The great interest rate rip off part 1

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The mortgage fees that have soared by 600% in two years | the Daily Mail

 

Homebuyers are being lured into taking up what appear to be good value mortgage deals only to be stung with huge fees.

 

Some leading lenders have increased their arrangement fees by more than 600 per cent in the last two years.

Banks and building societies can manipulate where they appear in best-buy tables by appearing to have low interest rates.

 

In reality, they are simply switching their charge to the arrangement fee.

Intelligent Finance, a subsidiary of the biggest mortgage lender, the Halifax, charges as much as £2,999 as an arrangement fee.

This is up by 601 per cent on the maximum it charged two years ago.

The cost of arranging a mortgage cannot have risen by £2,500 in that time and may well have fallen because of computerisation - so it seems that a large portion of the fee goes into the bank's coffers.

Yesterday finance experts warned that the practice was conning the consumer, in a month which saw the fifth interest rate rise in less than a year.

The Bank of England base rate stands at 5.75 per cent, its highest since March 2001.

Lisa Taylor, of personal finance website moneyfacts.co.uk, said lenders are using smoke and mirrors to win customers.

 

The banks are in a win win situation, you can guarantee next year record profits will be announced while many consumers will be struggling to meet repayments on there mortgages.

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The rich are getting richer - and all moving to the South | the Daily Mail

 

The gap between rich and poor is wider than it has been for 40 years, a report reveals today.

The North-South divide is also increasing, with wealth rising in an area up to 100 miles around London and falling in the cities of northern England and Scotland.

Research for the Joseph Rowntree Foundation found households in already affluent areas have tended to become 'disproportionately wealthier' and many rich people live in areas segregated from the rest of society.

 

At the same time more households have become poor over the past 15 years, although fewer are classed as very poor.

Professor Danny Dorling, one of the authors of the report, said: "In the 1970s and the 1980s there were a few wealthy people almost everywhere.

"Now, apart from a small number in Cheshire and North Yorkshire, almost all the very rich are in the South East.

"Sadly the local chap-made-good who stays in the area where he has made his money and lives in the big house has gone - he's moved to London. Instead of manufacturing we sell insurance, finance and banking to the rest of the world - and that all happens in the City."

During the past 15 years there has been an increase in the number of households living below the poverty line, meaning they cannot afford the essentials most people take for granted. These households account for more than half of all families in parts of some cities.

Since 1970, levels of poverty and wealth in different areas of Britain have changed significantly, with the country now moving back towards levels of inequality last seen more than 40 years ago, says the report.

 

 

 

I think Merv has the solution rise interest rates again, it's amazing what interest rates can fix surely it can relieve poverty as well!!!

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Help us out, west asks Opec, with pound at 25-year high against dollar | | Guardian Unlimited Business

 

 

· Warning that oil could hit $95 a barrel by end of year

· UK inflation outlook may force sixth bank rate rise

 

Middle East members of the oil cartel Opec were last night under pressure for an immediate rise in production, after a warning from Goldman Sachs that prices could hit $95 a barrel this year.With a bout of speculative activity yesterday driving Brent crude to within a few cents of the record $78.65 of last summer, Goldman said that shortages of supply were behind the steady rise. However, the price later dropped to $77.63 and a decline in petrol futures led New York analysts to question Goldman's forecast.

A further rise in oil prices would add to inflationary pressures in developed countries, with some UK analysts fearful that dearer energy increases the risk of at least one more quarter-point increase in base rates from the Bank of England.

Despite recent declines in North Sea output, Britain's status as an oil producer has been a contributory factor in the recent rapid rise in sterling against the dollar. The pound yesterday exploited nervousness about further fallout from the US sub-prime mortgage crisis to climb above $2.04 for the first time in more than a quarter of a century. Analysts in London were looking to today's inflation figures for June, and tomorrow's release of the minutes of the meeting this month at which the Bank raised borrowing costs to 5.75%, to assess the chances of what would be a sixth increase in bank rate since last August.

 

What is clearly needed is a interest rate rise as this will magically produce more oil and ease inflationary pressures. It's lucky we have the wisdom of the BoE MCP otherwise we'd be facing financial meltdown.

 

Interest rate rises just seem to fix everything, I wonder if there magic could win us the world cup???

