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Interest rates

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Leothebear
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Interest rates

#498626

Postby Leothebear » May 5th, 2022, 12:13 pm

*****Breaking News******
Interest to soar to 1% - the highest for 13 years.

1%.

I may be naive but 1% still seems rather low to me. But then I can remember them being 15% and wondering how the hell I was going to make my mortgage repayments.

pje16
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Re: Interest rates

#498630

Postby pje16 » May 5th, 2022, 12:41 pm

I had an 11% fixed mortage when rate were 15%
Not too smug though... for the last 3 month of its life rates were down to 8% or so

Agreed 1% base rate is a joke
It has taught more than one generation not to bother saving money :roll:

swill453
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Re: Interest rates

#498684

Postby swill453 » May 5th, 2022, 4:18 pm

Leothebear wrote:*****Breaking News******
Interest to soar to 1% - the highest for 13 years.

1%.

I may be naive but 1% still seems rather low to me. But then I can remember them being 15% and wondering how the hell I was going to make my mortgage repayments.

It's the highest rate in just over a decade. But other than that period, it's the lowest rate ever.

Scott.

Mike4
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Re: Interest rates

#498699

Postby Mike4 » May 5th, 2022, 5:21 pm

pje16 wrote:I had an 11% fixed mortage when rate were 15%
Not too smug though... for the last 3 month of its life rates were down to 8% or so

Agreed 1% base rate is a joke
It has taught more than one generation not to bother saving money :roll:



I don't buy that. It's never been 'worth' saving money.

When BR was 15%, inflation was much the same and no bank was actually offering savings accounts at anything like 15%, IIRC. Banks have never paid interest at rates exceeding inflation AFAICR.

Or is my memory flawed?

UncleEbenezer
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Re: Interest rates

#498701

Postby UncleEbenezer » May 5th, 2022, 5:27 pm

pje16 wrote:It has taught more than one generation not to bother saving money :roll:

I wish I'd had that lesson in my youth.

Then I might have come to productive investing much earlier in life.

ReformedCharacter
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Re: Interest rates

#498707

Postby ReformedCharacter » May 5th, 2022, 5:34 pm

Mike4 wrote:
pje16 wrote:I had an 11% fixed mortage when rate were 15%
Not too smug though... for the last 3 month of its life rates were down to 8% or so

Agreed 1% base rate is a joke
It has taught more than one generation not to bother saving money :roll:



I don't buy that. It's never been 'worth' saving money.

When BR was 15%, inflation was much the same and no bank was actually offering savings accounts at anything like 15%, IIRC. Banks have never paid interest at rates exceeding inflation AFAICR.

Or is my memory flawed?

I'm sure I got 6.99% for probably a couple of years c.2008 with fixed-term savings accounts, which according to:

https://tradingeconomics.com/united-kingdom/inflation-cpi#:~:text=Inflation%20Rate%20in%20the%20United,percent%20in%20April%20of%202015.

Was a good few points higher than inflation.

RC

nimnarb
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Re: Interest rates

#498721

Postby nimnarb » May 5th, 2022, 6:29 pm

ReformedCharacter wrote:
Mike4 wrote:
pje16 wrote:I had an 11% fixed mortage when rate were 15%
Not too smug though... for the last 3 month of its life rates were down to 8% or so

Agreed 1% base rate is a joke
It has taught more than one generation not to bother saving money :roll:



I don't buy that. It's never been 'worth' saving money.

When BR was 15%, inflation was much the same and no bank was actually offering savings accounts at anything like 15%, IIRC. Banks have never paid interest at rates exceeding inflation AFAICR.

Or is my memory flawed?

I'm sure I got 6.99% for probably a couple of years c.2008 with fixed-term savings accounts, which according to:

https://tradingeconomics.com/united-kingdom/inflation-cpi#:~:text=Inflation%20Rate%20in%20the%20United,percent%20in%20April%20of%202015.

Was a good few points higher than inflation.

RC


Can remember exact dates but got 6.50%(perhaps a bit more) from nationwide building society perhaps for 1-2 years but took a 5 year bond from them at around 4.5% and then when it came tumbling down, felt like a genius.

pje16
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Re: Interest rates

#498725

Postby pje16 » May 5th, 2022, 6:54 pm

Mike4 wrote:I don't buy that. It's never been 'worth' saving money.

It certainly was in the 80s I was getting 12% on mine

Mike4
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Re: Interest rates

#498727

Postby Mike4 » May 5th, 2022, 6:57 pm

pje16 wrote:
Mike4 wrote:I don't buy that. It's never been 'worth' saving money.

