Bank Base Rate down by 1.5 %!

The fear I have it this rate cut will be meaningless, the Bank of England base rate is one thing, what you can actaully get a mortgage for is quite another!

If you currently on a tracker that follows BOE base rate you're laughing, those that are looking for a new deal once there currenty mortgage is up for renewel might have a harder task.
 
HEADRAT said:
The fear I have it this rate cut will be meaningless, the Bank of England base rate is one thing, what you can actaully get a mortgage for is quite another!

If you currently on a tracker that follows BOE base rate you're laughing, those that are looking for a new deal once there currenty mortgage is up for renewel might have a harder task.
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What it does do though is free up a fair bit of cash for people especially with the Christmas coming up. A lot of people have come off their discount rates and are on variable deals and for the most it is usually base + (1.5-1.99). Right now it actually works out more expensive for them to go on fixed deals again so essentially some will be back on rates between 4.5% - 4.99% which is what most of the fixed term deals were offering a few years back.

As for the property market until the banks start passing these savings onto new customers that market won't pick up. Getting very difficult to pick up a loan these days and if you can get one the rates are so high it is ridiculous and not really worth it. There are some ok rates around for those looking to put 40-50 % deposit in but realistically how many can afford that?

Not so good for the savers though, banks will be swift to slash their rates. Funny they aren't so quick to put them to up when interest rates go up. Same way for mortgages you usually get a letter within days if an interest rate goes up but usually takes a few weeks when it goes down ;)
 
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dsb said:
Will the banks start lending again then due to this?
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Depends what happens to the Libor rate unfortunately.

Currently it is still much higher than the bank base rate. It is very unlikely that we will see the full 150 basis point cut (1.5%) transpire into a 150 basis points reduction in Libor. (probably 50 at best).
 
This is likely to have the exact opposite effect. The markets have already reacted badly by the looks of it.

People will panic thinking the BoE know more than us. People will not spend the money, this christmas will be appaling financially, rates will drop again and we will be into deflation by the end of next year.

Then on to the Great Depression MK2
 
Damn my fixed deal suddenly doesn't look so good :eek:

All good news though if like me you're looking to move :)
 
Crikey! Only three months ago I got a 1-year fixed bond at 7.00%! It's a shame my mortgage is fixed rate though...
 
EddScott said:
This is likely to have the exact opposite effect. The markets have already reacted badly by the looks of it.

People will panic thinking the BoE know more than us. People will not spend the money, this christmas will be appaling financially, rates will drop again and we will be into deflation by the end of next year.

Then on to the Great Depression MK2
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Extract from a RS trader (FX markets mainly)

RBS said:
In a hugely surprising move, the Bank of England today cut official interest rates by 150bps, the largest move in interest rates since Sep 17th 1992 and the ERM crisis and the pound's exit from the ERM system. The decision was a bold move by the committee and reflects a front loading of rate cuts that undoubtedly would have been sanctioned by the committee over the coming months in any case. This now buys the MPC some time, with risks remaining that the committee will have to cut by more in coming months, but probably not for the next 3 months at least (taking us through to the next Inflation Report).

How should the markets react? Swap rates will continue to fall sharply at the front end (probably a further 50bps over the next few weeks), since they will price in the risk that interest rates will have to fall to 2% in order to kick start economic growth in the UK. Furthermore, deposit rates will also drop sharply, reflecting a rush to deposit by investors, since the ship on high deposit rates is rapidly sailing.

For the FX markets we think that the decision to cut interest rates aggressively is actually a good one, since it could shorten the length of time that the UK spends in recession. Therefore, we would not be surprised if GBP/USD, GBP/EUR and GBP/JPY rally from here. Watch out for a push up towards $1.61, €1.25 and ¥160 over the remainder of this session and into Friday.

All in all, this move is decisive, it is what the UK economy needed, and hopefully the markets will realise that the Bank of England are just adjusting interest rates to an appropriate level. Christmas may not be so bad after all.
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Great. More pandering to the people renting their homes from banks, whilst sensible savers are going to lose out in a huge way. :rolleyes:
 
Scam said:
Great. More pandering to the people renting their homes from banks, whilst sensible savers are going to lose out in a huge way. :rolleyes:
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Some of us can't afford to spend £180k outright on buying a house in our local area :rolleyes: What are we supposed to do? Live in a box??
 
So what I don't understand is that the Government if currently offering to guarantee banks lending and have introduced billions in liqudity from the taxpayer and they are failing to pass this on.

So hang on a minute, we're bailing them out and guaranteeing their loans/borrowing and the banks are creaming us by keeping the rates high.

LOL, I'm with the Cambridge Building Society and they've just their rate by 0.2%, how generous!
 
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ci_newman said:
Some of us can't afford to spend £180k outright on buying a house in our local area :rolleyes: What are we supposed to do? Live in a box??
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You dont bow to peer pressure and rent. If you cant afford to buy a house on a sensible mortgage then.. duh.. you dont buy one.
ruffneck said:
lol are you for real?
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What are you contesting? The fact that savers will lose out? Isnt inflation nearly 5% at the moment? I was hard-pressed to find an ISA paying much over 6% just a few weeks, what's going to happen now? Woop, i can get a rate below inflation and actually lose money?!
 
Pestilence said:
Still about 3 years fixed rate on my mortgage, so no help for me unfortunately. Also, our bank has just slashed interest rates on savings accounts by more than 1% due to the previous drop in base rate. No pluses coming my way in all of this.
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If you've got savings then you'll probably be better off paying some of the mortgage off with it all.
 
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