Low Interest Rates are hammering the poor

I have had an account at the Hanley Economic Building Society for 25 years. On Friday they sent me a letter saying that their bank would be closing my account and sending my money back. This follows the same action by the Bradford & Bingley a year ago. Why? As interest rates are so low, it is cheaper for banks to borrow from our debt-riddled governments than trying to raise their cash from depositors, so banks across the world are closing accounts for those with small accounts. The poor find themselves increasingly having to put their cash under the mattress again.

Likewise, banks see no reason to loan and put their money at risk to poor people, so the poor have to go to payday loan sharks in disasters where they find themselves with interest hidden in "arrangement fees" having to pay, in effect, TEN PERCENT A WEEK to sharks like CASHMONEY.

Meanwhile, low interest rates have created out of control asset inflation pushing house prices through the stratosphere to levels that poor people just cannot afford.

You should be keeping your savings "under a mattress" anyway

And, house prices are the lowest they've been in 2 decades?? Its a fantastic time to buy, where do you live?

a reply to: MenWIthHugeApplause

The elder relatives in my family are furious about the low interest rates. They were taught to save money whenever possible with the saying "take care of the pennies and the pounds take care of themselves". Now because successive governments have cocked up with their economic policies, they need low interest rates to keep the debtors from going bankrupt, only to have high street shops go bankrupt (Woolworths, BHS, etc...) because the pensioners don't have any spending money.

In places like Edinburgh and the South Coast, house prices are fairly high. You're looking at £200K just for a two bedroom.

a reply to: MenWIthHugeApplause

Absolutely no one is forced to borrow money from places like CashMoney.

I've said several times before that the best way to stimulate the economy is to raise interest rates.

a reply to: MenWIthHugeApplause

Money is cheap right now. Have to laugh when I see some of these commercials, no interest for 5-8 years. Not a good sign at all. Most people don't have money in the markets so putting it in even a high yield savings is only 1%. 30 years ago it was over 2%. Sad. Really no point in saving unless you have it in investments otherwise it's rotting away getting lapped multiple times by inflation.

a reply to: Atsbhct

Laughable BUNK!

You have your money stolen (eg. someone took it from under your mattress), you have to pay the rent - what else can you do if you cannot borrow from a bank?

The fact is that life does throw curved balls once in a while and with no access to bank borrowing, people have to borrow from somewhere.

originally posted by: Atsbhct
a reply to: MenWIthHugeApplause

Absolutely no one is forced to borrow money from places like CashMoney.

True. Although absolutely everybody is forced to continually forfeit their earned money to the government. I'm not talking taxes. I'm talking inflation. They are literally stealing money from all of our pockets on a regular basis.

Legal loan sharks are just taking an advantage of the situation created by the government. The government has been robbing the poor since it went off the gold standard, and so the poor can't get out of their situation. How does inflation hurt the poor but not the rich? Because when you are poor nearly 100% of your income goes to basic needs, shelter and food. A small devaluation of your money means you can't eat. Or can't pay rent. Or have to take out a loan with a ridiculous interest rate.

If only 1% of your income is required to provide you with the basics, then having your money devalued is of no threat whatsoever to your ability to live life.

When the government can (and does) devalue the money in my pocket on a regular basis that is stealing. I had a certain amount of value which I earned with my work, now that value was taken and given to banks and foreign nations without my consent.

It's all connected. Let's just blame the people who have none of the power and none of the wealth, because they have SO much influence. Right.....

originally posted by: ColaTesla
You should be keeping your savings "under a mattress" anyway

And, house prices are the lowest they've been in 2 decades?? Its a fantastic time to buy, where do you live?

With negative interest rates on the horizon, we may have to. But housing is booming in my area with higher and higher prices. If you want to live in Detroit I guess you can buy a cheap house, but not in a booming city like Seattle. Low interest rates are great if you want to buy a house, but they are also hammering people with money, who depend on interest for their retirement. The alternative is risky stocks. It ain't pretty for anybody right now.

There are Government workers who work for the Canadian Government who have not been paid for SEVEN MONTHS and have now been told to expect a pay cheque not before OCTOBER. How is a single mother with a sick kid supposed to survive if she cannot borrow from the bank?

a reply to: schuyler

BULLSH1T! Low interest rates are a NIGHTMARE form anyone buying a house. Everything is now super-expensive, but if you do buy, you can expect your monthly interest bill to skyrocket to 20 TIMES THE CURRENT in a few months when the economy cracks.

originally posted by: MenWIthHugeApplause
There are Government workers who work for the Canadian Government who have not been paid for SEVEN MONTHS and have now been told to expect a pay cheque not before OCTOBER. How is a single mother with a sick kid supposed to survive if she cannot borrow from the bank?

