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slawek

Recovery Funded By Savings

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Hardly surprising....think of all the property deposit funds that are now required, look at the feeble credit saving rates, BTL thinking the better bet.....banks don't want your savings, they want your debt. ;)

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I don't understand the chart!

What are "time deposits"?

It's what frugalistas do with a spare five minutes.

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Interesting chart. Also,unsecured lending has been rising again for a while, as per Chart D on page 9 of the Bank of England's April 2014 Trends in Lending.

Time deposits decreased by £57bln between Oct-12 and Apr-14. At this speed they will disappear in 6 years.

Unsecured lending stock increased by around £9bln in the same time. Secured lending by around £21bln.

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Could the ratio fall from June 12 be explained by investors that would have usually locked up for the long-term being unwilling to do so now as they anticipate future 'imminent' rate rises and so, better long-term deals ?

Edited by LiveinHope

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Could the ratio fall from June 12 be explained by investors that would have usually locked up for the long-term being unwilling to do so now as they anticipate future 'imminent' rate rises and so, better long-term deals ?

I have 3 ISA accounts still getting 4.2% when they mature there is no way I will lock my money up on the rates being offered. It will be stocks or ZOPA for me..

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Could the ratio fall from June 12 be explained by investors that would have usually locked up for the long-term being unwilling to do so now as they anticipate future 'imminent' rate rises and so, better long-term deals ?

I doubt. Nothing like this happened in 2003.

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I have 3 ISA accounts still getting 4.2% when they mature there is no way I will lock my money up on the rates being offered. It will be stocks or ZOPA for me..

Ditto. I can't see the point in a 5-yr fix at 1% more than the diddly squat you'd get on an instant access. And if rates were to rise over the 5 year period. it'd be silly to fix now, proportionately. The immediate 'extra' isn't worth it.

Edited by LiveinHope

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I doubt. Nothing like this happened in 2003.

We didn't have current low interest rates then. The proportionate difference between an instant access and a fix isn't worth it if you think rates will rise. And I expect the mentality of the saver could be that the longer rates are at 0.5% the sooner they think rates 'must' start to rise - which may not be true of course.

Edited by LiveinHope

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We didn't have current low interest rates then. The proportionate difference between an instant access and a fix isn't worth it if you think rates will rise. And I expect the mentality of the saver could be that the longer rates are at 0.5% the sooner they think rates 'must' start to rise - which may not be true of course.

Time deposits are dropping because offered interest rates are going down not because of an expectation of higher interest rates.

As you can see below interest rates for new time deposits (green line) started to go down in the middle of 2012, which coincides with time when households began to reduce their time deposits.

Graph%202.png

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Time deposits are dropping because offered interest rates are going down not because of an expectation of higher interest rates.

As you can see below interest rates for new time deposits (green line) started to go down in the middle of 2012, which coincides with time when households began to reduce their time deposits.

Graph%202.png

Unless I'm misreading this, I wouldn't disagree with the correlation 'then', as rates fell. Why lock up money as rates tumbled when history created the belief that rates would again be higher. Most 'savers' would have seen a falling interest rate as transient phenomenon, I would have thought.

Now, I would say the disensentive is 'locked' in, so reinvesting in long-term deposits (as bonds mature) will be even less popular as high street investors hope for better times.

Edited by LiveinHope

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Time deposits are dropping because offered interest rates are going down not because of an expectation of higher interest rates.

As you can see below interest rates for new time deposits (green line) started to go down in the middle of 2012, which coincides with time when households began to reduce their time deposits.

Graph%202.png

This is interesting stuff but you need to give some links to these sources.

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