Interest Rates.

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Nottsknots
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Re: Interest Rates.

Post by Nottsknots » Sun Nov 05, 2017 5:23 pm

ihadablackdog wrote:
Sun Nov 05, 2017 5:01 pm
If interest rates went to minus, would they pay me to borrow?

I’d be a feckin’ millionaire if they did!
:) , yes. Thats exactly what negative interest rates do. In fact both Sewden and Denmark have run negative interest rates in the last decade, to actively discourage an influx of capital (there was nowhere else safe to put it).

The corollary is that borrowers gets paid interest. Theres always a but... But you have to demonstrate that your borrowing is going to be a safe investment in those circumstances; yes you can get paid to "borrow", but folks are really paying you to look after their cash, and wont lend if theres much (if any risk) - unlike positive interest rate where they will lend provided the interest returns outweight the risk of losses. Basically covering the cost of forking out on a big bank vault (albeit a digital one these days). Nice try :lol: .
E87 118d, stock, plus PDC control unit drain, Parrot, debadged, Mothercare baby shades (but no babies), and occassionally a good layer of wax. Instantly forgettable, and thats the way I like it.

Sam_M
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Re: Interest Rates.

Post by Sam_M » Mon Nov 06, 2017 10:59 am

I'm rubbing my hands with glee at the additional 0.25% interest I'll be getting on my savings. :roll:

I'm just glad that I'm already overpaying my mortgage at a rate of 109%, base rate would need to be around 12% to erode my overpayment.

I just hope we don't see first time buyers further priced out as a result of this. Hard enough getting on the ladder without increased borrowing costs.

Quattrodave
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Re: Interest Rates.

Post by Quattrodave » Thu Nov 16, 2017 1:17 pm

There will likely not be a bigger rise than a quarter of a percent at any one go for a number of years due to the fragility not just of the UK economy but the world economy as a whole.

Our economy and many others have been propped up by house price increases for the best part of a decade now and it simply cannot continue indefinitely. Unfortunately the majority of people in society are blind and/or ignorant to that fact and a lot of people are going to be caught short.

History will show that the winners will be the baby boomers who bought their houses for £10-30k and sold them for £500k-£1m+ (downsizing or moving abroad) and the losers will be those born between 1980-1995 who have subsidised the boomers lifestyle only to be lumped with massive debt when house prices finally snap back to realistic levels and they're sat in their negative equity homes and crippling interest rates.

The government and Banks know that when this happens it's going to make the 2008 financial crisis look like a walk in the park as not only is the over valuing of property far greater in financial terms than the junk debt they had rolled up (which was based on high risk mortgages) there will also be the bubble within PCP that'll pop at some point too. They will continue to stoke the fire in the hope that it won't happen on their watch.

If you have a spare couple of hours I can highly recommend watching 'The Big Short' which explains in fairly lay terms the factors that generated the big financial crash and also predicts the next one.

As for my situation I'm happy with the interest rates as they are and the anticipated rises as I'm paying 0.74% on my base rate tracker mortgage and getting 1.5% in regular savings with the former being five times the latter. Net interest to me each year is about £800. That'll go up by £400 per year for each 0.25% rise (assuming no increase in interest on savings!). The financial penalties of moving mortgage every few years to fix rates massively outweighs moving from the great deal I have now and I'm prepared to pay the higher rates each year for the next few years.

Sam_M
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Re: Interest Rates.

Post by Sam_M » Thu Nov 16, 2017 3:59 pm

Quattrodave wrote:
Thu Nov 16, 2017 1:17 pm

If you have a spare couple of hours I can highly recommend watching 'The Big Short' which explains in fairly lay terms the factors that generated the big financial crash and also predicts the next one.
Household debt has already surpassed the levels it was at in 2008 when structured credit allowed almost unlimited lending.

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