interest rates

[skyhuck]

As fuel prices rose so did the price of any thing which requires transporting, which is most things when you think about it. Hence the price rises in the shops of food etc. This coupled with the media going on and on about it gave people the feeling that they were worse off than they actually were hence they spent less leading to a slow down. The government did'nt help by putting up interest rates several times to try and control inflation which was being fueled by higher fuel prices. Well thats my take on it anyway....

 

And how did fuel costs affect Northern Rock?, Bradford and Bingley?ext?

[Tom D]

I did say not the banking crisis.

[skyhuck]

I did say not the banking crisis.

 

so you think their are two separate problems?

[Tom D]

Originally yes. The banking crisis came after the slowdown had started in the states, which led to the sub prime losses and which eventualy filtered through the system to our banks here. The fact that the banks are now reluctant to lend will have an effect on the economy now as businesses will and are going to the wall due to a lack of liquidity. But this was'nt the case 12 months ago when borrowing was still easy, inflation was already rising then hence the rate rises of last year.

 

So the two are linked now as its harder for businesses and individuals to borrow their way out of trouble but originaly they were quite separate.

[John Hancock]

My fixed-rate came to an end on 31st October, just fixed up a tracker with HSBC...I'm chuffed !

[skyhuck]

Originally yes. The banking crisis came after the slowdown had started in the states, which led to the sub prime losses and which eventualy filtered through the system to our banks here. The fact that the banks are now reluctant to lend will have an effect on the economy now as businesses will and are going to the wall due to a lack of liquidity. But this was'nt the case 12 months ago when borrowing was still easy, inflation was already rising then hence the rate rises of last year.

 

So the two are linked now as its harder for businesses and individuals to borrow their way out of trouble but originaly they were quite separate.

 

IMO, we are just at the inevitable end of a cycle, people have been living on borrowed money, believing that the increase in the value of their homes would cover the borrowing.

 

How ANYONE could think that house prices could just keep rising is beyond me, I have been saying for the last two or more years why do people keep paying stupidly high prices for houses, people seemed to think house price rises was a good thing the only people who win are the banks, estate agents and a few who sold and moved into rented.

 

The whole of the boom that has just ended was fueled by house price bubble so now that has burst we have gone into a slump

 

The lack of liquidity is down to the fact that much of the money that was spent in the boom did not exist, because if you remorgaged your home for an extra £50K and spent that money now that your home is no longer worth the extra £50K where did the money that you spent come from?

[Dean Lofthouse]

I'm going straight out tomorrow and buying a brand new truck and chipper. If we all did that the economy would be straightened out in no time!

 

...and about time, mind, saying that, I'd better get myself a new truck:sneaky2:

[Gregsie]

IMO I think that one contributory factor that has been overlooked and has added to the banks problems is credit card debt. A lot of people are defaulting on their cards or only paying the minimum which is really stuffing the banks cash flow and they find it more difficult to claw back than a mortgage default.

 

I don't think we will be in the clear until the LIBOR rate has dropped as that is more of an accurate barometer to whether bank interest rates will drop.

 

And the housing market won't recover until they have become more affordable and more inline with a reasonable multiple of peoples incomes for mortgages.

 

I bet the banks drop the rates on my savings account quickly though.

[surreyarborist]

And when are the banks going to pay a decent interest to business accounts in credit. Nat west was zero interest.

[Ian Leach]

I think they might drop the rates again, they need people to trust in them again and start spending there money. I don't think its going to be a bad recession but a long one.