Does anyone else think the BOE is completely taking the P

[Brighteyedtriangle]

They kept rates so bloody unessecarily low for so bloody long. People on good wages but not by any means rich were getting half a mil houses, extensions and renovations left, right and centre. They have blindsighted a whole country into a false sense of security and then just pulled a rug.

Ok, ok I dont know much about economics if at all but they do so surely they know having interest rates at less than half a percent for so long is a recipe for disaster even stupid me saw this as silly and not sustainable.

And what were banks thinking and still are. I was looking at loans the other day and my high street bank said I would borrow upto 60k for a car. Wtf I dont even earn anywhere near that.

I dont know much about economics if at all

Clearly. Go and educate yourself about inflation.

You can't really comment if you don't know much!

What is concerning me is the government is pretty much washing their hands of dealing with the impacts. I am concerned about their complacency about how this is going to affect households.

Thanks, inflation would still be happening and people wouldnt be in so much shit due to the rapid rise in interest rates, so would be better prepped to deal with the mortgage, rents rise.
If people were use to the 3-4% interests rates and it jumped to 5-6% wouldnt be as bad as the situation a hell of alot of people are in now.

My issue isnt with the rising of rates it was them keeping them so low for so long.

You can't have interest rates at the wrong level just so that people can "get used" to them!

Artificially low interests rates for over a decade was certainly a terrible policy, and the price is being paid now. It wasn't called an emergency rate for nothing.

Sorry but I cant ever agree that 0.1% was ever a right level

I agree with you OP. They should never have been left so low for so long.

I also think raising them now the way they’re doing isn’t actually going to curb inflation. The stuff that’s inflationary isn’t discretionary, and theirs certainly enough people with enough money where I live to keep spending. Plus they’re not allowing enough time for the increases to feed through. So they’ll have to raise them so high they’ll crash the entire economy!!

It was obvious to me and probably anybody who has a house Pre 2008 that the rates would at some point go up .

it just took a hell of a lot longer than it should.
we have a whole generation of people who have never experienced rates of 4 - 6 percent which is what they should be really .

My son is buying now and to be honest I feel that it’s better for him to buy at a higher rate as he knows he can afford it - than to have bought at a much lower rate and having to pay hundreds of pounds more

Added to this, lots of people are either minimally affected or have more money because of interest rate rises.

Again, go and educate yourself. They're raising the interest rates to reduce the inflation. It needs to hurt, so people stop overspending.

I think you need to educate yourself. People are not overspending, the economy isn't hot. This is mainly a supply side issue (another brexit benefit) so raising interest rates isn't going to make a blind bit of difference, apart from making a recession more likely.

What?

It isn't about 'belief', you need to educate yourself about why rates were so low, and why they're so high.

The BoE is independent to remove political pressure from economically illiterate voters.

When we bought our current house, we took out a £145k mortgage. It's a nice house and all we want and need, and we're financially cautious by nature and always had an eye on interest rates retirning to around 5%.
The bank just casually offered us £575k if we wanted it. An extra £430k! We were tempted to buy a "dream home" while we had the chance, but thought probably best not to.
I'm thanking my lucky stars every day at the moment.
People should have been exercising more caution the whole time, but the banks have encouraged a lot of them into this mess.

Hmm, the issue is this will not help with the inflationary pressures we have that are the result of Brexit, Ukraine and COVID.

The BoE have few options, but the government is being negligent by pretending this inflation is due to 'demand'.

They are raising interest rates to try to stop inflation spiralling out of control. People will cut everything else and live off beans on toast before they default on their mortgages. It's painful but there are sound economic reasons behind it.

I do agree that because rates were so low for so long then some people that have never seen "normal" interest rates have probably over-stretched themselves and I feel really sorry for them. But something still needs doing to try to curb inflation.

But WILL it curb inflation, when rising prices are largely down to increased energy and food costs due to geo-political issues which are not related to consumer spending? Genuine question.

Are you saying here that ultra low interest rates for so long was the right thing to do? I can't tell here. I can see that you support the rises, but people with that opinion usually seem to think all the years of sub 1% rates were bad?

We did the same and bought a house well below what the bank would lend us. However, we live in an expensive part of the country and I can see how a first time buyer will have stretched in order to get a foot on the property ladder and when house prices round here are so expensive (Berkshire) will have had to borrow a lot of money. I do really feel for them.

If he'd bought when rates were lower he would have paid less.

I don't understand the idea that paying more for longer would have 'got people used to it'.

Yes me too. I was so desperate to be a homeowner when we bought our first place (2010), if stretching ourselves was the only way to get there, I'm sure I would have done it at the time.

I suppose we will have to wait and see. Certainly the energy providers and supermarkets have been making large profits recently.....not all of the price rises passed on to consumers have been necessary, there's been a lot of profiteering too.

What I'm saying is 'believing' the BoE should keep rates at certain levels so mortgage holders are 'used' to paying a certain amount is obviously nonsense.

Economists can argue til the cows come home about what rates should be but at least they are arguing about economics, not the feelings of voters.

The rates were always only going to go one way and that was up. It should have been sooner and banks should have been more responsible.

Last few years it was all over the news people have been over paying on houses as prices have been through the roof.

Im sure no one could have predicted 10% inflation but surely that is what the whole system is designed for to go on the side of caution. What they have done is gone so far one way and then to ping right the over within months. There was no balance in the first place

I think there are no guarantees in life. We have an irresponsible government and we've had major system shocks, Brexit, Ukraine and COVID.

I don't think the BoE can be blamed for all this mess, the Tories took us out of Europe on a tissue of lies for example.

But they’re not doing it in isolation. The Fed have raised interest rates 14 times in a row (I think). It’s part of a global trend. Whether interest rates should have stayed so low for as long as they did is another matter. Personally I think the government policy of scrapping stamp duty for a while after the pandemic was reckless and inflated the market.