Interest rates may rise this year

ProudDad

In truth as funding for lending and the help to buy scheme seem to be what is driving the savings rate down until these end there probably wont be any real difference in savings rates unless you have an account where the rate is directly linked to the base rate. Dont think there are many of those going about.

Tammer

I suspect that the market view of impending rate rises will probably have the same affect on the economy as an actual rate rise, therefore negating the need for an actual rise.

I have little sympathy for people with large savings in cash when there have been so many ways to make spectacular returns elsewhere since the financial crisis began.

Archi_Bald

Tammer wrote: »

I have little sympathy for people with large savings in cash when there have been so many ways to make spectacular returns elsewhere since the financial crisis began.

You are throwing everybody into the box you find yourself in. There are very good reasons why some people do not want to dabble with investments - e.g. a large purchase within the next 2-5 years, or people feeling that they should focus on cash in their old age.

JohnRo

Tammer wrote: »

I have little sympathy for people with large savings in cash when there have been so many ways to make spectacular returns elsewhere since the financial crisis began.

Isn't hindsight a wonderful thing.

Will that lack of sympathy also extend to those currently receiving mortgage welfare on the coat tails of the ongoing bank bailout and housing ponzi props. Fretting about their heavily subsidised borrowings become unaffordable when the boot of financial repression on the throat of savers is lifted slightly?

Tammer

Hi,


I didn't really intend my previous comment to be inflammatory.

It's just my opinion that the low interest rate environment probably does more good than harm. I have a bit of sympathy for people with large debts if there circumstances have changed and they can't do anything to improve their situation e.g. through moving to a lower rate of interest, or paying more of it back. I'd also guess that someone planning to make a purchase in a couple of years is probably not too bothered by a low interest rate on their deposit account.


It is a shame that some people who were relying on cash have seen returns reduce so significantly - and I guess a lesson to us all that cash is not a 'no risk' investment.

T

jimjames

Tammer wrote: »

It is a shame that some people who were relying on cash have seen returns reduce so significantly - and I guess a lesson to us all that cash is not a 'no risk' investment.

T

I'd also hope that the low rates have meant that people have explored other options than just deposits so they have considered things like S&S ISAs for better returns and hopefully realised that they aren't as scary as they may have believed.

brendon

jimjames wrote: »

I'd also hope that the low rates have meant that people have explored other options than just deposits so they have considered things like S&S ISAs for better returns and hopefully realised that they aren't as scary as they may have believed.

The stock market will not respond well to a rates rise. Businesses have been lured by cheap debt as much as struggling households have. If you have existing holdings, don't expect stocks to do too well this year.

masonic

brendon wrote: »

The stock market will not respond well to a rates rise. Businesses have been lured by cheap debt as much as struggling households have. If you have existing holdings, don't expect stocks to do too well this year.

It's impossible for anyone to know for sure how well markets will respond to a rate rise or how well they will perform overall this year. To what degree a rise in interest rates has already been priced into the market and to what degree it will be affected when the rise finally happens is a matter of pure speculation. However, one should never expect stocks to do well.

jimjames

brendon wrote: »

The stock market will not respond well to a rates rise. Businesses have been lured by cheap debt as much as struggling households have. If you have existing holdings, don't expect stocks to do too well this year.

I read an interesting piece earlier about how shares responded in 1994 after several years of growth. Rates were at low point and then started rising. Interestingly stocks carried on rising for the next 6 years so I don't think there is any guarantee which way they will move.

Tammer

Interestingly the news reported today inflation falling to 1.5% today following, among other things, the strengthening of the pound making imports cheaper - following the rumours of an interest rate rise.


It just shows that the rate doesn't have to rise for the market to go the way the BofE wants it to - just some chat from Carney will do it. I can't see how interest rates will rise if inflation keeps heading down.