Bank of England.....my arse !!

[Brewster's millions]

I remember "Black Wednesday" in the early nineties when interest rates hit around 15%. Banks and Building Societies were repossessing houses on an industrial scale. The mortgage lenders were desperate to recover money and sanctioned sales by estate agents at well below the property's real worth. I knew of two local estate agents, acting for the mortgage lenders, who would contact an "associate" third party, arrange for them to buy cheaply and then either sell on for a handsome profit or create a portfolio of properties to rent. There is always someone who profits during tough times.

It’s pedantry, admittedly, but the 15% bank rate on Black Wednesday never officially happened.

The announcement of the move to 15% was done after market close and was in reality a promise to put bank rate up to 15% the following day, but as we know Sterling had already left the ERM by the following day and so it remained at 12%. That’s why the 15% won’t show up on any official history.

 

[Churchlawtonblue]

It’s at the same level it was 19 years ago and it has the same relevance now that it’s always had.

Money was cheap from 2008-2021. It’s now more expensive (but still less than mean average post industrialisation). People need to get used to this being the norm and act and spend accordingly.

Great news for savers, less great for those living on credit.

For the record, I’m neither upset not gleeful by this (be grateful your mortgage isn’t 14% like my “main” house in South Africa), I’m just trying to give context because it’s lacking in this thread.

19 years ago! , again true, but your initial point was that it's historically very cheap. Context is fine but not when its
Irrelevant to the current economy. The sudden recent rises will damage the economy far more than the rises in the 80s and 90s simply because we've had extremely low rates for the past 13years. And that's what businesses and house buyers have been used to and come to expect. That's the reality.

Its like saying we used to get four to five dollars to the pound. True but completely irrelevant to our current trading situation.

 

[SWP's back]

I assumed you had misread the graph.

No, I was agreeing with your point and letting you know I’ve posted a graph showing interest rate movements over the previous 110 years (before the “credit crunch”)

 

[SWP's back]

19 years ago! , again true, but your initial point was that it's historically very cheap. Context is fine but not when its
Irrelevant to the current economy. The sudden recent rises will damage the economy far more than the rises in the 80s and 90s simply because we've had extremely low rates for the past 13years. And that's what businesses and house buyers have been used to and come to expect. That's the reality.

Its like saying we used to get four to five dollars to the pound. True but completely irrelevant to our current trading situation.

This is not based on reality. Our economy has sown itself to be very robust, hence we’re not yet in a recession even with the rises in base rate.

The US has managed to get theirs down to 3% whilst avoiding one (despite the markets pricing one in 12 months ago - hence a strong S&P500 performance over the last year).

People also need to remember that a six month recession isn’t the end of the world, it just means no growth during that time. Not that the world has come to an end.

I’d take this economy over 1988, 2001 or 2008 every time.

Ps, also I was wrong when I said 19 years, I meant 15 years (not quite a generation - unless you’re from Merseyside)

 

[supercity88]

People got used to low interest rates and forgot this point. Those long enough in the tooth will remember the ERM shitshow in the 1990's - where mortgage rates were c.17%!!!

From those I have spoken to it sounds like the majority weren't on fixed rates back in the 90s. And the banks would lend to just about anyone, without much in the way of a deposit. These days a deposit on a house is huge, there's more in the way of a credit check and a small interest rate hike makes a monumental difference because of how much you are borrowing and the houseprice to earnings ratio which is so high now.

I guess ultimately people bought back then without much cash and didn't consider interest rate hikes and people borrow now to get on the ladder, putting all of their capital into the home and also don't consider interest rates beyond what they fix at. I fixed at 2% 5 years ago and managed to beat these hikes for another 5 years at 2.25%. But I'm preparing for it to be a lot higher the next time!

I hear a lot about the 1990's and the mortgage rate increases from my parents. But things were clearly very different then, because it sounds like no one was on fixed rates and the hikes bit instantly?

My understanding is that you could buy a house with very little deposit and
interest rates being low is fine, but a small change on the current borrowing is substantial in terms of the repayments and house price to earning ratios are also far higher than they were. People can't rock up and buy a house with very little deposit and without a solid credit history now - lending was irresponsible in the past so people were stung when interest rates increased.

