Interest rate

malones1

Why can't the BoE have a specific lower interest rate just for mortgages that isn't linked to general interest rate... This would help home owners

Iamouttheotherside

???
So you want them to lend money for a lower interest rate and then pay savers the higher interest rate?

I have a gut feeling that's not a good way to run a bank!

🤔

Edi81

Because mortgage lenders don’t borrow from the Bank of England. They borrow from other banks and use customer deposits. 

R200

We are still in low interest rate environment 

once it goes over 8% we are back to normal then a year later once it gets to 15%+ then we can say we are in high interest rate environment 

R200

Edi81 said:

Because mortgage lenders don’t borrow from the Bank of England. They borrow from other banks and use customer deposits. 

Not true at all. 

The currency is created out of thin air and added to supply 

R200

It used to 9/1 ratio how much they can create out of thin air compared to how much they have in deposit but those restrictions have been lifted now there is no real limits how much currency can be created out of thin air and added to supply 

Exodi

malones1 said:

Why can't the BoE have a specific lower interest rate just for mortgages that isn't linked to general interest rate... This would help home owners

Aside from some of the other valid points raised in this thread, the cold hard truth is that they want (or need) home owners to struggle - it isn't an unintentional side effect, it's the whole point of raising interest rates.

When inflation soars (e.g. the price of goods is increasing), the BoE's only real tool to mitigate this is to raise interest rates - with the idea being that it encourages saving (as savings rates are higher) and discourages spending (as debt rates are higher). This causes reduced demand for products, and the theory behind supply and demand is that prices will reduce if demand for goods or service falls.

Unfortunately, the hardest hit will be those holding the largest debts - or as you can conclude, mortgage holders.

It makes no sense to shelter mortgage holders from the effect of interest rate hikes... making them poorer (or having less disposable income to buy goods, reducing demand) is literally the whole point.

ElwoodBlues

R200 said:

We are still in low interest rate environment 

once it goes over 8% we are back to normal then a year later once it gets to 15%+ then we can say we are in high interest rate environment 

Above 8% to reach 'normal'? Where do you get that from?

TheMilkmansDad

ElwoodBlues said:

R200 said:

We are still in low interest rate environment 

once it goes over 8% we are back to normal then a year later once it gets to 15%+ then we can say we are in high interest rate environment 

Above 8% to reach 'normal'? Where do you get that from?

https://www.bankofengland.co.uk/boeapps/database/Bank-Rate.asp