When will interest rates return to normal?

MX5huggy

eskbanker said:

Krakkkers said:

eskbanker said:

Krakkkers said:

Normal is 6% to 7% .

By what definition?  As per the chart posted on the previous page, it's only briefly spent time within that range during the last fifty years....

But a lot of time over it, average??????????????

Yes, a lot of time over it and a lot of time under it, but that doesn't make it 'normal', in fact quite the opposite.  Even if it's the mathematical average, that doesn't really help - in mathematical terms, the average person has one breast and one testicle but that could hardly be described as normal!

The average person has less than one breast and one testicle. 

prowla

They've been abnormally low in recent times; which has led to huge house price inflation.

eskbanker

Krakkkers said:

eskbanker said:

Krakkkers said:

eskbanker said:

Krakkkers said:

Normal is 6% to 7% .

By what definition?  As per the chart posted on the previous page, it's only briefly spent time within that range during the last fifty years....

But a lot of time over it, average??????????????

Yes, a lot of time over it and a lot of time under it, but that doesn't make it 'normal', in fact quite the opposite.  Even if it's the mathematical average, that doesn't really help - in mathematical terms, the average person has one breast and one testicle but that could hardly be described as normal!

Then define normal if you don't like the answer. Mean, modal, average, normal.

I'd argue that, in the context of this sort of question, the modal average would be a better fit than the mean to what's considered 'normal' in vernacular terms, although trying to condense everything down to a single figure (or a narrow range) is inherently flawed and too simplistic, so I'd strongly favour the visual approach of a chart that's worth a thousand words (on average )!

eskbanker

MX5huggy said:

The average person has less than one breast and one testicle. 

Have you ever been to Norfolk?

Anyway, yes, agreed, but I'm being selective with my pedantic accuracy....

Krakkkers

The next 10 years interest rates will be higher than the last 10 years.

Millyonare

NedS said:

EssexHebridean said:

We're a lot closer to normal now than we've been in the last few years. 

The OP's post does highlight the issue though that there are a lot of people out there who think that the historic and unsustainable low rates we've seen in recent times are "normal" though - and that is a massive issue. When MrEH and I bought our home as first time buyers back in 2003, when we spoke with a mortgage broker we were repeatedly told that we could "easily" borrow far more than we had. Yes, we said, but then hat if interest rates go up? Throughout, I based what we decided to borrow on not only what we could afford to repay at that stage, but also on what we could afford to repay if interest rates increased. Ironically enough, we didn't see that increase - indeed the highest rate we paid was 6.87% (I think, from memory) when we first took the mortgage out - the lowest was 4.34% in our final 5 year fix up to 2016. Do I regret the level of planning that meant we knew we were shielded from any likely rises though? Hell no! I get the nasty feeling that there are vast numbers of people out there who haven't - or in some cases haven't been able to - give themselves that level of "slack" though - and now that so far relatively modest increases in base rate are being combined with other rises in the cost of living, they are going to be  well and truly up the proverbial creek without a paddle in sight. 

Indeed, I am unfortunately old enough to remember a period in the late eighties where high interest rates and negative equities meant many people lost their homes. I fear we may now be on the precipice of a similar event, where people thought low interest rates were here to stay and are over-leveraged. A recession, with job losses, combined with rising interest rates and a large fall in house prices is something many are simply not equipped to deal with.
People simply have far too much debt - we saw it at the start of Covid where people unexpectedly lost their jobs and were suddenly unable to make their monthly payments for their iPhone, internet, Netflix, Sky, car, clothes bought on credit, credit card debt. The list is endless as absolutely everything seems to be on credit these days. All very different to when/how I was brought up - if you can't afford to pay for it, you can't have it. Simples

We live in vastly different times.

Britain of the 1980s and 1990s was a free-ish market, where the natural ebb and flow of supply and demand eventually determined the equilibrium of the economy.

Britain of the 2020s is a pseudo-communist economy, where the state is quietly taking control of our managed lives from cradle to the grave.

If my mortgage becomes unaffordable in 2023, I fully expect the UK state to bail me out for free. The state is already paying me free cash to heat my house.

Times have changed.

Krakkkers

I thought I was the only one who felt this way.

MX5huggy

eskbanker said:

MX5huggy said:

The average person has less than one breast and one testicle. 

Have you ever been to Norfolk?

Anyway, yes, agreed, but I'm being selective with my pedantic accuracy....

No it’s too far from Pembrokeshire, but I think it’s similar going beyond the finger post junction 5 miles down the road is a risk. 

Please keep Pedantry dialled up to 100. I was called a pedant at about 8 years old when a teacher asked how many squares did the car pass through from A to B 8 I said “no it’s 10”, no it only exited the fist square and entered the last I replied. I went home “mum what’s a pedant?”. 

Krakkkers

I failed my cycling proficiency test at school when the policeman taking the course asked me to cycle to the imaginary traffic lights where he had put cones out.
I cycled straight through and when he asked me why I had done that I said the imaginary lights were on green.

Noneforit999

As a 30 something, I have only ever known low mortgage rates. 

I think my generation is in for a big shock when they realise current rates are likely to be a minimum.