DOOOM: Interest rates

[_V_]

Interest has always been a way of compensating for inflation and risk. If there is no risk (everything is backed by central banks) and we only see deflation, then negative interest rates are coming.

I cannot wait to borrow a large amount of money and be paid for sitting on this sum.

[d000hg]

That would be very annoying as I'm about to fix on a new rate.

I'm guessing rates would need to go some way into negative territory before consumers see any return on their mortgage.

After the plunge in interest rates in the 2000s, I think mortgages all have small print that the rate cannot fall below 0 even on trackers. Back then there were people on discounted deals who ended up getting small payments from the lender, IIRC - we didn't have it that good but I do have a BTL property on which my interest is £41pcm.

[WTFH]

Hmmm.. could create some interesting square root results, or divide by zero errors...

Or, if a bank was stupid enough to use a database instead of an excel spreadsheet and only perform calculations where x > 0

[CheeseSlice]

All those systems not designed to go negative? Temp fix and more permanent solutions needed? Or just another big fuss about nothing but they may as well pay someone to trawl through the code and test it anyway.

Hmmm.. could create some interesting square root results, or divide by zero errors...

[CheeseSlice]

Soon be a good time to take out a fixie mortgage then

That would be very annoying as I'm about to fix on a new rate.

I'm guessing rates would need to go some way into negative territory before consumers see any return on their mortgage.

[Hobosapien]

Millenium Bug 2 in the making?

From that beeb article:

Mr Woods said he wanted to know if the banks would face technological challenges if rates should turn negative.

"We are also seeking to understand whether there may be potential for short-term solutions or workarounds, as well as permanent systems changes," he said.

The past few years have been marked by outages and other problems with the computer systems of various British banks.

Last year, MPs condemned the level of IT failures at banks, warning that financial levies on firms and more regulation may be needed.

All those systems not designed to go negative? Temp fix and more permanent solutions needed? Or just another big fuss about nothing but they may as well pay someone to trawl through the code and test it anyway.

[scooterscot]

Effectively this is a bank bail in.

Should neg rates become applicable to retail customers.

[ChevyChase]

Bank of England questions banks over negative rates - BBC News

Negative rates incoming. This should be interesting..

Soon be a good time to take out a fixie mortgage then

[fullyautomatix]

Bank of England questions banks over negative rates - BBC News

Negative rates incoming. This should be interesting..