Social Media Posted May 11, 2023 Share Posted May 11, 2023 UK interest rates are expected to rise even further this week as inflation remains high, according to economists. The base rate of interest has been forecast to rise from 4.25% to 4.5% on Thursday. It would be the 12th time in a row that policymakers at the Bank of England have raised rates, making it even more expensive to borrow and pressuring banks to lift savings rates. It would also mark the highest level since 2008.Mortgage-holders, and renters absorbing interest rates rises through soaring rents, are feeling the pain of successive interest rate hikes. It comes as UK Consumer Prices Index (CPI) inflation remained firmly in double digits in March, squeezing household budgets, and proving more stubborn than expected. Link to comment Share on other sites More sharing options...
Popular Post UKresonant Posted May 11, 2023 Popular Post Share Posted May 11, 2023 Yes it is weird, they should perhaps tackle the food price inflation and those other essentials that are impacting the majority of working people with below median salaries . the increase in the Mortgages and rents as a knock on effect of the rate rises, is in itself inflationary! The increasing housing cost to wages ratio is unsustainable, something will break at some point. 3 Link to comment Share on other sites More sharing options...
puchooay Posted May 11, 2023 Share Posted May 11, 2023 34 minutes ago, UKresonant said: Yes it is weird, they should perhaps tackle the food price inflation and those other essentials that are impacting the majority of working people with below median salaries . the increase in the Mortgages and rents as a knock on effect of the rate rises, is in itself inflationary! The increasing housing cost to wages ratio is unsustainable, something will break at some point. Interest rates have been far too low for far too long. At 4.5% they are approaching something near to " normal". 2 Link to comment Share on other sites More sharing options...
hotandsticky Posted May 11, 2023 Share Posted May 11, 2023 22 minutes ago, puchooay said: Interest rates have been far too low for far too long. At 4.5% they are approaching something near to " normal". It is true that interest rates have been artificially low for almost 15 years. Unfortunately, that means a whole generation have 'been used' to these low rates - and probably expect them. Nearly 32 years since we saw double-digit base rates. I remember (as may just about also remember) rates peaking at 14.88% in October 1989. For the youngsters on here:- Interest Rates in the United Kingdom averaged 7.12 percent from 1971 until 2023, reaching an all time high of 17.00 percent in November of 1979 and a record low of 0.10 percent in March of 2020. 1 Link to comment Share on other sites More sharing options...
puchooay Posted May 11, 2023 Share Posted May 11, 2023 3 hours ago, hotandsticky said: remember (as may just about also remember) rates peaking at 14.88% in October 1989. Yes, I do remember. I had a mortgage at the time. 1 Link to comment Share on other sites More sharing options...
Popular Post BenStark Posted May 11, 2023 Popular Post Share Posted May 11, 2023 3 hours ago, hotandsticky said: It is true that interest rates have been artificially low for almost 15 years. Unfortunately, that means a whole generation have 'been used' to these low rates Interest rates have been too low for too long time in the whole world, for only one reason, which is to make the rich even richer. Real estate (owned by the rich) prices rose to unsustainable levels, and average Joe didn't care, because he could get a cheap mortgage. Now the chickens come home to roost, not for the rich because his properties have been sold, but for the mortgagee whose mortgage now isn't a cheap one any more. 2 2 Link to comment Share on other sites More sharing options...
hotandsticky Posted May 11, 2023 Share Posted May 11, 2023 48 minutes ago, puchooay said: Yes, I do remember. I had a mortgage at the time. Fixed rate, subsidised, I hope ???? Link to comment Share on other sites More sharing options...
hotandsticky Posted May 11, 2023 Share Posted May 11, 2023 38 minutes ago, BenStark said: Interest rates have been too low for too long time in the whole world, for only one reason, which is to make the rich even richer. Real estate (owned by the rich) prices rose to unsustainable levels, and average Joe didn't care, because he could get a cheap mortgage. Now the chickens come home to roost, not for the rich because his properties have been sold, but for the mortgagee whose mortgage now isn't a cheap one any more. Everybody benefited from low borrowing rates. The older (and maybe richer) people with savings were stuffed. Link to comment Share on other sites More sharing options...
