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Bank of England

Glee For Banking Sector

More Pain For Consumers?

Banks have been waiting years for a rising interest rate environment to boost revenues and margins. That time has finally come right in the midst of a cost of living crisis, but do they care?

The Bank of England base rate is already up from 0.25 per cent at the start of the year to 2.25 per cent. Since Kwasi Kwarteng’s announcements of last Friday, markets have been betting it could hit 6 per cent next year.
This should be a (another) bonanza for the big banks.

The benefit to Britain’s large high street lenders from higher interest rates is plain enough. Rate rises are passed on in full to borrowers, (and yet another huge squeeze on your finances).

Here's an interesting statistic... for Lloyds Banking Group, each 0.25 percentage point rise adds around another £175m to net interest income. When interest rate expectations have risen by as much as 2 percentage points in a matter of weeks, that means a substantial improvement in profits, at the expense of all of us, again.

There is of course the risk that loan growth could slow. But, who really cares, as Banks already hold large books of mortgage debt with a low rate of churn.

Good news for Banks is that the point at which households are unable to pay their mortgage debt is years away, so why not milk it whilst one can...

According to the FT, three banks (Barclays, Lloyds and NatWest should increase their revenue by £12bn between 2022 and 2025 as margins expand and assets grow modestly. It’s not until the base rate moves above 6 per cent that the estimates of consumer loan loss rates start to shift materially.

But to state the obvious, it is hard to forecast the implications of a disorderly interest rate shock. Even if there is a sharp fall in house prices, what happens to unemployment will probably be more important. Households may remain resilient but the risks to corporate debt could be more complex.

The broader question will be about whether higher interest rates stick after the current downturn.

The future is bleak... unless we can use our voices to limit the damage.


Desired Outcomes

What Are You Trying To Achieve
Having lived through high interest rates before, watching my parents struggle in the 70's, we have to ensure that high rates never again persist. We can sit back and do nothing at our peril.
Success Criteria
Common sense fiscal policies need to be put in place for the benefit of all.

Requirements Needed To Progress

Preferred Participants
Activists, Anyone, Charities, General Public, Governments, Home Owners, Politicians, Press
Type of Help Needed
Direct Action, Press Coverage, Public Awareness, Public Support

Considerations & Next Steps

Next Steps For Interested Parties
Does the world exist for profit or for humanity to thrive? How do we create the right balance? Join our community if you want to have a say, or take action.

Location or Impact of Ambition

Bank of England, 8AH, Threadneedle Street, Cornhill, City of London, Greater London, England, EC2R 8AH, United Kingdom

Other Information

Ambition Status
In Progress
Ambition Priority
Important & Urgent

Business Hours/Availability

Author Info


Nadine James

Member since 3 months ago
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Activity Owner Info

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Nadine James

Member since 3 months ago
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