To be angered off by the rubbish interest rates?

[dilemma456]

Message withdrawn

Your little article is crystal clear. It just doesn't say anything like "interest rates will rise soon", which was your claim.

You are a funny man, telling me to "do some reading around the subject"

This is how we end up every time on these threads on economy, unfortunately. You make assertions and can't support them. I try explaining to you why they are not likely, and you get funny. Clearly, you don't even understand what I am saying.

Not that I mind. There are all sorts on the internet. Live and let live and all that.

What I do mind is that some people seem to be taking you seriously, and this is one subject you should know what you are talking about if you intend to go around making economic forecasts.

Cote, the last two times we ended up on the same finance thread
you made a runner the moment I showed your arguments to be poorly thought out.
(Do you remember your amusing 'Clinton did it' line?)

Maybe that's why you have appeared strangely agitated on this thread
but, as I have said to you before, I urge you to stop personalising differences of opinion.

Just contribute your thoughts and people can pick whatever makes most sense to them.

Just to wrap up our difference of opinion on this thread:
I don't share your faith in the power of the gilt market to predict the future.

I suspect - if the BoE's plan works out! - inflation will pick up and the BoE will be forced to raise interest rates.

If anyone out there slavishly follows my opinions, as alleged by Cote,
please please do your own reasearch!
And please do challenge me if you find evidence contradicting my views -
we can enjoy a good debate AND protect our financial fortunes in the process!

Interest rates will remain low in my view for the next 2 - 3 years, possibly longer. It is very unfair and it's pensioners I feel most sorry for.

It is pernicious that someone on my income level who because of my divorce has no savings and a mortgage of about £1.3m should have given to me in effect massive benefits. I suppose if the cost of keeping some of my older children who are at university stage and looking for jobs (very hard in the current climate) rises that may negate the interest savings I have but it certainly perverse.

My profile - huge debt, no savings (because I was silly enough to marry a man who earned a lot less, few other women make such mistakes and then divorce him) which is not actually my fault but could have been because I was extravagant are the people who are benefitting now and those who saved for years are penalised. It even disincentives you from paying back debt as borrowing is so low. I think I pay 1.5 over base. When I first bought a house in 1983 interest rates were 11.6% (!) and upper rate tax 60%.

You win some , you lose some. We've managed to "benefit" from the lower interest rate by refixing our mortgage recently but all our investments - long and short term - have suffered as have the value of our shares, accumulated over a long period. If you want a guaranteed income you could look at fixed rate bonds (not a corporate bond fund) or term deposits - many building societies are offering better rates than you seem to have if you look at best buy tables or ads in today's papers.

I would very wary of anyone who purports to predict with any degree of certainty how interest rates will move in the short to medium term. All of us have our views, informed or not, but telling someone to rely on what we think is IMO irresponsible.

It would be good to see some inflation in the near future, if only so that we don't end up in a deflationary cycle. I don't understand enough of how inflation will arise, but I hope it would be because of real growth, rather than printing of money or rising cost of commodities not matched by growth in UK.

These are sobering times. It looks to me like the global economy will go into a synchronised recession before we get out of it. Low interest rates on my savings are not a patch on the larger issues.

We rent as we have a large deposit but have been worried about market uncertainty for a while.

Recently, we looked at the market again and we were offered a disgusting 6.5% on a mortgage with our own bank (LloydsTSB) . They offered this rate because they were being 'prudent'. This same bank was offering us 6 times a single salary on an interest only basis last year - and saying things like 'why not throw in a bit extra for your new kitchen?'. We didn't follow this path because we're not stupid but now we're bailing out the greedy incompetent bastards - it makes me mad!

Housing market does not seemed to have slipped much in price here I have to say. A four bed house recently came on for 415k - at least 50 k higher than anything I've seen locally.

Bloody madness!

I agree with Noonki's post.

Please bear in mind that not everyone who doesn't have savings are, by definition, reckless spendthrifts who've spent all their disposable cash on holidays, cars, big houses etc.

There are many, many families who've enjoyed none of that but who have always struggled to make ends meet (even when "times" were "good") and for whom saving - even a little - is a physical impossibility.

Those families may now be benefitting from lower mortgage rates but are extremely vulnerable should they lose their jobs because they have absolutely no safety net to fall back upon.

I do feel sorry for pensioners (or anyone else who can't work) who have seen their income reduce as a result of loss of interest on their savings, but when you are employed, and still able (albeit by being "careful") to put money aside, then you are already in a priviliged position simply because you literally don't have to spend that money (on utilities, housing, commuting to work, food).

I do appreciate that savers' money is required to keep the economy afloat, and that there must therefore be some incentive to do so (as opposed to putting it in a piggy bank) but surely a long term view of saving should be taken ...... and the average interest over a period of years is what really matters.

Doesn't anyone feel sorry for the people who live on the interest from their savings apart from me?

I think it must be tough to have saved carefully all your life thinking you could live off the interest as a pension and then find it all gone and have to start eating into the capital ie when interest rates go back to normal your income will still be massively reduced/gone.