BenStark Posted May 11, 2023 Share Posted May 11, 2023 (edited) 10 minutes ago, hotandsticky said: Everybody benefited from low borrowing rates. At that point in time yes, but those that didn't have fixed rate mortgage, which I think is the majority, look now at much higher monthly payments. And yes they borrowed low, but at the cost of a significant higher price for the property. How much have property prices increased over the last 15 years? 10 minutes ago, hotandsticky said: The older (and maybe richer) people with savings were stuffed. With the rich I didn't mean the older people, but the elite and the banks. Edit; Older people would put their money in mutual funds, and made good profits, because there has been a bull market for a decade Edited May 11, 2023 by BenStark Link to comment Share on other sites More sharing options...
puchooay Posted May 11, 2023 Share Posted May 11, 2023 6 minutes ago, hotandsticky said: Fixed rate, subsidised, I hope ???? Were such things available back then? 555 I remember it was a 100% mortgage on a 46k 1 bedroom flat. Not fixed rate. I think our mortgage rate was something like 15.7%. Quite a chunk of change. 1 Link to comment Share on other sites More sharing options...
puchooay Posted May 11, 2023 Share Posted May 11, 2023 2 hours ago, BenStark said: Interest rates have been too low for too long time in the whole world, for only one reason, which is to make the rich even richer. Real estate (owned by the rich) prices rose to unsustainable levels, and average Joe didn't care, because he could get a cheap mortgage. Now the chickens come home to roost, not for the rich because his properties have been sold, but for the mortgagee whose mortgage now isn't a cheap one any more. One doesn't need to be rich to own property. 1 Link to comment Share on other sites More sharing options...
Chomper Higgot Posted May 12, 2023 Share Posted May 12, 2023 Something doesn’t add up. We are frequently told that the root cause of the inflation the UK economy is suffering is due to supply side restrictions; oil and energy, food imports, manufacturing restrictions. Increasing interest rates is not a cure for supply side restrictions. It does however reduce business investment and increase unemployment. Perhaps someone believes labour shortages are giving workers too much economic leverage. 1 1 Link to comment Share on other sites More sharing options...
BritManToo Posted May 12, 2023 Share Posted May 12, 2023 (edited) 10 minutes ago, Chomper Higgot said: Something doesn’t add up. We are frequently told that the root cause of the inflation the UK economy is suffering is due to supply side restrictions; oil and energy, food imports, manufacturing restrictions. Increasing interest rates is not a cure for supply side restrictions. It does however reduce business investment and increase unemployment. Perhaps someone believes labour shortages are giving workers too much economic leverage. I've always noticed in a healthy economy the interest rates are higher than inflation. Without a return on investment ......... there's no point in investing. As a Marxist I believe the state should own and distribute the use of all land and housing, so there wouldn't be a mortgage rate or mortgages. Edited May 12, 2023 by BritManToo Link to comment Share on other sites More sharing options...
Chomper Higgot Posted May 12, 2023 Share Posted May 12, 2023 3 minutes ago, BritManToo said: I've always noticed in a healthy economy the interest rates are higher than inflation. Without a return on investment ......... there's no point in investing. I invest in businesses that produce things. The return on investment is based on the businesses producing stuff and selling it at a profit. I’m not a fan of usury. Link to comment Share on other sites More sharing options...
BritManToo Posted May 12, 2023 Share Posted May 12, 2023 10 minutes ago, Chomper Higgot said: I invest in businesses that produce things. The return on investment is based on the businesses producing stuff and selling it at a profit. I’m not a fan of usury. Investing in anything is usury! 1 Link to comment Share on other sites More sharing options...
puchooay Posted May 12, 2023 Share Posted May 12, 2023 7 hours ago, Chomper Higgot said: Something doesn’t add up. We are frequently told that the root cause of the inflation the UK economy is suffering is due to supply side restrictions; oil and energy, food imports, manufacturing restrictions. Increasing interest rates is not a cure for supply side restrictions. It does however reduce business investment and increase unemployment. Perhaps someone believes labour shortages are giving workers too much economic leverage. That's one way of looking at it, but flawed. The other ways to look at it you won't agree with because of your political views When I studied economics our lecturer told us one thing to remember. " Economics is not politics. Don't let political views sway your judgement." Link to comment Share on other sites More sharing options...
Chomper Higgot Posted May 12, 2023 Share Posted May 12, 2023 29 minutes ago, puchooay said: That's one way of looking at it, but flawed. The other ways to look at it you won't agree with because of your political views When I studied economics our lecturer told us one thing to remember. " Economics is not politics. Don't let political views sway your judgement." So having first declared my pov flawed and then gone on to tell us you studied economics, you failed to provide an explanation as to why you believe my pov flawed. Perhaps you’d like to give it a try. Link to comment Share on other sites More sharing options...
puchooay Posted May 12, 2023 Share Posted May 12, 2023 16 minutes ago, Chomper Higgot said: So having first declared my pov flawed and then gone on to tell us you studied economics, you failed to provide an explanation as to why you believe my pov flawed. Perhaps you’d like to give it a try. I've explained already. You are allowing politics to get in the way. Your posts make it quite clear you hate the Tories and all they stand for. That stance clouds your judgement. Link to comment Share on other sites More sharing options...