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Pound jumps as inflation signals rates of 6% - Times Online

 

Fears of yet another interest rate increase rose today despite official figures that revealed the rate of inflation fell to its lowest level for eight months in June.

Falling gas and electricity bills saw the headline Consumer Prices Index drop to 2.4 per cent last month, compared with 2.5 per cent in May.

But core inflation, which strips out energy, food, alcohol and tobacco, rose to 2 per cent from 1.9 per cent in June - the highest rate since National Statistics’ records began a decade ago.

This led to a new warning from economists that the Bank of England may be forced to put the cost of borrowing up to 6 per cent before the end of the year.

 

Sterling surged to a new high against the dollar of $2.0437 while the FTSE 100 of leading UK shares fell 55 points to 6642.7.

The Retail Prices Index, often seen as a more representative rate of inflation as it includes mortgage interest payments, rose to 4.4 per cent from 4.3 per cent.

Howard Archer, chief UK and European economist at Global Insight said: “The Bank of England is far from out of the inflation woods.

 

It's a pity economics isn't a real science with real answers rather than the pseudo science it currently is. We might as well employ muggers to steal a set amount from consumers each month to stop there wanton spending.

 

It's strange how real financial advice never comes from the bank, just how much of our income should we be spending each month, is spending 80% of your income excessive and inflation inducing? Questions which economists don't want to ask or answer.

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Huge increase in those forced to default on mortgages payments - Independent Online Edition > Mortgages

 

Britain faces a mortgage crisis with payment arrears rising sharply as 18 million homeowners struggle to meet the fifth rise in interest rates in less than a year.

It is being predicted that high earners who have stretched themselves to buy a home will join less prosperous social groups in experiencing problems as they juggle finances to adjust to rises in monthly payments.

Research suggests that twice as many borrowers as last year have missed mortgage payments in the past six months. A website, MoneyExpert.com said that, while 36,000 borrowers a month fell into arrears last year, this year that figure will be 77,000.

Fears that homeowners are vulnerable to rate rises intensified when the Council of Mortgage Lenders (CML) said yesterday that first-time buyers were borrowing a record 3.37 times their income and other buyers just over three times.

A spokesman for the CML said it was revising upwards its forecast of 18,000 repossessions this year. The two million people whose fixed-rate deals will come to an end in the coming 18 months are expected to endure the most pain. "There's a big squeeze coming up. Not because interest rates are particularly high but because of the pace of the rises in the past six months, which will catch people on the hop," the CML said.

Although treble what they were three years ago, repossessions are a quarter of the rate they were at their peak of 75,000 in 1991 when millions of people found themselves in negative equity - with properties worth less than their mortgages. But a time lag means that it may be several months before the true scale of problems emerges in 2007 and 2008.

 

By then it may be too late the BoE may have damaged the economy to the point it may take several years or even a decade to recover. However the time lag of the interest rate rises doesn't mean anything to the BoE, they are hell bent on crashing the economy as it's the all important money supply that matters.

 

I wonder if the 75000 repossessions will be topped!!! It will be a nice record for Merv to get.

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If rates are near the ceiling then why get fixed up? - Independent Online Edition > Mortgages

 

To track or not to track? That appears to be the question for many borrowers, among them readers of the Independent on Sunday Money section.

Last week, many got in touch on the subject of this month's interest rate rise to 5.75 per cent - its highest in more than six years - and what it meant for their decision on what kind of home loan to go for.

Should they pay a high fee to a mortgage lender for a fixed-rate deal so they can have the security of knowing what their repayments will be, or track the base rate for less but run the risk of potentially higher costs?

It's clear from recent figures what most feel is the right answer. Statistics published last week by the Council of Mortgage Lenders (CML) show 89 per cent of first-time buyers and 73 per cent of home movers took out a fix in May - typically for shorter periods of two to three years.

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It's not a return to the 1990s - but things could get worse - Independent Online Edition > Mortgages

 

Millions of homeowners are certainly going to feel the pinch when their cheap fixed-rate mortgages come to an end over the coming months. With interest rates now some 1.25 percentage points higher than they were when people took out fixed-rate mortgages two years ago, borrowers will suddenly find themselves being forced to pay as much as 25 per cent more interest on their loans than they were.

