To think we may be heading for the old days of massive interest rates?

[icarriedawatermelon2]

15% Were they really that high?!

Is it time to fix our motgage rates?

Yes, you weren't allowed to take huge multiples, and house prices were lower because there wasn't unreal credit sloshing around. I suppose our first mortgage must have been about 15% too as that was 1986 but we'd repaid it all before Black Monday

Interest rates will rise to combat inflation - the Bank of England is now responsible for keeping inflation down and interest rates are the main tool they use to do this. It sounds like the amount of money pumped into the economy in the "quantative easing" process makes high inflation likely once the economy gets going again, and high commodity prices are already contributing. So yes, I would say much higher interest rates are on the way. Inflation's quite good news for people with mortgages btw (so long as they can pay the interest), as it erodes the real value of your debt.

History of interest rates from Bank of England website. It was 17% in November 1979, and in double figures from then until 1982. Around 8-9% until 1984, 85-86 about 10-11%, 87-88 about 8-10%, rising in 89 to a high of 14.8% in October, but falling after that - back to single digit by May 1992, then from Nov 92 until the election, they remained under 6.5%.

Then the Government made the long overdue step of passing responsibility for setting interest rates from Ministers to the Bank of England.

at bank wankers!

Hello...I'm the bank wankerer of your local branch of Scallifax!

"It's my money get you're hands off it bank wankers!"

Really? If the bank have got your money, they'll pay you more interest. It'll only cost you more if you have their money.

:o at ZC

True enough, as a saver rather than a borrower, rates are too low at the moment. Hardly any way to save that keeps up with inflation.

Well - I'm unlucky enough to be in the middle of a 5 yr fix at 6.5%. It'll finish just when interest rates start to rise, knowing my luck - so I'll hardly notice the difference.

That's me looking on the bright side.

Can I take the opportunity to point out that the proper collective noun for bankers is a 'wunch'.

Well I hope so for the sake of my savings!! I bought my first house in 1988 at about 10% interest rates, it was the norm so thought nothing of it. Sold and after a gap subsequently bought a flat in 1993 and rates must have been 7-8%, again just accepted it as the the norm.

We have a long-term fixed rate that we took out when base rate was around 5%. It looks like long-term fixes now have around the same interest rate as we pay, which suggests to me that banks are expecting a rise to at least 5% in the short-term

where have you read 5%? I have read that a .5% rise sometime spring-fall is likely with another .5 by end of year beginning of next, climbing to 2% by 2013. if it goes up to 5% we are fucked, pardon my French.

Some economists reckon it could go up to 1.1/4per cent. [All vary with their estimations]. Just about sustainable for most, but any more than that in my humble opinion will put thousands more in negative equity and of course a lot more repossessions.
I am also worried about the increase in fuel prices which can have an affect on everything!

Our bus and train fares are extortionate. Our water/gas and electric bills make me feel I am being ripped off and to add insult to injury - if you do get repossessed our social housing has the smallest living spaces in the whole of Europe.

University fees, health, dental care. As a nation we are being crucified and listening to our career politicians from Harrow or Eton who are totally clueless when it comes to us 'common' folk trying to survive in the 'real' world makes me so angry
Grrrrrrr - Sorry - I needed a rant

I keep it all under the matress Zillion

Very interesting hogsback, is that short for 'wankers by the bunch' by any chance?

Agree with MusieB - Martin Lewis was on Daybreak the other day predicting a rise in rates starting "sooner, rather than later", all due to the high inflation rate. He's now recommending that if your mortgage is due for renewal, get a fixed rate and do it ASAP. It's all on MSE.

Apart from you wimple, you're not a wanker, you're lovely.

I think there are is going to be a fairly large increase in interest rates in the not too distant future. Inflation is too high and needs to be reduced

The BoE should have put interest rates up substantially last year. Their mandate is to target inflation and they are clearly failing to deliver on that mandate. Mervyn King (Merv the Swerv) is fast losing all credibility as a central banker.

The constant excuses for not putting up rates (public sector job cuts, weak growth etc) are irrelevant as it is not their mandate to provide employment or economic growth. It's a sham to hide the real reason: not to cause house prices to collapse.

CPI is running at 3.7%, RPI 4.7% and "street" inflation well above 5%. High inflation cannot be allowed to persist since it hurts the poor the most (they have no assets and spend more of their income on basic consumables like food/fuel).

Morally it is totally unacceptable that the poor and prudent savers are bailing out those who have overleveraged on houses. A crash in house prices is exactly what the UK needs.

" It's a sham to hide the real reason: not to cause house prices to collapse."

Why should house prices be such a big issue for them then? And yet not the concern for business? The company I work for is hanging on by the skin of it's teeth. We are avoiding redundancies...just. It's a company that has slimmed down and made itself really efficient to meet it's customers demands. But costs keep rising and supermarket want to cut prices too .... so life is getting very very hard. A big rise in interest rates might well be the last straw. There'll be a lot more poor people out there if companies like this go to the wall .

It isn't just people being stupid with mortgages and hankering after expensive holidays.

Not EVERYONE wants interest rates low :D my savings would love them a bit higher!

Our mortgage is fixed for term (another 18 years :() at 5.6%. I'm sticking with it, grateful that we fixed when we did. Having had an earlier endowment mortgage that did bugger all I like to be safe.

why would a rise in interest rates be such a problem orm? (sorry if I'm being a bit dim)

I think there is a bit of 'inflate away all this debt going on' but I don't know enough to understand how interest rates come into play with that
I do know that savers have been loosing money in real terms for some time now and that doesn't seem fair.