have interest rates been too low too long

tir21

Havent we painted ourselves into a corner?

When low interest rates feel the norm then we get used to low interest rates

But what will be the fallout if they go up 2 or 3 percent

Thrugelmir

Providing lenders advance mortgages based on sensible policy. Then the situation should be manageable.

safestored4

The present 350 year low interest rates are resulting in masive misallocations of capital and distortions to the financial system. It is the mirror image of the situation in the 1970s when our mortgage rates were around 12%-15% and inflation was running at 20% per anum. Things didn't end well then and won't now. The Central Banks haven't got the faintest idea how to extracate themselves from the mess they have got us into.

Thrugelmir

safestored4 wrote: »

The Central Banks haven't got the faintest idea how to extracate themselves from the mess they have got us into.

Always was going to be a long term project. Probably somewhere near the mid point of the super debt cycle. Next stage is cold turkey to combat the high levels of accumulated debt that exist.

Southend1

Have interest rates been too low too long?

Yes and no.

Yes because persistently high inflation is reducing real incomes for millions of people.

No because persistently high inflation has not yet reduced to manageable levels the debt incurred bailing out the banks, and as a result of the 100-125% mortgages given in the boom years.

CLAPTON

interest rates are round 3-6%

why do you call these low?

lee111s

I think the OP is meaning the BoE base rate.

SG27

CLAPTON wrote: »

interest rates are round 3-6%

why do you call these low?

If you are talking about mortgage rates that is low!

I must admit I am mildly concerned about what rates will be when my fix ends in 4 years time. Which is part of my motivation for doing some decent overpaying over those 4 years.

Hughesy84

Talking of the low rates.... is there anywhere that shows the rates before the latest bank crash?

Iv only had a mortgage 2 years, so would like to see what sort of rate they were in the boom?

BillJones

Hughesy84 wrote: »

Talking of the low rates.... is there anywhere that shows the rates before the latest bank crash?

Iv only had a mortgage 2 years, so would like to see what sort of rate they were in the boom?

Which rate?

The GBP 5y swap rate was about 4.5% in mid 2005, rose to 6.30% in mid '07, and is down at 1.9% right now.

Thrugelmir

SG27 wrote: »

I must admit I am mildly concerned about what rates will be when my fix ends in 4 years time. Which is part of my motivation for doing some decent overpaying over those 4 years.

Future direction of house prices is equally an unknown. So building equity is an extremely sensible idea.