 At 5.25%, interest rates are back up to where they were in February 2008 – just as the global financial crisis was really beginning to take hold. By the end of that year the international investment bank Lehman Brothers had collapsed, sending global financial markets into total meltdown. The UK government had been forced to use taxpayers' cash to bail out both the Royal Bank of Scotland and Halifax Bank of Scotland. By early 2009, things were so precarious that in March 2009 the Bank of England cut the base rate to a 315-year low. That crash was triggered because, ultimately, people buying homes had borrowed too much money, too cheaply. Bankers had bundled all those mortgages together, wrapped a ribbon around them and sold them to other bankers. The Bank of England has hiked up interest rates for more than a year (Picture: Reuters) Those bankers tied on another ribbon and sold them to yet other bankers, pension funds and insurance companies on the promise people would keep paying their mortgages. And they didn't. They couldn't afford to because having got their mortgage cheap on a special discount offer, after two years it rocketed. The whole thing spiralled and it was bad. It's slightly ironic that 15 years later and we're in a very similar situation – at least, individuals are. Mortgages have been unbelievably cheap for more than a decade and people forgot that wasn't normal. Combined with emergency spending through the pandemic, an energy crisis, Brexit and all the rest, inflation has soared and it's stuck way above where it should be for a healthy economy. Interest rates going up or down can have a big impact on mortgage holders and those with savings (Picture: AFP) Now the Bank of England is raising rates in response to people buying homes and borrowing too much money, too cheaply. For homeowners, the net result is the same as it was then.){kind=link}
NEWS… BUT NOT AS YOU KNOW IT
At 5.25%, interest rates are back up to where they were in February 2008 – just as the global financial crisis was really beginning to take hold.
By the end of that year the international investment bank Lehman Brothers had collapsed, sending global financial markets into total meltdown.
The UK government had been forced to use taxpayers’ cash to bail out both the Royal Bank of Scotland and Halifax Bank of Scotland.
By early 2009, things were so precarious that in March 2009 the Bank of England cut the base rate to a 315-year low.