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Interest rate rise
roadrunner - 5/5/22 at 11:09 AM

The Bank of England have increased the rate of interest again in bid to curb the rising cost of living.
Can someone please explain WTF, as everything spirals out of control cost wise that the powers that be think that charging us more interest will help.

David Jenkins - 5/5/22 at 11:14 AM

It's meant to discourage people from taking out loans/extra credit to buy goods.

Don't worry - I remember when I'd only been married a couple of years, new-born baby, and the interest rate hit around 15%... that was not a good time...

roadrunner - 5/5/22 at 11:19 AM

I'm not concerned for me. The math's don't add up.

cliftyhanger - 5/5/22 at 11:28 AM

I am no economist, but it also increases the value of the £, which in turn makes imports cheaper and exports mor eexpensive, both unhelpful.
However, it has always been a blunt instrument for controlling inflation. People who are strapped for cash can't spend, and if you can't sell it controls prices, or I think that is the idea.
Of course, it also causes job losses, home losses etc etc, but we all new interest rates could not remain so low forever.

David Jenkins - 5/5/22 at 11:48 AM

I've noticed that the rates for savers is not going up as quickly as the rate for borrowers... not that I'm surprised.

Slimy38 - 5/5/22 at 01:39 PM

quote:
Originally posted by David Jenkins
I've noticed that the rates for savers is not going up as quickly as the rate for borrowers... not that I'm surprised.


Aye, a bit like fuel fluctuations. The merest hint of a rumour that oil prices are going up and the forecourt price rockets. But on the way back down it takes a suspiciously long time to reflect in my fuel tank. I'm now in danger of not being able to fill up the car at a pay-at-pump because my fuel tank fill costs more than the £99 authorisation.

The only time I had a savers rate that corresponded to a borrowers rate is when I first had one of those offset mortgages. They took the savings amount off the mortgage before calculating the interest on the remainder. But I don't believe it works like that anymore, it's not a 1-1 relationship between savings and borrowings.

Overall I'm not worried though, it's fuel and energy prices that will make more of an impact to my money. And as David says, it has been worse. Thankfully that before my mortgage days so I didn't get the raw end of that one.

nick205 - 5/5/22 at 01:47 PM

quote:
Originally posted by David Jenkins
It's meant to discourage people from taking out loans/extra credit to buy goods.

Don't worry - I remember when I'd only been married a couple of years, new-born baby, and the interest rate hit around 15%... that was not a good time...



David - I was still at secondary school in that era, but remember well my parents (and others) fretting over the same issue.


As a mortgage payer now the interest rates on them have been very low for a considerable time. It seemed only likely they'd be going up. That said, having just had to move to the next mortgage "product" as they now call them it wasn't as painful as I feared. I suspect it'll change upward as the year progresses.


Equally noting and agree with your comment on the rates for savers - currently static or increasing by miniscule amounts!

coyoteboy - 5/5/22 at 02:35 PM

I'm still trying to decide whether to sit on a variable rate or to head to a fixed, bearing in mind that I may need to move to a buy to let mortgage soon for other reasons. Not an easy decision in the current climate.

perksy - 5/5/22 at 06:06 PM

Some of us of a certain age will remember being here before many moons ago and it was bloody tough

It wasn't good, but we did eventually see light at the end of the tunnel

I read an article today that said the forecast was for interest rates to hit 10% by the end of the year

That's recession territory

James - 5/5/22 at 11:08 PM

quote:
Originally posted by perksy
Some of us of a certain age will remember being here before many moons ago and it was bloody tough

It wasn't good, but we did eventually see light at the end of the tunnel

I read an article today that said the forecast was for interest rates to hit 10% by the end of the year

That's recession territory


Do you mean interest or inflation? It would seem unlikely for interest rates to go from 1% to 10% in 7 months.

James - 5/5/22 at 11:10 PM

quote:
Originally posted by David Jenkins
It's meant to discourage people from taking out loans/extra credit to buy goods.

Don't worry - I remember when I'd only been married a couple of years, new-born baby, and the interest rate hit around 15%... that was not a good time...


According to one of the monetary policy advisers on Radio 4's Today this AM it's exactly this.

It helps curb spending, it encourages saving.

Interest rates are historically low. They've averaged 5% over the last century or so- this is just returning to norm.

James - 5/5/22 at 11:14 PM

quote:
Originally posted by roadrunner
I'm not concerned for me. The math's don't add up.


There are still people with disposable though.

I remember as Covid was coming to an end they were talking about the 'K' effect. Where people who'd lost out during Covid were in trouble but those who'd kept their jobs and lowered their costs relative to before Covid (no where to go out, WFH so no travel costs etc. etc. would have plenty of disposable.

We see it at work. I work for a huge consumer electronics manufacturer. There's so much disposable income around we can't make bloomin 65+" TVs fast enough for the demand!

Good luck everyone... I sense rocky times ahead!

James - 5/5/22 at 11:17 PM

I just wish there was some huge, nearby free-trading block we could belong to. Free trade, huge quantities of cheap labour available to do the shitty jobs we don't want to, and freedom to travel and work wherever we wanted in healthier economies...

...could be really useful right now...

perksy - 6/5/22 at 06:39 AM

quote:
Originally posted by James
quote:
Originally posted by perksy
Some of us of a certain age will remember being here before many moons ago and it was bloody tough

It wasn't good, but we did eventually see light at the end of the tunnel

I read an article today that said the forecast was for interest rates to hit 10% by the end of the year

That's recession territory


Do you mean interest or inflation? It would seem unlikely for interest rates to go from 1% to 10% in 7 months.





Inflation

But if inflation moves then so will interest rates to try and curb the trend

Its come as a shock to most due to the length of time we've had such low inflation rates, but eg energy/fuel costs rising has a massive knock on effect for everyone

One things for certain, We've got a very choppy couple of years to endure and if the conflict in Ukriane goes on indefinitely who knows what will happen?
The knock on effect of all this is it might dent a few peoples retirement plans...



[Edited on 6/5/22 by perksy]

David Jenkins - 6/5/22 at 07:47 AM

quote:
Originally posted by James

Do you mean interest or inflation? It would seem unlikely for interest rates to go from 1% to 10% in 7 months.

They are talking about inflation - but interest rates will rise in sync (but maybe not to 10% yet).

[Edited on 6/5/22 by David Jenkins]