Stoxx
Well-Known Member
Interest rates now stand at 1.5%
Bank of England cuts by 50bps
- Thread starter Stoxx
- Start date
nuffield
Well-Known Member
whats next? printing money? wheelbarrows full needed to buy a loaf of bread?
Tinkerbee
Well-Known Member
*raises hand*
I know sod all about economics so could someone please explain something for me
The reason (partly- I do at least know there are many factors blah blah, bound to have recession at some point blah) we are in the current situation is due to idiots borrowing to much, being rubbish with money and not being able to pay back etc etc.
So why exactly are we lowering interest rates to encourage them to borrow?
Confused
I know sod all about economics so could someone please explain something for me
The reason (partly- I do at least know there are many factors blah blah, bound to have recession at some point blah) we are in the current situation is due to idiots borrowing to much, being rubbish with money and not being able to pay back etc etc.
So why exactly are we lowering interest rates to encourage them to borrow?
Confused
Darkly_Dreaming_Dex
Well-Known Member
Isnt this how the Zimbabwe crisis kicked off?
Stoxx
Well-Known Member
Well they have been denying the rumours today!
Banks can't lend at these rates as obviously they won't make any money. It's just a case of getting all the bad news out of the way, everyone trying to ride the storm out and then gradually confidence will come back in to the markets.
Banks can't lend at these rates as obviously they won't make any money. It's just a case of getting all the bad news out of the way, everyone trying to ride the storm out and then gradually confidence will come back in to the markets.
Stoxx
Well-Known Member
Their idea behind cutting rates is to try and boost business and to kick start the economy, however I think they are actually making people panic.
Inflation was high due to the increase in the oil price plus energy companies putting prices up, but now they are predicting inflation will fall very dramatically and they are trying to act before it falls negative.
Banks stopped wanting to lend because they've been stung, they weren't even lending to each other because they weren't sure of each others positions. Due to jobs being lost and panic generally people stop buying houses or are unable to get the mortgages they could before and then there becomes a flood of houses on the market which makes prices drop.
If you look at a banks website at the moment a lot of them will only be offering mortgages with a max loan to value of 75% or something similar, rather than the 100% they were offering 18 months ago. This means you can only secure a mortgage if you have cash, therefore if the home devalues then a margin has been created.
That's kind of really basic, but I hope it helps.
Inflation was high due to the increase in the oil price plus energy companies putting prices up, but now they are predicting inflation will fall very dramatically and they are trying to act before it falls negative.
Banks stopped wanting to lend because they've been stung, they weren't even lending to each other because they weren't sure of each others positions. Due to jobs being lost and panic generally people stop buying houses or are unable to get the mortgages they could before and then there becomes a flood of houses on the market which makes prices drop.
If you look at a banks website at the moment a lot of them will only be offering mortgages with a max loan to value of 75% or something similar, rather than the 100% they were offering 18 months ago. This means you can only secure a mortgage if you have cash, therefore if the home devalues then a margin has been created.
That's kind of really basic, but I hope it helps.
CrazyMare
Well-Known Member
Thanks lfield - that helps confirm that I thought I understood and I do.
Not a nice world for those of us about to graduate to try and get jobs and houses in.
Not a nice world for those of us about to graduate to try and get jobs and houses in.
Tinkerbee
Well-Known Member
thanks for that lfield, understand a bit better now.
SpruceRI
Well-Known Member
Oh - here's my 'I'm confused' question?
What's the point of reducing the Bank of England Base Rate if none of the mortgage lenders will reduce their mortgages in line with it?
All the people with mortgage debt will be unaffected but all those with savings will earn even less.
Am I understanding this right? Thanks
What's the point of reducing the Bank of England Base Rate if none of the mortgage lenders will reduce their mortgages in line with it?
All the people with mortgage debt will be unaffected but all those with savings will earn even less.
Am I understanding this right? Thanks
Doris68
Well-Known Member
...and what happens to all us old sods who have saved for retirement and now have b****r all interest to live on?
Sorry, boring old f**t stuff but it's true!
Sorry, boring old f**t stuff but it's true!
LCobby
Well-Known Member
and less incentive to invest in Building Societeis, so less money for them to lend out as mortgages.
However, the Bank of England Base rate affects far more than mortgages, e.g interbank rates, commercial and public sector finance and loans, business investments,value of sterling, etc.
However, the Bank of England Base rate affects far more than mortgages, e.g interbank rates, commercial and public sector finance and loans, business investments,value of sterling, etc.
burtie
Well-Known Member
Those us us who took out tracker mortgage do benefit and at the moment that is a lofe saver for us!
StaceyTanglewood
Well-Known Member
i have a tracker mortgage so it should follow this but i have been told mine is capped at 3% !!!!!!!!! GRRRR
Anyway someone at work just told me to check my Key Facts and if it isnt in there i can challenge it and they should have to give it to me !!