Everyone survives in the after life. She'll be alright.

originally posted by: MenWIthHugeApplause
a reply to: schuyler

BULLSH1T! Low interest rates are a NIGHTMARE form anyone buying a house. Everything is now super-expensive, but if you do buy, you can expect your monthly interest bill to skyrocket to 20 TIMES THE CURRENT in a few months when the economy cracks.

Why would your interest change after you buy?

originally posted by: Bluntone22

originally posted by: MenWIthHugeApplause
a reply to: schuyler

BULLSH1T! Low interest rates are a NIGHTMARE form anyone buying a house. Everything is now super-expensive, but if you do buy, you can expect your monthly interest bill to skyrocket to 20 TIMES THE CURRENT in a few months when the economy cracks.

Why would your interest change after you buy?

DUH!!! 99% of all mortgages are VARIABLE RATE.

The long run AVERAGE interest rate is 9% base rate. So, if base rates begin to move, your bank will begin to raise your interest payments - simply going to the long run average will raise the monthly mortgage bill by some 20 TIMES.

May i remind you all of WHITE WEDNESDAY.

It is a curious time in Britain's history when interest rates were rising ONE PERCENT PER 90 MINUTES.

originally posted by: MenWIthHugeApplause

originally posted by: Bluntone22

originally posted by: MenWIthHugeApplause
a reply to: schuyler

BULLSH1T! Low interest rates are a NIGHTMARE form anyone buying a house. Everything is now super-expensive, but if you do buy, you can expect your monthly interest bill to skyrocket to 20 TIMES THE CURRENT in a few months when the economy cracks.

Why would your interest change after you buy?

DUH!!! 99% of all mortgages are VARIABLE RATE.

The long run AVERAGE interest rate is 9% base rate. So, if base rates begin to move, your bank will begin to raise your interest payments - simply going to the long run average will raise the monthly mortgage bill by some 20 TIMES.

You have no idea what you are talking about...

a reply to: MenWIthHugeApplause


Anybody that gets an adjustable mortgage nowadays is an idiot.
Mines fixed at 3.25%

I think adjustable rate mortgages are only about 10% of mortgages.

a reply to: MenWIthHugeApplause

I think I've read that in the UK that the majority of mortgages are variable rate. In the US not so much. You can get a variable rate if you want, there are certain circumstances where it is advantageous like for people whose relocate for job opportunities every 5 or so years. The most common mortgages in the US are 15 and 30 year fixed rate. Before the 2008 collapse there was an increase in Adjustable Rate Mortgages and exotic mortgages like Option interest only ARMs to name one of the worst.

Your circumstances in the UK, I'm sure are different, but in the US 15 or 30 yr fixed rates are the norm. Who would get into an adjustable rate mortgage when the only way for rates to go is up.

Low interest rates absolutely destroys the saver, be they rich or poor. The poor person has no incentive not to spend when even with "mild" 2% inflation a savers unit of currencies purchasing power is halved over a working life. The rich have to go into riskier assets in order to seek a return on their capital. Low interest rates allow governments of any ideological bent to run deficits as opposed to face the political ramifications of raising revenue through taxes.

originally posted by: Edumakated

originally posted by: MenWIthHugeApplause

originally posted by: Bluntone22

originally posted by: MenWIthHugeApplause
a reply to: schuyler

BULLSH1T! Low interest rates are a NIGHTMARE form anyone buying a house. Everything is now super-expensive, but if you do buy, you can expect your monthly interest bill to skyrocket to 20 TIMES THE CURRENT in a few months when the economy cracks.

Why would your interest change after you buy?

DUH!!! 99% of all mortgages are VARIABLE RATE.

The long run AVERAGE interest rate is 9% base rate. So, if base rates begin to move, your bank will begin to raise your interest payments - simply going to the long run average will raise the monthly mortgage bill by some 20 TIMES.

You have no idea what you are talking about...

Well, that's laughable nonsense. I have already paid off two mortgages on two homes.

a reply to: jefwane

Fixed US mortgages are usually only fixed for a limited time. This is what cause the meltdown in 2009. After 5 years, most US people have to find a new mortgage, by which time the interest structure might be utterly different.