Chomper Higgot Posted May 12, 2023 Share Posted May 12, 2023 (edited) 7 minutes ago, puchooay said: I've explained already. You are allowing politics to get in the way. Your posts make it quite clear you hate the Tories and all they stand for. That stance clouds your judgement. You’ve explained why you believe I might hold a flawed opinion (because my political views are not the same as yours). That’s an ad hominem. What you haven’t done is explained the actual flaw you assert exists in my pov. Again, perhaps you’d like to give it a go. Edited May 12, 2023 by Chomper Higgot Link to comment Share on other sites More sharing options...
Popular Post BritManToo Posted May 12, 2023 Popular Post Share Posted May 12, 2023 10 minutes ago, puchooay said: I've explained already. You are allowing politics to get in the way. Your posts make it quite clear you hate the Tories and all they stand for. That stance clouds your judgement. Every sane person hates the Tories and all they stand for (namely greed and corruption). The mistake is in thinking Labour is any better! 1 2 Link to comment Share on other sites More sharing options...
puchooay Posted May 12, 2023 Share Posted May 12, 2023 4 minutes ago, Chomper Higgot said: You’ve explained why you believe I might hold a flawed opinion (because my political views are not the same as yours). No. I don't have political opinions or views when reading Economics. As I previously mentioned. 5 minutes ago, Chomper Higgot said: What you haven’t done is explained the actual flaw you assert exists in my pov. Yes, I have. Twice. Link to comment Share on other sites More sharing options...
puchooay Posted May 12, 2023 Share Posted May 12, 2023 Just now, BritManToo said: Every sane person hates the Tories and all they stand for (namely greed and corruption). The mistake is in thinking Labour is any better! I don't "hate" them. Neither do I "hate" any political party. Hate just uses up too much energy. Link to comment Share on other sites More sharing options...
Chomper Higgot Posted May 12, 2023 Share Posted May 12, 2023 19 minutes ago, puchooay said: No. I don't have political opinions or views when reading Economics. As I previously mentioned. Yes, I have. Twice. OK so you don’t have an ‘economics’ argument against my point of view. Despite this being a subject you say you studied. I’ll park this there. Link to comment Share on other sites More sharing options...
tgw Posted May 12, 2023 Share Posted May 12, 2023 8 hours ago, Chomper Higgot said: I invest in businesses that produce things. The return on investment is based on the businesses producing stuff and selling it at a profit. I’m not a fan of usury. I hold the opinion that there is such a thing as a "healthy interest rate". Because when interest rates are too low, markets get flooded with speculation and unhealthy, over-leveraged investments that ultimatively lead to the failure of markets. One example is the real estate markets. When interest rates are too high, it cripples the economy. My point of view is that the near risk-free interest rate should be approximatively between 2.5% and 7.5% higher than inflation, depending on policy. 1 Link to comment Share on other sites More sharing options...
puchooay Posted May 12, 2023 Share Posted May 12, 2023 (edited) 12 minutes ago, Chomper Higgot said: OK so you don’t have an ‘economics’ argument against my point of view. Despite this being a subject you say you studied. I’ll park this there. Your point of view is political. That is my arguement. As I've pointed out more than once. You've chosen the political view you agree with. You have not considered the bigger picture. Edited May 12, 2023 by puchooay Link to comment Share on other sites More sharing options...
Popular Post BritManToo Posted May 12, 2023 Popular Post Share Posted May 12, 2023 1 hour ago, puchooay said: I don't "hate" them. Neither do I "hate" any political party. Hate just uses up too much energy. You should hate them, they have destroyed our home country. 1 1 1 Link to comment Share on other sites More sharing options...
Chomper Higgot Posted May 12, 2023 Share Posted May 12, 2023 18 minutes ago, BritManToo said: You should hate them, they have destroyed our home country. They’re still trying to finish the job. 1 Link to comment Share on other sites More sharing options...
puchooay Posted May 12, 2023 Share Posted May 12, 2023 7 hours ago, BritManToo said: You should hate them, they have destroyed our home country. No they haven't. I'm in UK now. Things looking OK. Can't see any evidence of destruction. Link to comment Share on other sites More sharing options...
RayC Posted May 12, 2023 Share Posted May 12, 2023 2 hours ago, puchooay said: No they haven't. I'm in UK now. Things looking OK. Can't see any evidence of destruction. Maybe where you are but not in parts of South London. Increased numbers of people sleeping rough and more food banks doesn't indicate that things are ok. 1 Link to comment Share on other sites More sharing options...
puchooay Posted May 12, 2023 Share Posted May 12, 2023 23 minutes ago, RayC said: Maybe where you are but not in parts of South London. Increased numbers of people sleeping rough and more food banks doesn't indicate that things are ok. People sleeping rough and food banks does not equal "destruction". There are homeless people and foodbanks where I am but no destruction. 1 Link to comment Share on other sites More sharing options...
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