But talk of an imminent housing crash is over-cooked. Twenty- five per cent more interest is not necessarily the same as a 25 per cent increase in your monthly repayments. More than two-thirds of all new mortgages taken out over the past few years have been repayment loans - where borrowers are paying off a proportion of their capital each month, as well as the interest. For these people, the increase in their monthly payments will be much more manageable.

When the market crashed in the early 1990s, some 80 per cent of borrowers had interest-only loans - so as rates went through the roof, people's monthly payments increased at the same rate.

Economically, Britain is also much more stable today than it was 15 years ago. GDP is growing ahead of trend, unemployment is low and the early signs are that inflation is finally beginning to respond to the string of recent interest rate rises - heading back towards its target of 2 per cent. Things were very different at the start of the 1990s, and economic conditions will have to deteriorate significantly before we can expect the same kind of housing crash as we saw then.

 

It's a good job economics is a exact science where there isn't contradictory opinions everywhere.

 

Perhaps it will be a socio-economic crash where only certain sectors are affected.

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BBC NEWS | Business | UK June inflation slows to 2.4%

 

The UK's rate of inflation slowed in June as clothing and electronic goods costs declined, official figures show. However, the dip was smaller than many analysts had forecast, fanning fears that interest rates would rise again.

Consumer price inflation fell to 2.4% last month, down from 2.5% in May, the Office for National Statistics said. Analysts had forecast a figure of 2.3%.

The Retail Prices Index, an inflation measure often used in pay bargaining, rose to 4.4% from 4.3% in May.

Expensive money

In the past year, the Bank of England has raised interest rates five times to 5.75%.

Despite rates hitting their highest level for six years, many analysts are warning that increased crude oil costs and steady, if not stellar, economic growth will force the Bank to lift borrowing costs to 6% after the summer.

 

Don't forget both figures exclude the inflation busting increases in the cost of borrowing as they don't appear to matter!!!!!

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Derailed: Government's green promises on transport policy - Independent Online Edition > Transport

 

A green transport policy? New figures show how 30 years of failure has put Britain on the road to gridlock and pollution

 

By Ben Russell, Nigel Morris and James Macintyre

 

Published: 18 July 2007

 

 

 

Dramatic new evidence that car travel has become far cheaper while buses and trains have soared in cost led to renewed attacks on Labour's transport policy last night, as MPs said the Government was undermining its own battle against climate change.

According to newly disclosed statistics, the cost of car travel has fallen by 10 per cent over the past 30 years, while the price of bus and train tickets has risen by more than 50 per cent. The respective trends have continued throughout Labour's period in office.

Campaigners warned that the figures, revealed by the Department of Transport in a parliamentary answer yesterday, laid bare the huge disincentive for Britons to choose environmentally friendly forms of travel.

The statistics show that Labour has failed to reverse the long-term trend. Since 1997 when the party came to power, the cost of running a car has fallen by 10 per cent, but the price of bus travel has increased by 13 per cent and train travel has become 6 per cent more expensive. British trains are already among the most expensive in the world, with further above-inflation rises certain in the future.

Over the same period, greenhouse gas emissions have risen in five out of 10 years despite government promises to tackle global warming. Unsurprisingly, over the past 10 years the inexorable rise in car travel has continued, with motorists clocking up almost 400 billion kilometres (270 billion miles) a year.

 

Mystic Merv will have the answer it's all inflationary and the fix will a interest rate rise.

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Nurses' misery at job threats and low pay rises | the Daily Mail

 

Nurses' morale is at its lowest for ten years, a survey has found.

 

 

The Royal College of Nursing questioned 9,000 members and found that only 34 per cent thought the profession offered a secure job - down from 71 per cent in 2005 - while 35 per cent said they were afraid of redundancy, up from just 7 per cent two years ago.

Despite a series of pay rises, a quarter of nurses take on a second job to make ends meet.

One in four said they would leave nursing if they could and fewer than half said they would recommend it as a career.

Now nurses are being balloted on industrial action after the Government offered them only a 1.9 per cent pay rise

 

Perhaps they should call in Mystic Merv with his magical interest rate rises.

 

Nurses are being offered a paycut, the cost of living has gone through the roof with Mystic Merv's inflation busting interest rate rises. Luckily these rate raises are never added to the inflation figures so they are never counted. A cynic would be very suspicious about why this is done fortunately no ones watching.

