Serious now what would force interest%up?

PasturesNew

I need rates to rise for two things now: [1] to pay interest on savings to pay care home fees so the old isn't moved on when the money runs out [2] so I can afford to rent a cheap bedsit as it's my only income almost now and nobody will rent me somewhere lovely for £100/month including bills.

Generali

Wookster wrote: »

Hard to see that a euro collapse would cause rampant inflation in the UK though.

I agree. However, given the massive interconnectedness of financial markets, printing money in ex-Eurozone countries could cause inflation in the UK conceivably.

That's not a prediction so much as idle speculation. I've had a couple of goes at working through what could happen given a collapse of the Euro and it makes my head hurt.

mcc100

MrRee wrote: »

Rates will be low for a long, long, long, time ......

Political forces will come into play in 2013/14 ... when the Government will be looking to re-election in 2015.

I see rates remaining where they are until 2016.

That will mean that we will have had a fair number of clever buyers who bought their homes in 2009 on UltraLow Mortgage rates who may well have cleared their debt 7 years later in 2016 when rates may increase.

They will be seen as the cleverest of all people by the time 2017 comes around.

The base rate may stay at 0.5% for a long time, but mortgage rates could increase considerably once the exposure of banks to the Eurozone crisis becomes clear.

RenovationMan

DervProf wrote: »

I take it that your wireless keyboard's batteries failed before you could finish typing that post.

:xmassign: BTW.

Blimey DervProf, you must be getting desperate for a rumble if you're even trying to start a fight from that post. Jeeze, get a life mate. :rotfl:

the_root_of_all_evil

most peoples mortage deals today will be around 3.99%

savings rates 2.80% approx

yet the interest rate is 0.5%

only the lucky few have this rate, dont live yout life around it.

paddyrg

Do bear in mind, everywhere you see a 'will' in the whole thread above, it really means 'probably will in my opinion' - there are no laws or rules forcing it.

ChiefGrasscutter

I'm sure there is trouble round the corner somewhere.
The low interest rates coupled with low investment returns must be making life hell for the life insurance industry.
Anyone got anything more concrete than my 'musings' on how they are fairing and how they are going to be able to payout on all the policies maturing in the future with next to no income coming in from their investments.

DervProf

RenovationMan wrote: »

Blimey DervProf, you must be getting desperate for a rumble if you're even trying to start a fight from that post. Jeeze, get a life mate. :rotfl:

Just looking for some festive fun, but you don't want to join in. Which is a shame.

I was simply suprised by the fact that you were discussing interest rates, and didn't mention your own situation. Actually, you've been a bit quiet on that front recently. Things not going to plan, or have you finally realised that we've got the message that you are da man ?

MacMickster

I'm not sure where you got the idea of a plan to keep interest rates low for 3 to 5 years. The only people who would know of such a plan are the members of the MPC, and they certainly haven't announced any such plan.

Earlier in the year people thought that interest rates would begin to increase in March, then in May and then in August.

What may cause interest rates to rise?

1. Wage inflation - so far there has been no great pressure on wages to match the increase in RPI/CPI, however that is unlikely to last for another 3 to 5 years as household budgets continue to be squeezed.

2. A feeling that low interest rates and devaluation of the pound isn't producing the desired results. If/when the Euro goes belly up it may be seen as a chance to get investors to move their money from the eurozone to the UK with a higher interest rate.

3. A positive resolution to the Euro crisis. Currently UK banks are at risk from the collapse of the Euro, and a further hit to their balance sheets due to falling property values brought about by a rise in interest rates may be the straw that breaks the camel's back. If the threat from the Euro crisis was removed then there would be less necessity to support UK property values.

4. The unknown. Just over 3 years ago nobody would have predicted that interest rates would drop to their current low rates over the course of just a few months. Events then dictated that move. Events (as yet unforseen) may yet prove to be the cause of a sudden rise in interest rates.

kabayiri

MacMickster wrote: »

...
4. The unknown. Just over 3 years ago nobody would have predicted that intertest rates would drop to their current low rates over the course of just a few months. Events then dictated that move. Events (as yet unforseen) may yet prove to be the cause of a sudden rise in interest rates.

Indeed. I think it was "professor" Goldblum from Jurassic Park who espoused chaos theory. The interconnected nature of everything nowadays is only surpassed by the ability of the banking sector to dripfeed us yet more 'details' about hitherto unreported losses of some nature or other.

Is it any wonder financial institutions don't trust each other?

On a wider note, I believe the success of the City of London is due in part to its ability to attract foreign funds? If those funds are redirected to spending 'back home', will this force rates up as a response method of retaining these funds ? [eg China tries to prop up it's growth by spending at home].