A few years ago the FSA made them take out that part of it obviously not thinking that it would ever drop below 3% !!
im keeping my fingers crossed !! he he
Anyway someone at work just told me to check my Key Facts and if it isnt in there i can challenge it and they should have to give it to me !!
A few years ago the FSA made them take out that part of it obviously not thinking that it would ever drop below 3% !!
im keeping my fingers crossed !! he he
HammieHamlet
Well-Known Member
This is fantastic news for small business, or at least those who have business loans. Their monthly payments will fall, hopefully increasing profits. The better they look, the more investment that will be put in to them - eventually, this should help stimulate the economy.
Personally, as a first time buyer, I think this will finally allow me to get a foot on the ladder, as house prices are more reasonable. There are still 95% mortgages out there at the moment (probably aimed more at first time buyers), so I will start saving asap!
Personally, as a first time buyer, I think this will finally allow me to get a foot on the ladder, as house prices are more reasonable. There are still 95% mortgages out there at the moment (probably aimed more at first time buyers), so I will start saving asap!
BBH
Well-Known Member
I don't agree as I have a commercial loan on my yard and even though we have had 5 reductions since Oct they haven't passed on one. They did however increase it last year following one interest rate increase. So clearly some lenders have no interest in helping borrowers and are going to think only of themselves.
StaceyTanglewood
Well-Known Member
[ QUOTE ]
I don't agree as I have a commercial loan on my yard and even though we have had 5 reductions since Oct they haven't passed on one. They did however increase it last year following one interest rate increase. So clearly some lenders have no interest in helping borrowers and are going to think only of themselves.
[/ QUOTE ]
They should change at the beginning of each year - mine will come down as of March this year (it is halved)
I don't agree as I have a commercial loan on my yard and even though we have had 5 reductions since Oct they haven't passed on one. They did however increase it last year following one interest rate increase. So clearly some lenders have no interest in helping borrowers and are going to think only of themselves.
[/ QUOTE ]
They should change at the beginning of each year - mine will come down as of March this year (it is halved)
BBH
Well-Known Member
I have rung the lender and they have said they are not obliged to pass on any reductions and made no mention of any changes so I think i'm stuffed tbh.
StaceyTanglewood
Well-Known Member
[ QUOTE ]
I have rung the lender and they have said they are not obliged to pass on any reductions and made no mention of any changes so I think i'm stuffed tbh.
[/ QUOTE ]
Do you have a tracker mortgage though ??
I have rung the lender and they have said they are not obliged to pass on any reductions and made no mention of any changes so I think i'm stuffed tbh.
[/ QUOTE ]
Do you have a tracker mortgage though ??
firm
Well-Known Member
Hi Bumpy Ride Sorry to hear that how frustrating
The BOE dropping their rates has put pressure on banks & building societies to drop their Standard Variable rates over the last few months & most have. Northern Rock had one of the highest SVR and they have dropped theirs at last.
There are a fair few people in trouble who are stuck on Standard Variable Rate mortgages, unable to remortgage for better deals maybe due to negative enquity or high loan to value or simply not enough income to match up the new income multilpiers now needed and it will help them. I remember the last property crash when the banks said they would never do 100% mortgages again - this time round they were even offering 120% mortgages based on a rising market so don't blame completely the people who took up these mortgage offers. Most of them will not have experienced a property crash before and trusted their lenders ( many of whom are on sales commission and heavily target driven) who told them to get on the property ladder
The BOE dropping their rates has put pressure on banks & building societies to drop their Standard Variable rates over the last few months & most have. Northern Rock had one of the highest SVR and they have dropped theirs at last.
There are a fair few people in trouble who are stuck on Standard Variable Rate mortgages, unable to remortgage for better deals maybe due to negative enquity or high loan to value or simply not enough income to match up the new income multilpiers now needed and it will help them. I remember the last property crash when the banks said they would never do 100% mortgages again - this time round they were even offering 120% mortgages based on a rising market so don't blame completely the people who took up these mortgage offers. Most of them will not have experienced a property crash before and trusted their lenders ( many of whom are on sales commission and heavily target driven) who told them to get on the property ladder
BBH
Well-Known Member
No its standard variable rate which should be in line with base rate but depends on lender I think.
Rollin
Well-Known Member
Good old banks - great at shafting the customer.
We are retired and have had our income slashed - we were prudent Mr. Brown saved for our old age. Won't now be going on a spending spree.
Do you remember when the banks were making a fortune out of obscene bank charges? I had an Alliance and Leiceter a/c for more than 25 years NEVER overdrawn. Through a mistake it became overdrawn by £50 they wrote to me but I was away from home therefore it was two weeks before I could put this back in credit - the charge for this? £136!!