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http://www.dailymail.co.uk/pages/dmstandard/frame.html?in_bottom=http://www.thisismoney.co.uk/news

 

Millions of homeowners are facing further mortgage misery. Economists said today another increase in the cost of borrowing is almost certain and could come next month.

It would be the sixth since last August and take the Bank of England's base rate from its present 5.75% to 6%, the highest level since February 2001. But the prospect of higher interest rates is good news for British tourists going to the US. The pound jumped to a 26-year high of almost $2.05 as a result.

Fears of an interest rate rise increased when figures were released today showing that prices are rising too quickly.

The hardest hit will be two million homeowners who are on fixed rate mortgages due to end in the second half of the year. They could face increases from 4.5% to 6% when they come to lock into a new fixed rate.

 

Why isn't Mystic Merv policy working!!!

 

Lending limits should be enforced to limit the money supply, but it's far better to rip people off with ever increasing cost of borrowing. From my first post nearly £1600 a year is being taken from you in extra interest for a loan of £100,000 with none of that paying off YOUR DEBT.

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Petrol hits £1 a litre with no end in sight to turmoil in the world's oil market | | Guardian Unlimited Business

 

Motorists in parts of Britain were being forced to fork out over £1 a litre yesterday but can be expected to pay more soon as crude prices soared again to nearly $77 a barrel.Turmoil in the international oil markets, due to strong demand, geopolitical instability and a shortage of refining capacity, will put further upward pressure on forecourt prices. Huge profits are expected for oil companies such as BP and Shell, which report their half-yearly financial results next week. ExxonMobil, which also reports next week, has just become the world's first company to be valued on a stock exchange at over half a trillion dollars (£250bn).

The long-term outlook for the global economy seems bleak - without any concomitant relief for the environment. The International Energy Agency (IEA) said last week that it was raising its oil demand forecasts and warned there could be shortages in supply up until 2012.

The average price for unleaded petrol across the country is 96.75p, some way below the average 98.4p record high it reached in August 2006, according to Catalist, the monitoring specialist that provides information to the major oil companies. But some garages are already charging their customers 108p for unleaded fuel and as much as 109p for diesel. "Who knows where it is going to go from here?" said Arthur Renshaw, who covers the UK market for Catalist.

 

 

Consumers of the UK don't worry Mystic Merv will fix oil prices with a interest rate rise. It's a little know fact that UK interest rates have a direct impact on global oil prices. This global inflationary pressure will be quelled by a interest rate rise as the growing demand for oil by China and India will safely be quelled if interest rates he rise.

 

Mystic Merv's magic crystal ball says so.

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Card firms cash in on missed payments

 

• More than 4.1 million credit card repayments missed in last six months, MoneyExpert.com research shows

Credit card customers have paid out up to £50 million in penalty fees for missing payments in the past six months, new MoneyExpert.com research* shows.

 

Up to 4.1 million monthly payments on credit cards have been missed or paid late in the past six months, the independent financial comparison website says. That works out at around 694,506 repayments missed a month.

 

And MoneyExpert.com is urging card customers who are struggling with debts to take action now or risk further penalty fees and ultimately damage to their credit rating.

 

Around nine per cent of credit card bill payments have been missed in the past six months, MoneyExpert.com's research shows. Credit card firms charge £12 a time for missed payments after action last year by the Office of Fair Trading to cut high penalty fees.

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BBC NEWS | Business | Bank voted 6-3 to increase rates

 

Policymakers at the Bank of England voted six to three to raise interest rates to 5.75% this month, the minutes of their latest meeting show. The Monetary Policy Committee said there were no major signs of a slowdown in consumer spending or the housing market despite previous rate rises.

Rates have risen five times in the past year as policymakers have tried to contain inflationary pressures.

Inflation weakened last month to 2.4% but the fall was smaller than expected.

 

Strange how there own inflation busting rises in the cost of borrowings are always excluded in the figures, it's just a good job with increasing costs people aren't at risk of losing there homes.

 

I wonder if we are going to see an increase in the suicide rates over the coming months, no doubt Mystic Merv will find a convenient excuse and it won't be his fault as people shouldn't borrow so much money!!!

