Thursday, November 09, 2006

Interest Rates

Well my god the Bank of England have raised interest rates to a massive 5%!!!!

I bet you are all gnashing your teeth over this huge amount.

Now it makes me laugh because when I took the mortgage out on my flat back in 1986 I started off paying 11%! I bet that would get a few people windy. I remember the day Norman Lamont went mad and interest rates hit 15%.

I remember the day when the Investment Bank I worked for gave us a package when they'd pay us anything above 8%. I was in heaven as I was promoted that day.

In all the years I had a mortgage I never paid less than 7%. My father in all the year he had a mortgage never paid less than about 9%.

I do wonder what would happen if we ever had a return to high inflation and high interest rates.

Of course nowadays you can stick your money in a savings account and get 5% which for a basic rate tax payer is a 4% return given inflation is "officially 2.5% you are getting a real return on your money. In the past we got high rates BUT we never got more than inflation.

So folks don't panic 5% is nothing. It can get much much worse.

3 comments:

Anonymous said...

"It can get much much worse."

That's what worries me! I was stuck on a higher rate for 5 years even when the rate sank, just because they scared me with the idea it might rise to 15% again.

I always seem to hold the wrong policy at the wrong time.

Gnash.

nicola said...

Oh god, I just know what tomorrow will bring.....

Boo said...

Yes, I remember it well. Our first mortgage payment was in the days when it was 8.5% then of course it all rose again and again.


Of course savings were also relevant to interest rates but you never got the same as for borrowing!

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