Bank of England : Rate Drop!

megakid · 8 Jan 2009 at 14:52

I'm hoping that in October/November when my -0.49% reduced tracker mortgage expires and moves onto +0.99% one, I can try to nail down these low rates into a lengthy fixed deal.

Regards,

megakid · 8 Jan 2009 at 15:01

pastymuncher said:
There is absolutely no point in any more interest rate cut's. The banks are saying that they will not pass them on to borrowers. They are quick enough to cut them for savers though. All this is doing is shafting people who have actually bothered to save money. If you have a credit card you won't see your rates come down either. The banks still will not lend to people and businesses. It benefit's no-one except the banks. Seriously, what's the point?

You personally might not see any benefits, I have a tracker mortgage that follows the rate, so each time they cut it by 0.5%, I see approximately £75 extra in my pocket each month - thats just one example where people can benefit on an individual level.
There's plenty more benefit to the economy - banks can meet their liquidity requirements slightly easier during money market auctions with the government - hence directly keeping banks afloat and all the onward effects of that.

aardvark · 8 Jan 2009 at 15:06

Rich_L said:
Part of the reason that interest rates are so low is the risk of deflation, so I don't know why savers are getting in a tizzy that their savings are not earning as much, if we get into a period of deflation even savings with 0% interest will technically still be better off.

no way will we have deflation - they will do anything to stop that, and i mean ANYTHING.

what we will get is an explosion in inflation or a currency collapse, maybe both - might take a few years but it will happen.

starfighter · 8 Jan 2009 at 15:08

Yup, I love how everyone with a bit of money demands 3%. 0% is no growth, thank the lord it isn't -3%.

It really sucks, rich people have to actually do work rather than count the 0s on the intrest. When will this crysis end.

Obviously everyone loses whether it be less intrest on your billions or your first ever job at Woolworths. But I hazard a guess that the former are less likely to be affected in real terms than your avergate joe that loses his/her job. So overall it is a good idea assuming the banks don't simply skim it off imo.

I would have put my savings into some kind of fixed rate arrangement as soon as this crunch was getting close, if your savy enough to earn it you should be savy to keep it. It is the people getting layed off for no fault of their own that deserve the help.

The Mad Rapper · 8 Jan 2009 at 15:08

matt_fsr said:
When savings are gaining 1.5% interest but inflation is actually deflation of 2%, thats a net improvement of 3.5% (roughly speaking).

You'd have to take the money out and spend it to see any difference. If it just sits in the account then you're no better off in a delation environment.

The Mad Rapper · 8 Jan 2009 at 15:09

starfighter said:
It is the people getting layed off for no fault of their own that deserve the help.

Of course it's their fault they got laid off. They should have chosen a recession proof career path

Reality Bites · 8 Jan 2009 at 15:55

megakid said:
, so each time they cut it by 0.5%, I see approximately £200 extra in my pocket each month - t.

you must have one hefty mortgage if it drops £200 per 0.5%!

My 140k mortgage dropped around £25 per 0.25% drop.

rsatd · 8 Jan 2009 at 15:58

Stupid banks, now I get just £80 a year on my savings... Retarded idea. And most tracker mortgages have a lower limit anyway or they should. This weekend its trolling for a decent savings account...

jamief · 8 Jan 2009 at 16:00

rsatd said:
Stupid banks, now I get just £80 a year on my savings... Retarded idea. And most tracker mortgages have a lower limit anyway or they should. This weekend its trolling for a decent savings account...

Do you really expect the banks to pay out 5% interest when the base rate is 1.5%?

rsatd · 8 Jan 2009 at 16:05

Nope, none do at least that's what one of those comparison sites tells me. Its going to be either shoving it into NS&A (national savings or something like that) or some strange Indian based bank.

BBC claims that there's more money tied up in saving accounts then mortgages and yet they are getting shafted... Great idea. Maybe it would be possible to get an account in another country, but I doubt it.

