housing interest rates will go upwards, just ask the poms? : Melbourne Indymedia

10 YEARS OF HIGHER RATE RISES, WARNS BANK OF ENGLAND.

Oct 17 2003
Bank governor's warning

BANK of England governor Mervyn King yesterday
warned of a decade of higher interest rates, signalling disaster for borrowers.

He said the "nice decade" was coming to an end and record low interest rates would soon be a thing of the past.

The warning will strike fear into householders who have gone on unprecedented spending sprees and piled up dangerous levels of debt.

Speaking in Leicester, Mr King said: "Will the next 10 years be as nice? That is unlikely. To retain the unrivalled degree of stability we have achieved during the nice decade will be an even more difficult challenge for the future. It is over three-and-a-half years since interest rates were last raised - the longest period since the bank rate was held constant at two per cent through the 1940s."

He said it would soon be necessary to put up rates rather than keeping them low to boost high street spending.

Mr King added: "At some point reducing the present degree of monetary stimulus will be necessary in order to keep inflation on track.

"That risk is exacerbated by the continued strength of the housing market and associated borrowing that we have seen in recent weeks."

City analysts say the current basic 3.5 per cent rate could rise to four per cent later this year and by another quarter per cent next spring.

Mr King warned about "dangerous statistical fog" and said the UK economy would be more vulnerable to world events in the next decade. But he said he hoped "lady luck" would continue to shine on the economy.

Downing Street made no attempt to put a gloss on Mr King's gloomy prediction - leading to fears interest rate hikes are looming.

The Prime Minister's official spokesman said: "The governor was commenting on possible pressures in the economy to come, that is his job.

"Let's see how the situation unfolds as part of that will be the overall world economic situation and let's see what happens."

Britons are billions of pounds in debt after taking advantage of low lending rates and spare equity from rising house prices. Millions of people have taken out re-mortgage deals to get cash for cars, holidays and electronic goods.

Interest rates have been exceptionally stable. Since Labour came to power in 1997, there has been little sign of the boom and bust economics of the Thatcher and Major governments.

Earlier in the 90s rates climbed to double figures as Governments struggled to control inflation. On Black Wednesday in October 1992 they went up to 15 per cent.

In one day, Prime Minister John Major and Chancellor Norman Lamont wasted billions of pounds trying to bolster sterling.

Last night union leaders were calling on the Government to tackle the crisis in the manufacturing as figures showed employment in the sector has hit a new low. Ministers maintained that the labour market remained strong with near record levels of people in work and an increase in permanent jobs.

But unions said 10,000 jobs a month were still being lost in manufacturing.

Derek Simpson, general secretary of Amicus, said: "High quality, well paid jobs are becoming an endangered species and the Government must act before they become extinct."

The number of manufacturing jobs fell by 125,000 over the past year to under 3.5 million, the lowest since records began in 1984.

The number of people out of work between June and August rose 5,000 to 1,479,000, with the number of people claiming unemployment related benefit falling by 1,900 last month to 929,800, the lowest since 1975.
so who do we believe,"john howard ", who never ever tells lies, or wait for the coming crash over housing interest rates.look at the various interest rates overseas,and you will see a similar pattern of so called low interest rates.
if by xmas the aussie rates creep to 6%,what employer will give a nice pay rise to his employee, so he can pay off his mortage,and not default on this mortage payment ?