Osimabu

iTrader: (2)

(This post is the result of talking with my aged mum who is one of those prudent people Carney is kicking again today.)

Does it not occur to him that if he were to put interest rates up, people who actually have money, as opposed to people who haven't but who are willing to put themselves in more debt, might be able to go out and spend some of it, thereby stimulating the economy.

For over seven years, savers have been kicked in the nuts. At what point will the kicking stop? Perhaps they should all go to the banks, withdraw the lot, and see how they get on then?

Sorry to those who haven't been able to save, but this is simply a disaster for those who have, many of whom are old and trying to eke out their last years on pitiful and diminishing returns.

tarmac terror

iTrader: (2)

With you on that - in 2007 took a 25 year mortgage fixed at 4%, expecting that over time interest rates would increase, and I would continue at 4%. With a reasonable amount tucked away between my wife and I have been hoping for a return to the rates of the late 80's, but it isn't happening.

dpb

Well he wasn't ever going to stick it up to something worthwhile for savers !

isn't the worrying point that if this doesn't work then what

Shaun

You really think that by sticking the interest rates UP by .25pc will better the economy more than reducing them by .25pc? You're deluded if you think that's the case.

Don't blame the system for the fact that your money, that you chose to invest, is gaining small returns. Change your investments, and don't expect things to "just be".

No one guaranteed anyone's savings would mature at a fixed rate, and if anyone was told that and expected to be the case, they're deluded.

I'm sorry.... it just gets my goat when people blame the "system", the "government" etc. We all have a responsibility and some times **** happens.

No guarantees in life and that's a fact.

If this stuff was THAT easy to sort out...... it would have been sorted out I'm sure.

Osimabu

iTrader: (2)

Apparently, next month he'll drop the rate to 0.1%. The ****.

poffer1

Carney doesn't set the interest rates - a committee does and there are a fair few people on that. In reality, even they don't get to choose a rate, as the rate is dictated by market conditions.

In case you hadn't noticed, the world is all over the place at the moment, with a blond buffoon seeking to be president of the USA, another BB trying his best to fluff up the UK and Europe. An ex spy trying to recreate the USSR by force, thousands of thugs hiding behind religion to try and take the world back to the middle ages, the largest country in the world trying to steal more land by building an island whilst other countries worry about sinking under the rising seas.

So yeah, whilst responding to all that, interest rates in the UK are low and it sucks that my savings net no interest and my mortgage is fixed at 4.8%...........but I would rather be here than any of the places mentioned above.

You might as well moan about the weather, for all the good that will do........

Now, who can I blame for that

jonc

It's not as simple as that. Putting up interest rates when the economy is contracting is only going to make things worse. Putting interest rates up a quarter of a percent is not going to make savers spend!! In fact putting interest rates up will have the opposite effect. Putting interest rates down will more likely mean people will spend more as borrowing will be cheaper and therefore increase disposable income and capital for individuals and businesses.

ReallyReallyGoodMeat

OP - I fail to see the logic: How does increasing the interest rate, thereby encouraging saving, cause those with savings to want to spend?!

Blue by You

iTrader: (23)

Yeppppppppp!
With interest rates at an historical low, now is the time to spend money on tangible (safe) asset that will appreciate in value.
Savings will earn you nothing at the moment so what's the point in saving?

JackClark

The point of saving is to stop you running out of money at a later date. The banks sharing a bit of the profit they make on it is a bonus. Unfortunately borrowers won't see a benefit and savers will lose out, the banks will make more money though.

Blue by You

iTrader: (23)

Thank you for that illuminating definition of the terminology.
There is a difference between saving for normal everyday expenditure and sving for investment purposes, don't you think?
I wouldn't want you to think I was encouraging people to become reckless spendthrifts and embark on a path to destitution.

My comment was largely in response to the original post comment concerning people who actually have money. Just in case you missed it...

BrownPantsRacing

iTrader: (6)

I'm on 0.38% above base rate flexible now and have been for the last 5 or so years so I'm happy!


We have lots of savings and they are all in the offset mortgage helping us. This is really the only way to get benefit from your savings these days if you have any.

dpb

you could invest it all in apple shares

Blue by You

iTrader: (23)

You haven't been paying attention, have you?

PaulC72

The idea is all those who do not currently invest will as borrowing money is cheaper, I think they call it the bigger picture, those who have money tucked away, they already have it so them spending it is a win win eitherway.

what they want is to encourage new lending and investment not get those already with it to use what they have.

TBH I was on the same thoughtpath when it was announced but I was then enlightened to it and could see the reasoning behind it all.

I doubt .25pc will make all that much difference and if you have a 220k mortgage on variable you get to spend your £22 per month on mnore things that stimulate growth..... ;-)

JackClark

Yes I do that's why one is called saving and one is called investing.

Blue by You

iTrader: (23)

So if you save money in a deposit account are you not investing in the ability of the bank to make money for you?

njkmrs

[QUOTE=BrownPantsRacing;11864627]I'm on 0.38% above base rate flexible now and have been for the last 5 or so years so I'm happy!


Im on .25 above Base Rate. For last 10 years or so...

Errrrrr....Ecstatic..!!!!

Osimabu

iTrader: (2)

My mum's only income is the interest on her savings, and her small pension. If the interest rates increase, she has more money to spend, but if they go down, she has to keep digging into her savings which further reduces her income, so she spends less.

As far as I understand it, all the money the banks have belongs to savers, not borrowers. Why should savers constantly subsidise borrowers unless they are properly rewarded (with a decent rate of interest) for their prudence?

However, it may be I've got all of this round my ear of course, and more people getting themselves into debt, spending money they haven't got, on the promise of being able to repay it at some point in future is a good thing.

BrownPantsRacing

iTrader: (6)

Sounds like your Mum needs to take out a really big loan then!

hodgy0_2

what happens when the BOE prints money via QE?

jonc

So what's the solution? How much should interest rates rise, what rate should it be be set to properly reward savers?

steve05wrx

Hi,
Since the BOE took over control of interest rates from the chancellor of the exchequer - they have been targeted on inflation at a very low rate.
I preferred the days of inflation around 5%.

In those days - you got an annual salary increase around 4-5% - so you felt richer.
Mortgages were around 6 or 7% - so not too expensive.
If you bought a car on hp (or large household items) over a 3 to 5 year period - the monthly payments became a lower percentage of your disposable income over the loan period - as your salary was increasing year on year.

At the moment - everything is so flat for savers or borrowers - people aren't encouraged to spend money - which would stimulate the economy.
Cheers
Steve

The Trooper 1815

iTrader: (31)

I hate Gordon Brown even more for selling the UK gold stocks.

JackClark

Get a grip.