Do people budget for interest rate rises?

bassking

They 'can' go negative, but it would risk a run on the banks. Why keep money in the bank and lose money when you can withdraw the money and keep it at home. These days money is just digits on a computer screen, any kind of bank run for physical cash would crash the system.

However, if they introduce 100% electronic money... well... then the banks can do as they please and there's nothing that people could do about it.

sevenhills

trailingspouse wrote: »

Yes. You'd be daft not to.


Rates are at rock bottom - all they can do is go up. The only unknown is when.

The US Federal Reserve has raised interest rates again. Officials increased the target for the bank's benchmark rate by 0.25%, to a range of 2%-2.25%. ... The move marks the bank's eighth rate rise since 2015, continuing its policy of gradual rate rises - 26 Sep 2018


So they are more likely to go up and follow the rates in the US.

parking_question_chap

Unfortunately due to the amount of consumer credit being taken up, there is little chance of us returning to a decent interest rate level. I could forsee anarchy on the streets if we even got to 5%, and no government wants that.

Smi1er

lookstraightahead wrote: »

I remember mortgage interest temporarily reaching 15% in the nineties! I know of many people (younger than me) who have been used to low interest but are mortgaged to the hilt. Do you think people are generally prepared for higher interest if it does happen?

90's? You sure?

I was paying 15.5% in the late 80's.

Crashy_Time

parking_question_chap wrote: »

Unfortunately due to the amount of consumer credit being taken up, there is little chance of us returning to a decent interest rate level. I could forsee anarchy on the streets if we even got to 5%, and no government wants that.

They will be forced to raise soon, most people will just spend/borrow less and suck it up IMO, and many will welcome the drop in house prices this will bring.