It certainly was in the 80s I was getting 12% on mine


It seems a bit pointless saying you were getting "x" interest in <whatever> year unless you also mention the inflation rate at the time!

pje16
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Re: Interest rates

#498729

Postby pje16 » May 5th, 2022, 7:00 pm

It was beating inflation at the time
The are "fools" on here saving at 1.something % today
THAT is pointless

richlist
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Re: Interest rates

#498749

Postby richlist » May 5th, 2022, 8:47 pm

I had an overdraft facility in 1989 with Lloyds Bank for a house build when the BR went up to 15%. Even with that level of interest I still made a tidy profit. We've had 10 years + of cheap money and some haven't made the best use of that opportunity.

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Re: Interest rates

#498750

Postby Eboli » May 5th, 2022, 8:50 pm

For most taxpayers, tax has to be taken into account. That loads against beating inflation post tax when interest rates and inflation are high.

For example for a 40% marginal taxpayer you have to earn 16.67% interest to beat inflation at 10%.

My memory of the 70s and 80s was in real terms you never made money except in the very short term on some fixed rates when you were lucky.

The exception was tax-free RPI linked national savings certificates. I can't remember when these changed from being "Granny bonds" and became generally available to all. But they did guarantee a real return.

Eb.

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Re: Interest rates

#498756

Postby Gersemi » May 5th, 2022, 9:06 pm

In 2005 - 2007 I had various Building Society accounts paying 4 - 7%. Inflation was between 2 & 3 % at that time. Some of the accounts were ISAs, so tax wasn't an issue (At that time ISAs paid a similar interest rate to taxable accounts). This included an Icesave account paying 6.3%. This went bust in 2008 and interest rates fell off a cliff soon after.

pje16
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Re: Interest rates

#498759

Postby pje16 » May 5th, 2022, 9:21 pm

Oh yeah I remember Icesave
A bit nerveracking until the email came in saying we would get our money back
A friend of mine said his was in in wife's name and she deleted the email thinking it was spam
I had to forward him the one I got :roll:

AleisterCrowley
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Re: Interest rates

#498775

Postby AleisterCrowley » May 5th, 2022, 11:14 pm

I had a Kaupthing Edge account which was a good payer for a while.... Eventually ended up with ING, and then... I forget

Dod101
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Re: Interest rates

#498798

Postby Dod101 » May 6th, 2022, 7:50 am

It is not where we were in the long past that matters; it is where we are headed now. The fact is that the years of loose money appear to be coming to an end, even if for the wrong reasons. Where this will leave us all I do not know but of course with inflation heading for 10% apparently that has to be dealt with. The one good thing is that it presumably will help the government with its huge debt mountain but will also push up its monthly interest bill on its borrowings. A slowing of the economy cannot broadly help share prices I assume and so it is not really good news for any of us.

Most of my cash is protected in N S & I Index Linked certificates, and the rest of it might be better invested but in what? Apart from energy shares of one sort or another.

Dod

UncleEbenezer
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Re: Interest rates

#498852

Postby UncleEbenezer » May 6th, 2022, 11:04 am

Dod101 wrote:It is not where we were in the long past that matters; it is where we are headed now.
Dod

Indeed. If we really turn our backs on Russian money, will that be the catalyst for other chickens of the past 20 years[1] to come home to roost? Economic effects being a crash in Sterling that'll make the 1970s look like a fond memory.

[1] 20 years being since Gordon abandoned Prudence (and his successors doubled down on that). Though some chickens go back much further.

didds
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Re: Interest rates

#498890

Postby didds » May 6th, 2022, 2:29 pm

Mike4 wrote:When BR was 15%, inflation was much the same and no bank was actually offering savings accounts at anything like 15%, IIRC.


circa 1980 ish I had a deposit account at the natwest that paid 15%.

pje16
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Re: Interest rates

#498894

Postby pje16 » May 6th, 2022, 2:45 pm

So did the bank of Arabia (or similar name) also pay 15% in the early 80s
It's almost 40 years since I closed my account :o

scotia
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Re: Interest rates

#499411

Postby scotia » May 9th, 2022, 10:59 am

Eboli wrote:For most taxpayers, tax has to be taken into account. That loads against beating inflation post tax when interest rates and inflation are high.

For example for a 40% marginal taxpayer you have to earn 16.67% interest to beat inflation at 10%.

My memory of the 70s and 80s was in real terms you never made money except in the very short term on some fixed rates when you were lucky.

The exception was tax-free RPI linked national savings certificates. I can't remember when these changed from being "Granny bonds" and became generally available to all. But they did guarantee a real return.

Eb.

Some of us still have national savings certificates - since we rolled them over at the end of each term. They have been downgraded to Tax free CPI - but that's better than any other savings that I know of.


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