times' less than 5%, but not very many.

Most SVRs are about 4.5% or so? So anyone on an SVR isn't on very low rates.

If you're one of the feew getting one of the current tracker mortgages that are around 2.5% then it suggests that you've done something right in the past with your money as you'd need a pretty decent deposit.

As I've said before, we took out a five year fixed at 4.74% in early 2004. We then went on to SVR in 2009 which was around 4%, then we've just fixed for around 4% for the next five years until around 2015. I suspect that many people will be similar to us, in that they've not really seen much difference in their mortgage rates for the past 6 or 7 years, and might not see much of a difference for the next 6 or 7.

Graham_Devon

Cleaver wrote: »

The interest rate thing is a weird one. Yes, there's a minority of people on trackers who are on an interest rate 'ten times' less than 5%, but not very many.

Most SVRs are about 4.5% or so? So anyone on an SVR isn't on very low rates.

If you're one of the feew getting one of the current tracker mortgages that are around 2.5% then it suggests that you've done something right in the past with your money as you'd need a pretty decent deposit.

As I've said before, we took out a five year fixed at 4.74% in early 2004. We then went on to SVR in 2008 which was around 4%, then we've just fixed for around 4% for the next five years until around 2010. I suspect that many people will be similar to us, in that they've not really seen much difference in their mortgage rates for the past 6 or 7 years, and might not see much of a difference for the next 6 or 7.

I can only give my experience.

Fix at 4.75%, which after fix went up to 7.75% and now it's down to 3.75%.

marklv

Interest rates should be at 8% now. The sooner they rise, the better.

Cleaver

marklv wrote: »

Interest rates should be at 8% now.

So you think the base rate being at 8% would generally be a good thing for our economy right now?

marklv

Cleaver wrote: »

So you think the base rate being at 8% would generally be a good thing for our economy right now?

Yes, because savers would at least be able to get an inflation beating return on their investment, feel wealthier and be able to spend more without worrying about their future as much.

ILW

Cleaver wrote: »

So you think the base rate being at 8% would generally be a good thing for our economy right now?

If a substantial part of the defecit is paid down over the next 12-18 months, then higher rates may be a good thing for long term stability and an encouragement to save for emergencies, rather than spending more than one earns and then banging it on credit at every little hiccup. This goes for governments and individuals.

Cleaver

ILW wrote: »

If a substantial part of the defecit is paid down over the next 12-18 months, then higher rates may be a good thing for long term stability and an encouragement to save for emergencies rather than spending more than one earns and then banging it on credit at every little hiccup. This goes for governments and individuals.

I completely agree. What I completely don't agree with is interest rates being moved to 8% now, which is a stupid suggestion.

Cleaver

marklv wrote: »

Yes, because savers would at least be able to get an inflation beating return on their investment, feel wealthier and be able to spend more without worrying about their future as much.

I asked you whether you thought it would be good for the wider, whole economy though. You've answered in relation to savers.

By the way, savers don't make investments, savers save their money (which is where they get their name from I believe). Investors invest their money, and many will have got a return well over 8% over the past year or so.

carolt

Dan: wrote: »

I will always vote labour and they were hardly trashed at the recent election, were they?

Ah, but it's because Labour became the party of people like you that I stopped voting Labour.

Read a Grauniad article on holiday saying (IIRC) that research showed that Labour lost 6 times as many votes among 'traditional' Labour supporters as it did among the 'New Labour' supporters.

Someone with your approach to housing is clearly not Old Labour...