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    From Ros Altmann:economist and pensions,
    investment and retirement policy expert

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    Category: Monetary Policy and Interest Rates

    Rejoice or despair? Five years of record low rates and QE

    Rejoice or despair? Five years of record low rates and QE

    28th February 2014 It is almost exactly 5 years since the Bank of England cut short-term interest rates to 0.5% and started printing billions of pounds to force long-term interest rates lower.  Good news for some?  Dreadful for others.  Should rates be rising or stay where they are? TEN REASONS TO REJOICE – these policies are great and have had tremendous benefits Borrowers have had a bonanza with mortgages getting cheaper and cheaper, encouraging people to borrow far more than…

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    Analysing BoE’s statistics on mortgage and savings interest rates

    Analysing BoE’s statistics on mortgage and savings interest rates

    4 February 2014 No surprise there’s a housing bubble as latest Bank of England figures confirm bonanza for mortgage holders 100,000 Mortgage borrowers £3,300 a year better off Savers with £100,000 saved up are now £4,000 a year worse off Analysing the Bank of England’s statistics on interest rates in mortgage and savings markets since 2007 shows fascinating results.  The extent of income gains for mortgage borrowers is startling and the losses for savers are significant.  Those with the largest…

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    Prolonging the party – who wants rates to rise?

    Prolonging the party – who wants rates to rise?

    31 January 2014 Bank of England statistics confirm bonanza for mortgage holders Mortgage borrowers may be £3,300a year better off and savers over £4000pa worse off Low rates are huge help for mortgagees – no wonder so many don’t want rates to rise Analysing the Bank of England’s statistics on interest rates in mortgage and savings markets since 2007 shows fascinating results.  The extent of income gains for mortgage borrowers is startling and the losses for savers are significant.  Those…

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    Well done Mr. Carney ….

    Well done Mr. Carney ….

    28 November 2013 … for focussing Funding for Lending on business loans – which is what it should always have done. At long last some relief in sight for savers? The Bank of England’s announcement today that the Funding for Lending scheme will only be available for business lending, not mortgage lending, is fantastic news. At long last, there seems to be a recognition that there are real dangers of a housing bubble based on unsustainably cheap mortgages and that…

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    Rates are too low as economy booming – Forward Guidance looking backwards

    Rates are too low as economy booming – Forward Guidance looking backwards

    14 November 2013 Bank of England repeating past mistakes – rates should start rising as UK growth set to surge Mortgage borrowers enticed into large loans at low rates as loan to income ratio returns to pre-crisis peak Keeping rates at 0.5% is about politics, not economics Take the squeeze off pensions and savers – and encourage companies to spend their £200bn cash pile UK economy is booming – but BoE looking backwards instead of forwards: The Bank of England has finally realised…

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    Potential good news for pensioners as gilt yields rise

    Potential good news for pensioners as gilt yields rise

    17 September 2013 Rising gilt yields and revised regulations could increase pensioner incomes from income drawdown by 50% But inflexibility prevents pensioners from accessing more of their money By the time they are allowed to, the opportunity may be lost Need to make drawdown more flexible and allow for ill-health  Recent rises in gilt yields and Treasury rule changes for income drawdown mean people could now take much more money out of their pension funds than last year.  This should…

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    DANGER: Even estate agents think house prices rising too fast

    DANGER: Even estate agents think house prices rising too fast

    Calls to cap house price rises are clear sign of housing bubble RICS is shouting from the rooftops – are the authorities listening? No more ‘Help to Buy’ we need ‘Help to Build’ Clear signs of housing bubble: The RICS has issued an unprecedented call for a cap on house price rises.  This suggestion, from the industry most closely associated with the housing market, clearly indicates that house prices are in bubble territory.  It has been clear for months that…

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    Blinkered Bank of England ignoring dangers of low rates as economy picks up

    Blinkered Bank of England ignoring dangers of low rates as economy picks up

    4  September 2013 Bank of England should take off its blinkers and look at the economic evidence Low rates are distorting economy – causing borrowers and savers to take too much risk MPC should consider a small rise in rates now As the Bank of England Monetary Policy Committee meets, I urge its members to look carefully at the evidence showing a stronger UK economy and start the process of increasing interest rates to more sustainable levels.  Ultra low interest…

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    Following the Bank of England’s statement

    Following the Bank of England’s statement

    7 August 2013 Three more years of misery for savers and pensioners Rates remaining at emergency levels whilst there is no emergency Relying on borrowing and house price inflation to drive growth is how we got into the crisis Anyone approaching retirement and potentially buying an annuity, anyone running a pension scheme and anyone saving for their future will have been disappointed by today’s masterly statement from Mark Carney, potentially promising three more years of emergency, ultra-low, interest rates. The…

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    Low rates still damaging firms with pension liabilities

    Low rates still damaging firms with pension liabilities

    7 August 2013 Here is my latest piece, looking at the recent figures on UK pension deficits.  Firms are still struggling with the effects of QE and continued low interest rates, plus above target inflation.  I hope that Mr. Carney will not overlook these negative effects of low rates, although I fear it is not an issue he will take seriously. Do give me your thoughts.  Comment below. FTSE 100 pension deficits still rising despite strong markets and higher employer…

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