'How high should interest rates be?' poll discussion

Former_MSE_Lawrence

How high should interest rates be?

UK interest rates have been at 0.5% for two years, but calls to raise them are growing. If you were the Bank of England what rate would you set?

Beginners' Interest Rates Briefing

Increasing interest rates encourages saving and discourages borrowing – both mean people spend less, so money is taken OUT of the economy. As we currently have relatively high inflation (price rises) many believe we should increase rates to smooth demand and slow price rises.

Yet if we do that it’s likely to slow the economy down for a time, and it’s the fact people believe we need growth that’s stopped rates rising so far. Balancing the two is the start of the problem.

Of course there’s a personal finance impact too. While variable rate mortgage holders gain from low interest rates, it’s a nightmare for savers – especially elderly people living off the interest on their savings. As you can see it's not an easy job…

How high should interest rates be?

0%
0.25%
0.5% (current rate)
0.75%
1.0%
1.25%
1.5%
1.75%
2 –2.75%
3 - 3.75%
4 -4.75%
5 – 5.75%
6 – 6.75%
7% or more

Please vote here, or click 'post reply' to discuss below. Thanks

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RussWWFC

I want them risen. Why should responsible people like me get poor savings rates whilst people who borrow what they've not got get off lighter. I appreciate mortgages make up a fair chunk of this and maybe some protection for people paying back these could be introduced

Blue_Eddie

I second that emotion. Being committed to not buying things that I haven't got the money for (house excepted obviously) I get heartily sick of public figures telling us we should save and then getting now reward for doing so. I don't want to see people losing their houses, but I do want people to take their responsibilities seriously. Just because you don't have something doesn't mean that you ought to have it. Live within your means. I refer all to Mr Micawber.

zabini

I'm a youngish widow and work long, hard hours to pay my way. I have had a family and do know how tough it is to pay the mortgage etc but I budgeted and went without to do so.
Now, I have a little savings (from the long years of hard work from my late husband) but get very little interest for. Yet, as I have a little above the threshold, if I lose my job in the round of NHS cuts (and no-I've not been with them long enough for good pension), I will not be able to claim any benefits. It seems at the moment that if you owe money, you can get good deals but if you work hard all your life to try to provide for yourself, you get next to nothing as an incentive and are actually penalised. A little more interest would soften the unfairness.

sylwright

The problem is that mortgage rates no longer bear much relation to base rate. If they did most people on variable rate mortgages would be be able to pay about 1% above base but thats not the case for most people.

By all means put base rates up but get the banks to keep mortgage rates as they are.

brown_ambassador

Interest rates should be ahead of the inflation curve, they must rise immediately to send a message that they actually are tough on inflation and not just "vigilant" every month

2010

Rates should be around 6% to counteract inflation and to make people pay the real cost of their debt, then in future they may not be so keen to burden themselves.

The savers have suffered long enough, and without savers there`s no mortgages.

William_Barnes

Rates should rise gradually until they hit 5 or 6%.

I too think people who don't budget have gotten off too lightly at the expense of those of us who are very careful with money.

originalmiscellany

I think that the false economy of .5% hasn't resulted in people paying down massive amounts off their mortgage, rather them just continuing as before, not aware of the perfect storm approaching. For what it's worth I think we'll see gradual (.25%) rate increases for the next few years until the end ot 2013, it'll be around 4%. You heard it here first, put a monkey on it!

Niksan

Yep, we're all going to vote on what's best/could be best for the economy, and not what will benefit us as individuals.

stevemcol

Low interest rates will help most hardworking families to get through the recession and post recession economy. It's a shame for the net savers but low rates benefit the majority for now. Hopefully if things ever recover, we'll see more 'normal' rates of say 4 or 5%. Lets hope it doesn't runaway though. My first mortgage was 15%.