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Everyone Is Saying Interest Rates Are High After The Recent Rises

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I was in a branch of Lloyds the other day, discussing joint accounts with my new wife. We went into a back room where they sort out new accounts and mortgages and the like. On the wall was a graph of interest rates, starting with them somewhere around 10% and showing how they had changed since then.

The comments on the graph were along the lines of;

"There are a lot of people in the media saying interest rates are currently high. Looking at this graph, it is clear interest rates are lower than they have historically been. Have you considered how you would pay your mortgage if interest rates increased to the more normal levels of 8-9%?"

This was on a scrappy piece of paper. It was not covered in branding so looked like something the bank manager had had put up, rather than company policy. But it does go to show some bankers think we are in an abnormally low interest rate period.

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I was in a branch of Lloyds the other day, discussing joint accounts with my new wife. We went into a back room where they sort out new accounts and mortgages and the like. On the wall was a graph of interest rates, starting with them somewhere around 10% and showing how they had changed since then.

The comments on the graph were along the lines of;

"There are a lot of people in the media saying interest rates are currently high. Looking at this graph, it is clear interest rates are lower than they have historically been. Have you considered how you would pay your mortgage if interest rates increased to the more normal levels of 8-9%?"

This was on a scrappy piece of paper. It was not covered in branding so looked like something the bank manager had had put up, rather than company policy. But it does go to show some bankers think we are in an abnormally low interest rate period.

If more mortgage sellers and brokers had been more honest all along we wouldn't be in this mess, imho this SHOULD be policy for all mortgage sellers

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It always annoy me when I hear the media say inflation and interest rates are high etc.

The country has never had it so good in terms of low inflation and rates.

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The country has never had it so good in terms of low inflation and rates.

You're only half right.

Yes, interest rates are low compared to the historical norm. However that means inflation is high. It's just that the CPI and RPI don't measure it accurately. Inflation measured on the growth of the money supply (M4) is about 12%, not the 2.5% the BoE reports.

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Interest rates are currently at record lows.

The average rate is 8% so anything less is low.

The problem is that many people borrowed at 3% some years ago, so of course to them they are high as they have gone up 100%, however they will in their eyes be going up a lot more as rates are rumoured to rise to 12%.

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It always annoy me when I hear the media say inflation and interest rates are high etc.

The country has never had it so good in terms of low inflation and rates.

No, if you look back over the last couple of hundred years you'll find that interest rates and inflation were up to and around the 5% mark. Between 1973-1993 were the years of anomaly when inflation and IR's were a lot higher (and during the WW1&2). Absolutely nothing to do with being tied to the gold standard of course...

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It always annoy me when I hear the media say inflation and interest rates are high etc.

The country has never had it so good in terms of low inflation and rates.

We have never had it so bad in terms of low rates - in spite of inflation.

Why the assumption that the majority should be feckless debtors?

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I've been showing this table to anyone who thinks I'm a fool for fixing my rate long term;

http://www.bankofengland.co.uk/mfsd/iadb/R...p?Travel=NIxIRx

When it opens, the highest rate you can see is 7.5%, which seems expensive but bearable.

Scroll down to the first mention of 8% - September '92. It's prior to this date that the reading becomes interesting, and you realise how short peoples memories are.

From '75 to '92, the rate drops below 8% just twice, for a total of 1 year, 3 months. Half the time seems to be in double figures, and hits the teens 4 seperate times in '89, '85, '81 and '77. The rate rose from 5% in oct '77 to 14% in feb '79. Why can't that happen again?*

*A retorical question :P

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It always annoy me when I hear the media say inflation and interest rates are high etc.

The country has never had it so good in terms of low inflation and rates.

Agree that IRs are historically low, but do you really believe we've enjoyed REAL low inflation?

The ridiculous CPI calculation for inflation is partly the reason for low IRs and why we are in this mess, imho...

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  • 292 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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