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US mortgage debts contaminate Europe - Times Online

 

Two European insurers are facing an $8 billion exposure to American sub-prime mortgage markets, it emerged today, only hours after bad debts forced the Wall Street bank Bear Stearns to tell investors that two funds it manages were virtually worthless.

Aegon and ING, both Dutch-based insurers, hold about $4 billion (£1.95 billion) each of sub-prime US mortgage assets, according to analysts at Sanford Bernstein, the stockbroker.

Bruno Paulson, a senior analyst at Bernstein, estimates that Prudential, the UK-based insurer, has a further $200 million of market exposure.

And Axa, the French insurance group, is thought to be among other leading European insurers facing the risk of losses in the wake of the collapse in confidence in the US housing market.

 

The crisis of confidence in the US housing market has had a marked knock-on effect on the value of mortgage-related securities traded on the wholesale markets.

Delinquency levels among mortgage borrowers with patchy credit histories have rocketed to four-year highs in America, hitting the underlying value of structured packages of mortgages put together by investment banks and previously extremely popular among investors.

The banking sector shouldn't worry Mystic Merv will fix it all with a interest rate rise, higher borrowing costs means it's less likely people will default on loans in Mystic Merv's eyes. It's all the consumers fault for borrowing too much money, never the central banks fault for failing to enforce lending limits to stop banks lending stupid amounts of money in the first place. Banks are chasing profits and they make money by lending money as such they have no vested interest in curbing lending.

 

But quite rightly the consumer should always foot the bill.

 

If insurances companies take a loss on these funds guess who's insurance premiums will be higher next year to make up for the loss!!! Higher insurance costs will be inflationary so we all know what that means!!!!

 

Another rate rise please Mystic Merv!!!!

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Mystic Merv « Leaders We Deserve

 

Mystic Merv is a hermit from the Celtic fringes. He sometimes speaks out ‘from the big chair’, on his mountain fastness. He claims powers of divination in the tradition of a distant ancestor, Mystic Merl, consultant to King Arthur. Merv offers ten leadership predictions for 2007 with news of what will happen to Tony Blair, Google, Gordon of the big fist, Bob Woodward, The Big Green Mac Corporation, and the monster Glaskazep merger.

 

Is this the same Mystic Merv that's in charge of the BoE????

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Bernanke warns on US housing market | Special report | Guardian Unlimited Business

 

Ben Bernanke, chairman of the Federal Reserve, tonight warned that the downturn in the troubled US housing market would get worse before it got better as he pledged action by the central bank to rein in abuses in the sub-prime mortgage market.Deploring what he described as "the outright fraud" involved in selling some home loans to those on low incomes, Mr Bernanke sent the dollar into a fresh slide when he stressed that the housing market would remain a drag on growth.

The Fed chairman's half-yearly health check on the economy to Congress stressed that growth would remain weak in the rest of 2007 before gathering steam in 2008.

Despite new evidence from US government data today that the real estate sector remains in decline, Mr Bernanke provided scant hope that the Fed would cut interest rates in the near future. Inflation remained too high for comfort, he told Congress on the day when the latest figures for consumer prices showed the core measure of the cost of living up by 0.2% in June and by 2.2% on the year.

Just like Mystic Merv the Fed would rather people lose there homes than keep them. Central Bankers do not give a damm about the people all they care about are there figures, if it affects peoples lives they simply don't care. Such caring soles aren't they.

 

And there response to any criticism will be people should only borrow what they can afford. However how you can borrow "what you can afford" when the central bankers keep changing the cost is a bit beyond me, especially when they can easily add £1600 a year on a mortgage in a year, and no one questions there competence in managing the economy when they are failing so miserably!!!! Perhaps people do have money to burn and £1600+ extra a year isn't a problem and neither is the fact this money doesn't pay a penny off the debt owed.

 

Clearly allowing the increased cost of borrowing to come off the debt would start to help reduce the growth of the M4 money supply which the central bank is concerned about. I wonder what difference to the growth on money this would make if the extra went to pay off the debt rather than disappearing into a big black hole.

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Bank was split three ways over rates vote in July - Independent Online Edition > Business News

 

A three-way split on the Bank of England's Monetary Policy Committee was revealed yesterday as the minutes of their last meeting were published.