 

[Churchlawtonblue]

This is not based on reality. Our economy has sown itself to be very robust, hence we’re not yet in a recession even with the rises in base rate.

The US has managed to get theirs down to 3% whilst avoiding one (despite the markets pricing one in 12 months ago - hence a strong S&P500 performance over the last year).

People also need to remember that a six month recession isn’t the end of the world, it just means no growth during that time. Not that the world has come to an end.

I’d take this economy over 1988, 2001 or 2008 every time.

Ps, also I was wrong when I said 19 years, I meant 15 years (not quite a generation - unless you’re from Merseyside)

Haha,

Interest rate rises affect some sectors of society and business much more than others. The building housing construction sector has is already slowed right down. Those who have just starting off on the housing ladder will very much feel these rises. Those without mortgages will feel little if any pain.

A six month recession is negative growth is it not? Its significantly worse than continued growth. Its means redundancies and people losing their homes and a loss in tax revenue for the government. Sure not the end of the world ?? But far from ideal. You sound like Andrew (the clown) Bailey coming out with stuff like that. This is the man that predicted a deep 2 year recession last Oct. Then in March changed his mind and said we would avoid a recession. He is utterly useless. There are other ways to help bring down inflation, our Goverment is choosing to ignore those.

 

[SWP's back]

Haha,

Interest rate rises affect some sectors of society and business much more than others. The building housing construction sector has is already slowed right down. Those who have just starting off on the housing ladder will very much feel these rises. Those without mortgages will feel little if any pain.

A six month recession is negative growth is it not? Its significantly worse than continued growth. Its means redundancies and people losing their homes and a loss in tax revenue for the government. Sure not the end of the world ?? But far from ideal. You sound like Andrew (the clown) Bailey coming out with stuff like that. This is the man that predicted a deep 2 year recession last Oct. Then in March changed his mind and said we would avoid a recession. He is utterly useless. There are other ways to help bring down inflation, our Goverment is choosing to ignore those.

Seeing as you know best than the economists, list these other ways.

 

[Rory Bluelow]

It’s pedantry, admittedly, but the 15% bank rate on Black Wednesday never officially happened.

The announcement of the move to 15% was done after market close and was in reality a promise to put bank rate up to 15% the following day, but as we know Sterling had already left the ERM by the following day and so it remained at 12%. That’s why the 15% won’t show up on any official history.

Christ I remember that like it was yesterday. You’re right of course it only “existed” for a few hours. I do recall Lamont saying he was singing in his bath when we were forced out of the ERM basically when Germany (who called the shots pre-ECB) having thrown money at protecting the French Franc wouldn’t support Sterling. I’m fairly sure mortgage rates hit 15% though.

 

[crooky]

Haha,

Interest rate rises affect some sectors of society and business much more than others. The building housing construction sector has is already slowed right down. Those who have just starting off on the housing ladder will very much feel these rises. Those without mortgages will feel little if any pain.

A six month recession is negative growth is it not? Its significantly worse than continued growth. Its means redundancies and people losing their homes and a loss in tax revenue for the government. Sure not the end of the world ?? But far from ideal. You sound like Andrew (the clown) Bailey coming out with stuff like that. This is the man that predicted a deep 2 year recession last Oct. Then in March changed his mind and said we would avoid a recession. He is utterly useless. There are other ways to help bring down inflation, our Goverment is choosing to ignore those.

It affects everyone paying for housing not just those with a mortgage.

Why renters are more vulnerable to interest rate rises than mortgage holders

Britain has become a nation of renters. Sky News looks at the data to see if that leaves us in a better or worse place as the Bank of England prepares a new interest rate announcement.

news.sky.com

 

[city2]

14 rises on the the trot, the only thing I see is families having less disposable money, people further in debt, low interest rates on savings if your lucky to have any, the increases haven’t done anything for the economy only the rich get richer it’s always been that way. Work till your 70 tho while the politicians retire and enjoy it. Fuck em