A few facts about bank interest rates
‘Like most people of my generation who have lived through the period of hyper interest rates, of as high as 17% and inflation averaging in the teens in the 1970s, I am baffled by how long and how low-interest rates and inflation in the UK have lasted in recent years.'(*1) I find the current media doom-fest of the return to an historically average interest rate just nauseating.
The current panic stories all over the media about “high interest rates” are journalistic nonsense, made worse by their obvious ignorance of history.
Current Interest rate moaners seemed to be unaware of the fact that bank interest rates have been, on average, around 5 percent from 1800 until the 1970s which is when oil prices suddenly quadrupled amongst a few other external issues. Mortgage interest rates then rose to 18%!
Thatcher’s 1980s deregulation of the ‘markets’ eventually led to the crash in 2007 which caused the panic collapse of rates to a never before seen low.
I describe that catastrophe in detail in Chapter 9 of my book ‘British politics is broken, BUT…’.
Then, back in 2008, the biggest losers were the those who were close to or already in retirement.
Those who had savings in private pensions which they had probably struggled to create, were earning 6 percent interest in 2007 but suddenly lost that income when interest rates dropped to zero after the ‘crash’.
What exactly did the oldies lose?
- 15 years of the lowest ever interest rates which harmed those of us who had done the ‘right thing’ by saving for retirement.
What did the young gain?
- 15 years of the lowest ever mortgage interest rates for those on or joining the housing ladder.
Then we oldies had to listen to all those youngsters moaning about rising interest rates and then watched the bankers who were caught with their trousers down, yet again, when reality started to be introduced back into the economy in late 2022.
As I mentioned in the Introduction of ‘British politics is broken, BUT…‘, the bankers were ineptly unprepared for interest rates to rise again and many, in the USA and Europe filed for bankruptcy protection from us again, and a few went into liquidation!
To summarise the current so-called ‘interest rate panic and misery’
Ignorance of the past is preferred by TV and media journalists who just want to make a story out of those who have benefitted for 15 years of the lowest ever mortgage interest rates.
(*1) I quote Tony Byrnes https://wealthandtax.co.uk/what-the-200-years-history-of-interest-rates-teaches-us/
