UK Gilts Auction Failed...

interesting......and at 4.5% thanx for the post

regards

It's not in fact a unique event. Similar happened in a auction involving German government bonds a couple of months or so back. I drew attention to it on here.

The auction will be rerun on terms more attractive to buyers.

In otherwords, the market is forcing interest rates up.

They seem unnaturally low - I am an economic numpty, but it seems even to me that rock bottom interest rates do not really help anyone in the long term. What's the point of lending at low rates? What's the point of saving or investing at low rates? You are better off paying off longstanding debt with the money to counter natural inflation or your cash will be wiped out by price increases due to the weakness of the pound instead.

Yup!

Should we be surprised?

That's because investors can get better rates elsewhere.

Indian government owned banks are paying better rates at the moment.

'Maria' wrote this:

An indication of falling trust in British Govt debt. The markets are not happy with Brown's free spending policies, particularly after Mervyn's warning yesterday.

'Mel Rowing' wrote this:

Meaning the Treasury will offer a higher rate.

'Maria' wrote this:

They help borrowers, that's why Brown has forced them down.

Little point in saving cash at low rates, unless you have little or no choice (like most older savers etc). These are the people paying the price for Brown's rank dishonesty and incompetence.

Afaik many of those who have received large reductions in mortgage repayment are using the money to pay off the mortgage, much to the annoyance of Brown I'd bet. He wants them to spend it.

'William Black' wrote this:

How many vindaloos to the £sterling Willie?

just so...expect increasing pressure as lenders try to gain compensation for the inflation...

i'm amazed by the incredible crap coming out of 'new' labour blathering about trying to lower interest rates.... are they innumerate or merely impossibly dishonest

regards

Next stop the IMF.

Yet still not one single redundancy in the bloated public sector, not so much as one real nappy co-ordinator has bitten the dust.

The lunatics really have taken over the asylum.

'abelard' wrote this:

Yes all of that, plus he's only reducing domestic IRs to put cash in the pockets of mortgage borrowers.

Not sure if that can be maintained for long...

Except than many borrowers (almost certainly more than half) are on "fixed rate" terms so are not helped at all. ISTM very very unfair to help a minority of borrowers, whilst "punishing"

IMHO the best way to get people to spend is to pay interest to the "savers", these are the people who don't have other debts to pay off.

tim

ISTM after the Icelandic fiasco, anyone investing in the third world for a few percentage points in interest is an idiot!

tim

'tim.....' wrote this:

Absolutely agree. Especially given that many of the borrowers are in the mire because they overborrowed, and many savers are older people who use interest income to supplement their pension income.

Indeed. But this group of people are not very well represented, so tend to get ignored by the pols.