Ten days ago the policy-makers decided, by six votes to three, to raise the bank rate by a further quarter point to 5.75 per cent, a six-year high. The move was a reversal of the close (four to five) vote in June to keep rates on hold, when the Governor, Mervyn King, found himself in the hawkish minority. This time two previously dovish MPC members, Kate Barker and Paul Tucker, switched sides.

The MPC was divided into three schools. There were the hawks, who believed that "any delay in raising bank rate this month [July] would run the risk that rates would eventually have to go higher than otherwise would be necessary". Another group agreed to the small increase presaged in the Bank's May Inflation Report, but "without a clear presumption that further increases would be necessary". Third, there was a thoroughly dove-like tendency who wanted to see how the four previous rises since last August pan out.

The last faction comprises the Bank of England's Deputy Governor responsible for monetary policy, Rachel Lomax; the Bank's chief economist, Charles Bean; and the super-dove David Blanchflower, an external member. For them, "major uncertainties about the impact of higher interest rates, especially given the high level of the stock of household debt, pointed to a gradual approach to any further tightening in policy," according to the minutes.

For the hawks, the "upside danger" for inflation was more stark, and the benchmark rate of 5.5 per cent before this month's meeting "was only just on the restrictive side."

 

The exact psudeo science of economics where so fortunate that it doesn't/won't cost people thousands of pounds, their homes and relationships. Must be nice sitting on such a high perch that you have no feeling for what your doing to the people. No one truly knows how the current rate rises will feed into the system over the coming months, the effects could prove devastating to so many people on fixed rate mortgages which finish over the next 18mths.

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Daily Express: The World's Greatest Newspaper :: YourMoney :: How to stop debt getting out of hand

 

RECORD numbers of people are being plunged into debt as living costs and mortgage rates continue to rise.

 

Brit*ain’s personal debt is increasing by £1million every four minutes.

 

The average household debt now stands at £8,816 excluding mortgages, or £54,771 including mortgages, according to comparison website Money http://www.super*market.com.

 

Every day around 330 people are declared insolvent or bankrupt.

 

“Debt has certainly become the common curse of modern times,” says Tim Moss from Moneysupermarket.com. “Whereas 40 years ago, being in the red was considered a last resort, it seems many of today’s Britons are much more accustomed to taking on debt — although actually being able to control it is another thing.”

 

Figures released by the Consumer Credit Counselling Service (CCCS) last week showed a record number of

people had sought advice from debt experts in the first six months of this year. Rising interest rates and

other bills are only expected to make matters worse.

 

Good job Mystic Merv doesn't care, another rate rise is needed to put you all in your place. He doesn't care how many people suffer just as long as his beloved M4 isn't in double digit growth figures.

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Crucial six months to stop the lights going out | | Guardian Unlimited Business

 

Britain's energy policy is entering a crucial phase with decisions over the next few months shaping the country's ability to meet demand over the next two decades, according to energy minister Malcolm Wicks.Climate change and the geopolitics of energy supply and demand will be among the big issues of the 21st century and the ability to meet the challenge will be as important to national security as the armed forces, he said yesterday.

 

So we can all look forward to a energy crisis, increased energy prices and more Mystic Merv interest rate rises to fix the energy crisis.

 

Mystic Merv for PM.

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Haven't we been here before? | Special report | Guardian Unlimited Business

 

It has become a daily occurrence. The pound rises against the dollar and the reports say that it has scaled heights not reached in 26 years.An explanation for why sterling is currently so strong is not hard to find. Money is coming piling into London in anticipation that interest rates - already the highest in the G7 group of industrial nations - are going higher still over the coming months.

What's more this has co-incided with a bout of severe dollar weakness, caused by fears that Wall Street is sitting on heavy losses as a result of the crisis in the US subprime mortgage market. The dollar is not just weak against the pound; it is at its weakest when measured against a basket of global currencies for more than a decade.

But that's now. If the pound has not been at these stratospheric levels since 1981, what was going on 26 years ago to explain its strength then?

There are, it has to be said, some similarities. At the start of the 1980s, Margaret Thatcher's government was convinced that the cure for Britain's recurrent inflation problem was to target the money supply. There was, ministers believed, a direct link between the amount of money sloshing around in the economy and what happened to prices.

