Interest rate rise?

antrobus

westernpromise wrote: »

Not lending at all would squeeze it even worse.

Besides, they've had 10 years of borrowing at 0.5% and lending at 3.5%. They should be recapitalised by now.

I don't think so.

LBG results for 2017 show interest income of £16,006m, expense of £5,094m. Which is a ratio of 3 to 1, not the 7 to 1 you claim is the case.

In any case, low interest rates are bad for banks. At the least the ones that have billions sloshing around in current accounts that pay 0%. The higher LIBOR gets the more money they make.

A decade of low interest rates has depressed bank profitability.

antrobus

Ozymandias73 wrote: »

What about all the zombie companies that are only alive because of QE and virtually zero interest rates? I have read that a lot of zombie companies will not survive higher rates, and will go the way of Carillion. Those companies will employ home owners, who may need to liquidate assets if they lose their jobs.

Where have you read this? Do they name the companies?

I only ask because there is money to be made from shorting shares.

Thrugelmir

westernpromise wrote: »

Besides, they've had 10 years of borrowing at 0.5% and lending at 3.5%. They should be recapitalised by now.

If only it was that easy.

System

antrobus wrote: »

Where have you read this? Do they name the companies?

I only ask because there is money to be made from shorting shares.

I have only read about zombie companies in general, but like BHS, Carillion and other highly indebted companies that cannot pay off their debts, I suppose they turn out to be Warren Buffet's naked swimmers.

michaels

Ozymandias73 wrote: »

What about all the zombie companies that are only alive because of QE and virtually zero interest rates? I have read that a lot of zombie companies will not survive higher rates, and will go the way of Carillion. Those companies will employ home owners, who may need to liquidate assets if they lose their jobs.

Surely zombie companies will already be paying a massive risk premium making a minor change in the base rate pretty much irrelevant?

System

michaels wrote: »

Surely zombie companies will already be paying a massive risk premium making a minor change in the base rate pretty much irrelevant?

According to Warren Buffett's dictum, I think they are not recognised as zombie companies by investors and creditors until revealed as such by rising interest rates.

System

Unemployment down and wage inflation up significantly again today. The MPC is rapidly running out of excuses not to raise interest rates in a fortnight's time. The rate hiking cycle could be about to start in earnest.

westernpromise

We've been hearing that for nine years.

System

westernpromise wrote: »

We've been hearing that for nine years.

We don't have to wait very long to see what happens on 2nd August.

I really hope this time they will raise rates. Prior to today's strong data, 72% of economists and 80% of investors had already been thinking they will pull the trigger on 2nd Aug, After today's data those figures are probably nearer 100%.

The-Joker

Ozymandias73 wrote: »

Perhaps that rise in interest rates will finally come on Aug 2nd. Bloomberg seems to think so today. The property market is already in a particularly stagnant phase, but would an interest rate rise next month be enough shift it into a new falling phase? No doubt, sellers will say 'No' and buyers will say 'Yes'.

It would certainly be impossible to spin it as positive news for house prices, although if buyers were to cite it as a reason for lower offers, I expect estate agents and sellers would probably try to dismiss it as either fake news or economically irrelevant.

It doesnt matter when it comes, the only thing that is certain is that interest rates are going up