The fed just raised interest rates by .25%

iantojones40

michaels wrote: »

Agree with the first part.

Have often heard the second part but not sure what the logic is?

I don't about the world following the U.S. but I think it's safe to say the U.K. does

http://peped.org/economicinvestigations/graph-uk-and-us-interest-rates/

Graham_Devon

There was absolutely no reason to reduce rates in the UK earlier this year. Many were stating that when they reduced rates, so this isn't really a hindsight issue.

Seemed more of an excuse to lower rates than anything else. So I don't expect the UK to follow in this instance. Raising rates is the biggest elephant the room has ever seen.

wotsthat

I'm looking forward to wishing 0.5% (& less!) base rates a happy 8th birthday next year.

As a gen x'er who bought houses at generational low prices and have seen mortgage rates trend downwards for a couple of decades I have to pinch myself. The last 8 years have been a bit of a grind but they've been great.

If only I'd been a bit more bullish and a debt junkie I'd be smoking it.

lisyloo

I've personally bet a little by taking a 2 year fixed savings account (although I can get out of it with a penalty).


The BBC and those they quote appear to disagree with those of you who think we will follow the US.


Personally I expect rates to stay low for at least 2 years (and have put my money where my mouth is in a smallish way).

padington

Carneys never raised interest rates, here or governor of Canada. As long as he's boss and we're happy to have a cheaper pound, we're a low interest country.

Don't forget, government can only do three things to overcome 2008 bank robbery.

Increase immigration lots
Decrease pensions and other spending lots
Weaken the pound lots

Also don't forget the words of the last Bank of England governor
' we've been trying to devalue the pound for ages'.

Thrugelmir

michaels wrote: »

If you have borrowings in usd then it is an issue, if you have had below target inflation for several years and a debt problem you are struggling to inflate away and no internal supply constraints pushing costs then I would have thought there is no need to follow the us?

The UK is dependent on borrowing from overseas. If the US offers a much higher return than the UK. Which option do you think investors will choose? Doesn't require an increase in BOE base rate to have an impact on the wider market either.

Crashy_Time

iantojones40 wrote: »

I don't about the world following the U.S. but I think it's safe to say the U.K. does

http://peped.org/economicinvestigations/graph-uk-and-us-interest-rates/

https://uk.finance.yahoo.com/news/saudi-uae-shares-rise-interest-122350052.html


More to come no doubt, the real fun starts here when the first EZ country says "enough" to being in the euro.

westernpromise

wotsthat wrote: »

I'm looking forward to wishing 0.5% (& less!) base rates a happy 8th birthday next year.

As a gen x'er who bought houses at generational low prices and have seen mortgage rates trend downwards for a couple of decades I have to pinch myself. The last 8 years have been a bit of a grind but they've been great.

If only I'd been a bit more bullish and a debt junkie I'd be smoking it.

Gen Xers are the luckiest generation of all. If you were born in 1970 you probably FTB'd at the low of the market and have since had 20 years where prices went only up and rates went only down. If you were born in 1975 you should still be in great shape but if you were born in 1965 you were screwed because you FTB'd into negative equity and lost 10 years.

The interesting thing about these rates is that, given you can get a 10-year fix, we'll soon see people whose entire mortgage term goes by at these levels. It then becomes quite hard to argue that they are a short-term aberration. How much longer than 25 years does any borrower need them to stay low?

I am not sure what you mean by "debt junkie". If you keep a car for three years it's reasonable to borrow the purchase price over three years as well. It's not reasonable to keep it three years and spread the borrowing over 10 because if you do that, then in the tenth year you're paying for four cars, even though you've only got one.

Someone with a mortgage isn't a debt junkie. A house is a capital item and the cost of paying for it should properly be spread over the period of use. The debt is of finite size and duration and leaves you with a capital asset. The real debt junkies are speculative renters. They have a debt equal to the NPV of all the rent they will have to pay, which is of unknown size and even when paid leaves them with nothing.

Crashy_Time

lisyloo wrote: »

I've personally bet a little by taking a 2 year fixed savings account (although I can get out of it with a penalty).


The BBC and those they quote appear to disagree with those of you who think we will follow the US.


Personally I expect rates to stay low for at least 2 years (and have put my money where my mouth is in a smallish way).

The bbc never mentioned rates in the headlines I saw today, where SKY had the first section dedicated to a discussion on rates, concluding that low rates here "couldn`t go on". The bbc are a disgrace and just parrot the "Don`t panic, nothing to see here, look at Aleppo etc." line. If the US start seriously hiking we will be forced to follow.

Crashy_Time

westernpromise wrote: »

Gen Xers are the luckiest generation of all. If you were born in 1970 you probably FTB'd at the low of the market and have since had 20 years where prices went only up and rates went only down. If you were born in 1975 you should still be in great shape but if you were born in 1965 you were screwed because you FTB'd into negative equity and lost 10 years.

The interesting thing about these rates is that, given you can get a 10-year fix, we'll soon see people whose entire mortgage term goes by at these levels. It then becomes quite hard to argue that they are a short-term aberration. How much longer than 25 years does any borrower need them to stay low?

I am not sure what you mean by "debt junkie". If you keep a car for three years it's reasonable to borrow the purchase price over three years as well. It's not reasonable to keep it three years and spread the borrowing over 10 because if you do that, then in the tenth year you're paying for four cars, even though you've only got one.

Someone with a mortgage isn't a debt junkie. A house is a capital item and the cost of paying for it should properly be spread over the period of use. The debt is of finite size and duration and leaves you with a capital asset. The real debt junkies are speculative renters. They have a debt equal to the NPV of all the rent they will have to pay, which is of unknown size and even when paid leaves them with nothing.

Y..a..w..n.....:rotfl: lets see how comfortable the average UK punter is with rate hike races to the top....:rotfl: Greenspan was talking yesterday about the late seventies when US rates went double digit to "balance the economy", plenty scope here for the CB losing control. The average punter will be squeaking if rates hit 1% let alone 3%.