The answer was to make money more expensive, and that meant setting interest rates at punitive levels. Forget 5.75%. Back in 1980, bank rate stood at 17%. Fretting about the money supply, however, has come back into fashion. One reason interest rates have been going up is that the hawks on the monetary policy committee are concerned that credit is too plentiful and too cheap.

Another striking similarity comes from what's happening in the oil markets. Earlier this week, the price of Brent crude was within a whisker of its record level of $78.65 reached last summer.

 

 

 

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By the end of 1980 and the start of 1981, the pound was trading above $2.40 against the dollar, but that was the peak. Thatcher's monetarist experiment brought down inflation but at the cost of the biggest recession in Britain since the 1930s.

To get the economy moving again, interest rates were cut. This co-incided with political change in the US, with Ronald Reagan succeeding Jimmy Carter as president.

 

I think your forgetting we've now got Mystic Merv and his crystal ball where surely not going to have a massive recession caused by the BoE incompetence!!!! Well at least Merv won't loose his £250,000 a year job over it, even if he does he'll get a nicely paid top City job so everything will be fine apart from the misery brought to millions of UK households.

 

But remember it's all your fault for borrowing too much money which you couldn't afford after the bank put through inflation busting interest rate rises!!!

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BBC NEWS | Business | Mortgage lending hits new record

 

Mortgage lending has reached another new record in June, says the Council of Mortgage Lenders (CML). Total new lending rose by 9% from May to £34.2bn, despite the five increases in interest rates imposed by the Bank of England since last summer.

The CML said the rise was partly seasonal, as this is the peak time of the year for house buying.

It predicts that lending will be strong in the coming months, reflecting continued demand from borrowers.

 

More proof Mystic Merv doesn't know what he's doing????

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Enjoy your holiday: interest rates have peaked -Times Online

 

Most people in Britain must be looking forward to their holidays even more than usual this year. It has been a thoroughly miserable summer – and for many families, the weather has not been the only reason to dream of “getting away from it all”.

In the past 12 months, the single biggest item in almost every family budget – the cost of the mortgage – has increased more sharply than at any time in the past ten years. For every £100,000 borrowed – and the average new mortgage is now £126,500 – the interest costs have increased by £104 monthly. Meanwhile, the family earnings of £33,000 – which typically support every £100,000 borrowed – have grown by less than £20 per month, once increasing retail prices, unrelated to mortgage costs, are taken into account.

To put the point more directly, almost everybody in Britain is now substantially worse off than a year ago. In fact, the decline in real earnings, after taking account of inflation, mortgage costs and taxes, has been greater than at any time since the deep recession of the early 1990s. And most financial experts believe that the worst is still to come.

After the higher than expected inflation figures that were published on Tuesday, most City analysts believe that another increase, from 5.75 to 6 per cent, is now absolutely certain – and to judge by the recent trading in financial markets, further rate rises early in 2008 are more probable than not. To make matters worse, the big gains in property prices that have boosted homeowners’ wealth and thereby compensated for dwindling real incomes are probably a thing of the past. Average house prices outside London stopped rising last month, according to the Halifax index. And with interest rates marching ever upwards, they could soon start falling, at least for a while. Thus the normal recourse of the hard-pressed British family – to borrow recklessly against their valuable property assets – will look much less tempting in the coming months as house prices stagnate or fall.

 

I bet Mystic Merv won't lose his house through his recessionomics policy.

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BBC NEWS | Business | Wet weather hits UK retail sales

 

The wettest June on record meant UK retail sales climbed more slowly than expected by many analysts last month, official figures have showm. Sales rose 0.2% in June, down from an increase of 0.4% in May, the Office for National Statistics (ONS) said.

On an annual basis, sales rose 3.4% in June, the ONS added.

However, analysts said that while sales growth had slowed, it was probably still too strong to deter the Bank of England from raising interest rates.

 

Probably due to increase sales in umbrellas

[interestrateripoff]

BBC NEWS | Business | Chinese economy refuses to cool

 

China's economy outstripped analysts expectations during the second quarter and grew by 11.9% from a year before, according to new government figures. It came despite government measures in the first six months of the year to cool the economy, which had grown 11.1% in the three months to March.

Government spokesman Li Xiaochao said the government would "improve macro controls" to rein in the economy.

The rapid growth has pushed inflation to a 33-month high.

 

Perhaps Mystic Merv is needed in China!!