MSE News: UK base rate decision looms - what it means for you

bigadaj

boatman wrote: »

There are probably a lot people who would be happy to be saving some money, there are still many who can't afford to buy, and now it's looking far less likely,

Which is a sign of a broken economy, if people can't afford things when the base rate is 0.5%, or even the heady heights of 0.75% then something is still seriously wrong.

People have become addicted to the heroin of cheap money and won't thank you for undergoing the pain of weaning them off whether that means going cold turkey or not.

This all ignores the real elephant in the room which is quantitative easing, that means real interest rates have been seriously negative for years, what happens when QE is unwound then no one knows.

tonyt1

Time for savers to be given a fair deal :beer:

ashcarrot

To be fair the slight increase is a good thing, it gives the message to borrowers that the rate and the price they pay DOES go up (unlike the previous 10 years which they may have become used to) and to prepare and plan for such changes.

Increasing it substantially could put many people under which would be awful for our economy. The gentle gentle approach of very small increases is the right idea even if its only a reset from the drop from 0.5 to 0.25 back a while ago. This give those starting their lives / mortgages time to start paying down any debts / overpaying. Whilst not leaving too many in negative equity which a dramatic increase in rates would do (by the impact to the housing market).

Financially though for me personally it would be much more benefitial for dramatic increases ...

bigadaj

ashcarrot wrote: »

To be fair the slight increase is a good thing, it gives the message to borrowers that the rate and the price they pay DOES go up (unlike the previous 10 years which they may have become used to) and to prepare and plan for such changes.

Increasing it substantially could put many people under which would be awful for our economy. The gentle gentle approach of very small increases is the right idea even if its only a reset from the drop from 0.5 to 0.25 back a while ago. This give those starting their lives / mortgages time to start paying down any debts / overpaying. Whilst not leaving too many in negative equity which a dramatic increase in rates would do (by the impact to the housing market).

Financially though for me personally it would be much more benefitial for dramatic increases ...

But that's the fundamental problem in treating house price inflation as the only form of good inflation.

The combination of zero interest rates and QE has inflated all asset prices hugely, the assets haven't really gone up in value but the value of the money involved has reduced dramatically.

So we have to maintain the bubble in house prices for both political and social reasons, it doesn't bode well for anything but stagnation for the next few years if not decades.

phillw

bigadaj wrote: »

it doesn't bode well for anything but stagnation for the next few years if not decades.

When you have a boom then you have to pay the price with a bust, you'd have thought everyone would accept that by now.

The idea that things can get progressively better for ever is fantasy.

tonyt1 wrote: »

Time for savers to be given a fair deal :beer:

You mean you want a better deal, as we could end up with negative interest rates & that could be considered fair.

ashcarrot

bigadaj wrote: »

But that's the fundamental problem in treating house price inflation as the only form of good inflation.

The combination of zero interest rates and QE has inflated all asset prices hugely, the assets haven't really gone up in value but the value of the money involved has reduced dramatically.

So we have to maintain the bubble in house prices for both political and social reasons, it doesn't bode well for anything but stagnation for the next few years if not decades.

Very true..

bigadaj

phillw wrote: »

When you have a boom then you have to pay the price with a bust, you'd have thought everyone would accept that by now.

The idea that things can get progressively better for ever is fantasy.

I wonder if Gordon brown accepts that now.

We don't want another brown bottom.

ColdIron

bigadaj wrote: »

We don't want another brown bottom.

I thoroughly enjoyed the last one, $260 an ounce

phillw

bigadaj wrote: »

I wonder if Gordon brown accepts that now.

According to the telegraph, it's nearly 9 years since he accepted it.

http://www.telegraph.co.uk/finance/recession/3497533/Gordon-Brown-admits-he-was-wrong-to-claim-he-had-ended-boom-and-bust.html

pearl123

A small mention of those who are better or worse off with the interest rate change.
http://www.bbc.co.uk/news/business-41917891