Interest Rates going back up to normal levels again?

westernpromise

So many people are now on fixed mortgages that any rate rise would surely take years to filter through to everyone's actual payments. As the goal of rate rises is to take demand out of the economy by removing money from people's pockets, speed of transmission is important.

The last time we had steadily rising rates, which was the late 80s, the impact of rises - on mortgagees at least - was instantaneous.

ruperts

The fact that they're having to consider a rate rise with the economy doing nothing for ordinary people and with massive dark brexit clouds on the horizon only serves to demonstrate what the tory's comprehensive failure on the economy over the last seven years. It has been a shambles from start to finish. They've nowhere left to turn so now on top of demand-crushing austerity we'll have demand-crushing rate rises alongside a demand-crushing brexit. What a total mess.

michaels

To be fair there was never any planning for Brexit (no judgement on whether there should have been) and without it we would still be at 0.5% or possibly higher, inflation would still be below 2% and there would be no risk of wage inflation as immigration would be rolling on. With growth higher as well 2%+? without the inflation/uncertainty the deficit would still be falling, there would be less pressure on public sector wages and more spare cash for giveaways.

So it may not be great but had things gone to the osborne/cameron plan then it would look very different now.




but that is the price of democracy

MobileSaver

The-Joker wrote: »

then they havent got a clue what is going on,

A bit like yourself, methinks!

MobileSaver

ruperts wrote: »

It has been a shambles from start to finish. ... What a total mess.

Everything in life is relative. If you think this is a mess just think how much worse it could have been with Labour in charge!

economic

i just fixed my mortgage at 1.54% for 2 years no fees. i think thats a great rate for piece of mind as comparable trackers are similar rates.

Phil&Michelle

It will take up to 10 years to return to normal levels which I class as 3/4%.

economic

Phil&Michelle wrote: »

It will take up to 10 years to return to normal levels which I class as 3/4%.

theres no such thing as normal levels. interest rates can be 100% or -100% and both can be seen as normal, it depends on economic conditions current and future (fwd looking).

they could stay this low potentially for many many decades. there is way to much excess capital (SUPPLY) not able to find places to invest in. this is keeping rates low along with DEMAND for capital being low.

Thrugelmir

Phil&Michelle wrote: »

It will take up to 10 years to return to normal levels which I class as 3/4%.

US rates will be far higher that that by the end of 2018. That'll influence rates globally.

Koldweather1

Our interest rates will probably divorce the US to some extent simply because we have the external issue of Brexit for the next few years. I suspect there maybe a few token rises of the interest rates but I think the BoE will be well aware not to cut the supply cord too much based on the simple potenial that the Brexit situation could go south rapidly at any point.

My main goal is to ensure I have enough savings that even if rates rocket and my mortgage goes up in a big way (which it would to be fair) the interest from the savings will help to cushion the blow.