Interest Rates going back up to normal levels again?

GreatApe

The-Joker wrote: »

You mean the emergency low interest rates can't go back to normal because the emergency from 2008 is not over yet?

What ever happened to all those green shoots we have been promised for the last ten years?

I have argued for the best part of a decade that real returns will tend lower and lower as an economy builds out its infrastructure and becomes first world. The last few years I have also argued that rates should be negative and get more negative as time goes by.

That is to say, these rates are what is normal.
The 5-6% rates just before the crash were the abnormal they were too high before the crash

I can see the BOE keeping rates between 0-1% for another decade. It is not emergency rates it is normal rates.

And despite all the negative stories nations like the UK or Japan or Germany are all very very rich and doing very well.

AG47

westernpromise wrote: »

You keep saying "normal" as though there's some "normal" rate we all agree on. I bet you think "normal" is 10% or so, am I right? If so I have bad news for you - rates have only been above 10% in 20 of the last 300 years and all of them were between 1970 and 1995.

Your idea of normal is probably a level that was an ephemeral aberration in itself.

I'd assume mortgage rates of 3 to 4% for the indefinite future / a standard mortgage term starting from here, if I were you.

Normal is several percent over hundreds of years

sevenhills

GreatApe wrote: »

That is to say, these rates are what is normal.
The 5-6% rates just before the crash were the abnormal they were too high before the crash
I can see the BOE keeping rates between 0-1% for another decade. It is not emergency rates it is normal rates.

People might pay interest of 9% on a £3,000 loan, but only 6% on a loan of £7,000, what is normal to the Bank of England has no relation to 'normal' people.
If a Bank wants to loan a bussiness £1 million, what rate would they charge?

Thrugelmir

[QUOTE=sevenhills;74425188
If a Bank wants to loan a bussiness £1 million, what rate would they charge?[/QUOTE]

What's the security? How profitable/cash generative is the business?

worldtraveller

The Bank of England has held interest rates but signalled an August rate rise is more likely than previously thought.

In a decisive move, Andrew Haldane, the Bank's chief economist, joined two other Monetary Policy Committee members in voting to raise rates to 0.75%.

The nine-member MPC was split 6-3, with Bank governor Mark Carney leading the group who voted to hold rates at 0.5%.

The last time three people "dissented" from the overall view, in June 2017, rates rose the following November.

But economists believe that if the economy does show signs of picking up, an August rise is in play. Government borrowing figures published on Thursday boosted hopes among some economists that the economy may be gaining momentum.

BBC News

lisyloo

An august rise might be back on again :-)


https://www.bbc.co.uk/news/business-44721670


5 months to go before my 0.99% mortgage is paid off.

michaels

lisyloo wrote: »

An august rise might be back on again :-)


https://www.bbc.co.uk/news/business-44721670


5 months to go before my 0.99% mortgage is paid off.

If I could borrow at .99% I would be maxing out the credit line and making a nice profit on the turn. For example even instant access you can get 1.35%.

I refixed yesterday for 1.94% 5 years even though I could have paid it all off as I can already make a small profit on cash savings and if rates do rise then that profit will only increase.

lisyloo

If I could borrow at .99% I would be maxing out the credit line and making a nice profit on the turn.

Yes I have done since 2008.
Initially I had some NS&I index linked certificates that were RPI linked and paying more than 5%. The profits have got gradually less, but I'm still making a profit with no risk.
Unfortunately it comes to an end, but Im certainly not complaining.

michaels

lisyloo wrote: »

Yes I have done since 2008.
Initially I had some NS&I index linked certificates that were RPI linked and paying more than 5%. The profits have got gradually less, but I'm still making a profit with no risk.
Unfortunately it comes to an end, but Im certainly not complaining.

Those were the days, I had some 5 year (with a break clause ) 5% newcastle saving accounts (not bonds so no capital risk) that I took out at the start of the financial crisis instead of paying down the mortgage. They were extremely profitable, but would have been insanely profitable it I had chosen a tracker mortgage rather than a discount variable just before TSHTF and hsbc in their wisdom only passed on about have the reduction in the base rate to their svr.

I also fixed 5 years ago just before rates were definitely about to start going up, have fixed again for 5 years but am much less certain this time that any short term rate rises will stick. Whilst Carney is certain that the Q1 slowdown was weather related I am equally sure that the current pick up is weather/world cup related and will be quickly reversed, population growth is down sharply which will knock on to GDP (even if not GDP per head).

sevenhills

ilovehouses wrote: »

I think anyone waiting for interest rates to go back to 'normal' is in for a long wait. This is normal and probably will be for some time yet

What will be a 'normal' rate with a Jeremy Corbyn Government?