Someone said " Why should you get any money at all simply for saving?" because business is about supply and demand savers are supplying money to allow people to borrow, the same way car hire firms provide cars in return for money, I don't see Avis letting you use their cars for free.

Oh yes a couple of people do

It must be so hard when you're elderly as it must be even more difficult to find a job than when you're younger. If you're still able to work anyway.

Unfortunately in our society, as we have seen time and time again, no-one really gives a rats arse about pensioners, especially ones who only just keep afloat. They don't do anything for the economy and only eat up NHS money, and a lot of them are old women who usually get screwed more than anyone when things go tits up. Makes me so .

Yes, pensions and savings have been a big con really particularly since labour introduced the guaranteed mininmum income in retirment which means if you spend al your life the state picks up the tab to make up your income to the minimum level. I will follow the exampel of mym father who worked full time to 77 and my children's other grandfather who still works a few days a week in his 80s.

I remember rabidly inflationary times, when you could take out a big loan because prices were going up so fast that its value (the loan) would be much less . That wouldn't exactyl damage me either , hugely benefit even but even so I don't want us back to inflationary times and at the moment we even virtually have deflation on some reckonings, prices going down.

DaddyJ - I have done no "runner" and Clinton's deregulation of the derivatives market is a fact. It was pushed through by a Republican Senator called Phil Gramm (who later joined UBS). Look it up.

You still have not come up with a single person, source, or article that says interest rates will rise "soon". Why is it so hard to find something (anything) that supports this theory? You claimed this belief was based on what you have read. Where are those articles?

Meanwhile, you don't seem to understand why 2 yr UK government debt yielding less than 1.3% clearly shows that most people believe interest rates will not rise significantly anytime soon.

Look at the yield curve. (Assuming you know what it is). It would be on BoE website. It clearly shows that few if any players believe interest rates will rise "soon".

I feel the same as OP. for the first time EVER in my life I have savings. Im 36 and have a good job and finally I hacve been working hard to put money away only to see interest rates fall to an all time low. I feel done too.

re People who live off interest on their savings:

As I was saying earlier, there are alternatives to earning meager interest on a bank deposit - sovereign debt & corporate bonds of highly rated countries/companies, for example.

Many economists are reluctant to make any firm predictions regards interest rate rises in the coming years as the current situation is unpresidented. However, there does seem to be a view held by many (look at the business sections of most of the weekend papers) that we are looking at a 'U-curved' trend which will mean that inflation will climb to double digits and interest rates will therefore follow. The big debate seems to centre around how long this will take to happen. The banks at the centre if the storm in Britain are making long term plans to best position themselves in the market when these rises do come.

I remember 20% inflation in my life time - 1980 just after I'd gone to university but down to under 3% by 1983. Not long since our highest tax rates were over 90% then either.

Interest rates in the UK unusually do include mortgage costs/interest. If there is wage and price inflation then I suppose house prices will go up too and the value of home loans will in effect reduce and negative equity will disappear. But I still don't think that's desirable.

I'm not sure that it is realistic for elderly grannies just getting by with a few bob in the bank bringing them a little extra each month to start dabbling in sovereign debt and corporate bonds (whatever they may be).

My gran would have been highly suspicious of putting her money anywhere except her high street bank she used for donkeys years.

Not all the people who relied on money from interest to keep them afloat are au fait with all this stuff.

Sovereign debt = government bond = the debt of a country

Corporate bond = debt of a company

It's not that complicated. Even grannies have client representatives in whichever bank they deposit their money.

The thing is, banks prefer to keep these accounts in deposits with near-zero interest rates (it is very cheap money) so the proverbial granny wouldn't normally get alternative investment advice.

I'm not sure I understand you cote, I think you are saying that there are alternatives but the average bank wants to keep the average granny's savings in an account with low interest for their own benefit. Is that right?

No surprise there, but it doesn't change the fact that where people were getting 5% say on their bog standard savings account they are now getting very very little.

Is the point that people who aren't able to understand the ins and outs of the financial markets shouldn't expect any help from anyone - the govt or the banks? Not saying that you're saying that, but in general?

Yes, client representative would probably not be forthcoming with the advice to invest your money in alternatives to a simple deposit. Simple reason: bank uses deposited money (cheap funding) but doesn't get anything from money you invest in government or corporate debt, except from a small custody fee.

However, OP and others looking to get higher returns on their money can demand to see a list of such instruments to invest in, in which case the client representative will introduce them to the concept.

In short: Ask your bank which corporate bonds and sovereign debt they recommend. They will give you a list.

Cote - see Bellebelle's point.
You are being a little childish on this thread
but given your past errors I can see why you are upset.

'The big debate seems to centre around how long this will take to happen'
Yes, Bellebelle, I agree.
We will need to wait and see how quantitative easing will impact the economy.
Interesting times..

Cote, would banks require a minimum amount to purchase corporate bonds and sovereign bonds, which is so high that it is out of the reach of the average granny? Sounds like something offered in private banking rather than retail banking. But I don't know.

I can't see how the housing market is being helped by some banks.

One of my colleagues is looking for her first house. One lender has stopped offering the variable rate, tracker rate and their fixed rates are naff.