Low rates are now endangering the economy

chucky

michaels wrote: »

Let me get this straight:

The boomers have stolen the future through high house prices.

We should raise rats so those with savings and retirees (boomers again mostly) can steal the future again through risk free real returns on their savings and increased pension?

Let me add a little more to that...

"As long as house prices drop, we don't care what happens to the economy, savings rates, pensions, jobs etc..."

OffGridLiving

I thought that the banks had tightened up their lending criteria since the GFC? If that's the case then how are people taking on more risk if the banks won't let them, regardless of what the underlying BoE base rate is?

EDIT: Sorry, I posted the above after just reading the OP. I see that tohers have already made the same comment:

Graham_Devon wrote: »

ukcarper wrote: »

Are people allowed to borrow more just because rates are low.

Not neccesarily no, which is why I stated I couldn't comment on any normal transaction.

My comments were regarding help to buy, where, by definition, you are helped because you cannot afford to buy in the market under "normal" conditions.

So in just one page, Graham has changed his mind that low interest rates are endangering the economy and is instead banging on about Help to Buy (which has nothing to do with BoE interest rates).

Righto, another Help to Buy bashing thread. *sigh*

Loughton_Monkey

michaels wrote: »

Let me get this straight:

The boomers have stolen the future through high house prices.

We should raise rats so those with savings and retirees (boomers again mostly) can steal the future again through risk free real returns on their savings and increased pension?

Bring it on....

But aren't you forgetting something?

Graham_Devon wrote: »

ukcarper wrote: »

But if people can't borrow anymore now than they could when rates were 8% or higher and people paid those higher rates why can't they pay them now.

Because the people buying now are very unlikely to have been paying those rates in the first place.

This confuses new buyers buying with help to buy with existing owners back in 2007.

Us boomers also had the 'privilege' to have experienced MI rates in the 8% - 15% range, thereby knowing that it could happen again.

These poor, poor, youngsters of today apparently can't understand that because they have never experienced it. We should feel utterly ashamed of ourselves.

Thrugelmir

ILW wrote: »

We just lurch from one crisis to the next. Nobody is interested in more than a of months ahead. Very different attitude to Germany.

Maybe that's because people have become complacent. Recession what recession?

Loughton_Monkey

Thrugelmir wrote: »

Maybe that's because people have become complacent.

I used to be complacent. But now I'm perfect.

OffGridLiving

Thrugelmir wrote: »

Maybe that's because people have become complacent. Recession what recession?

Out of interest, how have you personally been affected by the recession?

antrobus

Graham_Devon wrote: »

.....Dr Altmann said: “Ultra low interest rates are distorting the economy now, driving borrowers and savers to take on too much risk.....

This is (of course) perfectly possible, but I'd like to see some evidence that this was actually "distorting the economy", or indeed "endangering the economy".

Practically the only supporting evidence provided in the article is the statement; "Many who rely on the income from their nest eggs are pulling the money out of cash accounts and putting it into more volatile shares, bond and other investments, figures indicate. For example, sales of investment funds hit their highest level in more than two years in July, with £2.2bn flowing in." Personally, I'm not 100% convinced of the notion that this a 'bad thing'. Indeed, you could argue that it is a 'very good thing' indeed, and just what the British economy needs.

And as far as borrowing is concerned, the July 2013 BOE statistical release on Money and Credit showed that 'Lending secured on dwellings' was increasing at an annualised rate of 0.5%, so there isn't any indication that low rates are encouraging consumers to load up on mortgage debt.

chucknorris

OffGridLiving wrote: »

Out of interest, how have you personally been affected by the recession?

That's a subject worthy of its own thread (for everyone I mean).

Loughton_Monkey

HAMISH_MCTAVISH wrote: »

....

Again, what Ros Altman wants to do is raise interest rates so the people she represents can get more risk free money.
....

Most of us agree this....

... but I notice Saga is currently pushing their fixed rate savings (3 years minimum) offering 2.25% to 2.55% [depending on amount deposited].

So if she got her way, and Carney started ramping up 0.25%/0.5% every other month or so, I wonder how many 'happy' customers would welcome her intervention if in a year they could get 3.5%/4% instant access in a year's time?

Anyway, the woman's negotiating skills are no doubt very good. Birmingham Midshires will give any John Doe off the street an ISA for 1.75% or 2% (<£15K). What enhanced terms has she wrung out of them for Saga customers? ... er... 1.4% whatever the amount.

... some mistake, surely? Or is anyone going to suggest she's taking a 0.35%/0.6% screw?

Us boomers are getting old and doddery. None of us will ever notice....

Loughton_Monkey

OffGridLiving wrote: »

Out of interest, how have you personally been affected by the recession?

I have. I had my pile at the Isle of Dogs bank, and they called in the retrievers....