Luseac · 8 Jan 2009 at 16:06

jamief said:
Do you really expect the banks to pay out 5% interest when the base rate is 1.5%?

I managed to get 5.1% fixed when the base rate was 2%.

Hurrah for interest rate cuts, yet again the sensible ones are punished.

Hatter The Mad · 8 Jan 2009 at 16:10

I'm sick of the government penalising (people like) me who was sensible with money and saved a lot, so that they can appease people who took out mortgages way above their weight.

megakid · 8 Jan 2009 at 16:31

Reality Bites said:
you must have one hefty mortgage if it drops £200 per 0.5%!

My 140k mortgage dropped around £25 per 0.25% drop.

You're absolutely right - I was thinking about the 1.5% cut they did a month or so back. Don't have time to work it out exactly but I believe it saves me about £75 per 0.5%.

Booner! · 8 Jan 2009 at 16:38

Hatter The Mad said:
I'm sick of the government penalising (people like) me who was sensible with money and saved a lot, so that they can appease people who took out mortgages way above their weight.

Same

jamief · 8 Jan 2009 at 16:45

Hatter The Mad said:
I'm sick of the government penalising (people like) me who was sensible with money and saved a lot, so that they can appease people who took out mortgages way above their weight.

The interest rate cut has very little to do with "appeasing" mortgage payers. It is an attempt to increase profits for the banks, so they can then begin to lend more freely, with the ultimate result of the economy being boosted by more money being available.

Energize · 8 Jan 2009 at 16:47

Morba said:
eh?
you dont lose anything.

Yes he does, interest rates are lower than inflation so he is losing money. How the government expect people to spend when the banks can't lend money because no one is saving I don't know.

scorza · 8 Jan 2009 at 17:00

Energize said:
Yes he does, interest rates are lower than inflation so he is losing money. How the government expect people to spend when the banks can't lend money because no one is saving I don't know.

Ah but we have "real deflation" atm (using the same criteria by which we had 10% real inflation not so long ago) so he's not losing money at all. You've answered your second point yourself - the government expect people to spend what they'd otherwise save.

Fuzz · 8 Jan 2009 at 19:15

If you have any savings at all, from what I've been reading about the ecomomy and what's going on, you need to buy lots of gold with it and get rid of your "paper" money as it isn't worth the ink written on it.

Energize · 8 Jan 2009 at 19:28

scorza said:
Ah but we have "real deflation" atm (using the same criteria by which we had 10% real inflation not so long ago) so he's not losing money at all.

We never had 10% inflation, RPIX is real inflation, which was 3.9% last time it was calculated.

the government expect people to spend what they'd otherwise save.

But if you don't save there's no money to spend as banks create money from deposits. The government expect banks to lend so people can spend, but they won't because their not getting enough money!

starfighter said:
Yup, I love how everyone with a bit of money demands 3%. 0% is no growth, thank the lord it isn't -3%.

No if it's equal to inflation there's no growth, if it's less than inflation there's negative growth, if interest rates are negative but there is deflation then there is still growth.

It really sucks, rich people have to actually do work rather than count the 0s on the intrest. When will this crysis end.

Yeah damn those pensioners who saved all their hard working lives so they could retire in security, they should be left to live on the streets now their savings and pensions aren't giving them the income they need to afford food. Btw it's "crisis".

I would have put my savings into some kind of fixed rate arrangement as soon as this crunch was getting close, if your savy enough to earn it you should be savy to keep it.

Which you can't do unless you have a lump sum of at least £1k which you don't want to touch. So if you are poor with small savings you are actually going to be affected more by the rate cut than the "rich".

thepharcyde · 8 Jan 2009 at 19:31

I heard the other day that Nationwide said that they will not be passing on anymore drops to 'some' tracker mortgage holders.

Anyone know whos affected. I renewed my mortgage with them in Dec 07 at 8bps above base rate so will be paying 1.58% if they pass this on.

Talk of the base rate dropping to zero by the end of the year!!!!