The bank argued that the overdraft was unauthorised - oh yes isn't that what they did when they borrowed money on the international money market to finance dodgy mortgages and found they were 'without funds to meet their liabilities'.
Who has paid the bill - we taxpayers who were being charged outrageous amounts of money by these clowns for small banking errors.
Who will be unemployed? who will find their businesses failing? which people may lose their homes? The people who run our finanicial institutions - I don't think so.
What I think about our banks is unprintable
We are retired and have had our income slashed - we were prudent Mr. Brown saved for our old age. Won't now be going on a spending spree.
Do you remember when the banks were making a fortune out of obscene bank charges? I had an Alliance and Leiceter a/c for more than 25 years NEVER overdrawn. Through a mistake it became overdrawn by £50 they wrote to me but I was away from home therefore it was two weeks before I could put this back in credit - the charge for this? £136!!
The bank argued that the overdraft was unauthorised - oh yes isn't that what they did when they borrowed money on the international money market to finance dodgy mortgages and found they were 'without funds to meet their liabilities'.
Who has paid the bill - we taxpayers who were being charged outrageous amounts of money by these clowns for small banking errors.
Who will be unemployed? who will find their businesses failing? which people may lose their homes? The people who run our finanicial institutions - I don't think so.
What I think about our banks is unprintable
bhpride
Well-Known Member
[ QUOTE ]
Good old banks - great at shafting the customer.
We are retired and have had our income slashed - we were prudent Mr. Brown saved for our old age. Won't now be going on a spending spree.
Do you remember when the banks were making a fortune out of obscene bank charges? I had an Alliance and Leiceter a/c for more than 25 years NEVER overdrawn. Through a mistake it became overdrawn by £50 they wrote to me but I was away from home therefore it was two weeks before I could put this back in credit - the charge for this? £136!!
The bank argued that the overdraft was unauthorised - oh yes isn't that what they did when they borrowed money on the international money market to finance dodgy mortgages and found they were 'without funds to meet their liabilities'.
Who has paid the bill - we taxpayers who were being charged outrageous amounts of money by these clowns for small banking errors.
Who will be unemployed? who will find their businesses failing? which people may lose their homes? The people who run our finanicial institutions - I don't think so.
What I think about our banks is unprintable
[/ QUOTE ]
All they care about is making money. Fat cats who don't know, care or remember what it's like to struggle financially. I feel so sad for people losing their homes
Good old banks - great at shafting the customer.
We are retired and have had our income slashed - we were prudent Mr. Brown saved for our old age. Won't now be going on a spending spree.
Do you remember when the banks were making a fortune out of obscene bank charges? I had an Alliance and Leiceter a/c for more than 25 years NEVER overdrawn. Through a mistake it became overdrawn by £50 they wrote to me but I was away from home therefore it was two weeks before I could put this back in credit - the charge for this? £136!!
The bank argued that the overdraft was unauthorised - oh yes isn't that what they did when they borrowed money on the international money market to finance dodgy mortgages and found they were 'without funds to meet their liabilities'.
Who has paid the bill - we taxpayers who were being charged outrageous amounts of money by these clowns for small banking errors.
Who will be unemployed? who will find their businesses failing? which people may lose their homes? The people who run our finanicial institutions - I don't think so.
What I think about our banks is unprintable
[/ QUOTE ]
moogrrr
Well-Known Member
I must admit i don't understand the whole situation but i have been saving really hard over the last few years (for a horse, a house and a wedding in September). I checked my ISA yesterday to realise that since October, despite putting in quite a lot more money, my interest has dropped by over £10 a months due to the cuts in interest rates. That might not seem much, but in the grand scheme of things that is £120 a year (that is if I don't lose any more) and an ISA is meant to be a savings account. I would be just as well off with my money in a normal account!
It makes me really mad that the banks can get away with behaving like they do - no one apart from them seem to be winners in the interest rate drops! GRRR!
Sorry for the rant about something that to many must seen very small fry compared to losing a house or business but it really annoyed me. It just shows how badly the banks are behaving. I am lucky, i wasn't relying on that interest but lots of people live off their interest - imagine if i was or if i needed it to pay for something?
It makes me really mad that the banks can get away with behaving like they do - no one apart from them seem to be winners in the interest rate drops! GRRR!
Sorry for the rant about something that to many must seen very small fry compared to losing a house or business but it really annoyed me. It just shows how badly the banks are behaving. I am lucky, i wasn't relying on that interest but lots of people live off their interest - imagine if i was or if i needed it to pay for something?
bhpride
Well-Known Member
Yes speaking living off interest that's what my mother's doing wtih 75k from her house sale. I just hope she doesn't start struggling. She needs to keep the money there to buy in the future.
Wildspirit
Well-Known Member
*groan*