Base rate rise!

AJUK · 11 Jan 2007 at 14:29

The problem with the savers' smugness is that they are often slow to make a rise and then the rise in rates is less than the base rate increase. ********!

Rotty · 11 Jan 2007 at 14:30

Samtheman1k said:
Tax perhaps isn't the right word, I mean more money for the GVT!

still lost me, from where ?

eddiemcgarrigle · 11 Jan 2007 at 14:31

I'm just glad I got a good deal on my mortgage last year. I managedto secure a ten year fixed rate at 4.3% and if rates ever fall lower then my mortgage will match that lower rate. Happy days.

shine · 11 Jan 2007 at 14:32

eddiemcgarrigle said:
I'm just glad I got a good deal on my mortgage last year. I managedto secure a ten year fixed rate at 4.3% and if rates ever fall lower then my mortgage will match that lower rate. Happy days.

Sounds like a good deal, what's the catch?

Samtheman1k · 11 Jan 2007 at 14:34

Rotty said:
still lost me, from where ?

Um, where does the interest earnt from 5.25% go to? Obviously the extra on top of 5.25% goes to the bank/BS, but doesn't the 5.25 go to the GVT? Or have I completely misunderstood how mortgages work?

Haircut · 11 Jan 2007 at 14:38

Samtheman1k said:
Um, where does the interest earnt from 5.25% go to? Obviously the extra on top of 5.25% goes to the bank/BS, but doesn't the 5.25 go to the GVT? Or have I completely misunderstood how mortgages work?

Yes, all the interest goes to the bank.

Banks lend out at higher interest rates than they give to savers, hence (one of the ways) how they make a profit.

Samtheman1k · 11 Jan 2007 at 14:41

Haircut said:
Yes, all the interest goes to the bank.

Banks lend out at higher interest rates than they give to savers, hence (one of the ways) how they make a profit.

Fair enough, I always though the GVT was involved! So interest rates rises are good for banks, unless it results in more repossessions I guess, as there can be a bigger differential between debt and credit. I guess that also means they make more profit and thus more tax for the GVT!

Haircut · 11 Jan 2007 at 14:46

Samtheman1k said:
Fair enough, I always though the GVT was involved! So interest rates rises are good for banks, unless it results in more repossessions I guess, as there can be a bigger differential between debt and credit. I guess that also means they make more profit and thus more tax for the GVT!

It's not quite as simple as interest rate rises being good for banks.
If, at 5% base rate the bank lends out at 5.25% and pays interest at 4.75% then they have a 50 basis point spread (0.5%)
If they interest rate rises to 5.25% they may lend at 5.5% pay at 5%, thus still keeping the same 50 b.p. spread (They usually put up rates on loans more than rates on savings though!!)

The bank may also have exposure to bond markets etc. as well which can affect things when rates rise or fall.

Rotty · 11 Jan 2007 at 14:51

Samtheman1k said:
Um, where does the interest earnt from 5.25% go to? Obviously the extra on top of 5.25% goes to the bank/BS, but doesn't the 5.25 go to the GVT? Or have I completely misunderstood how mortgages work?

to the bank who provide the mortgage, they take the whole lot

Edinho · 11 Jan 2007 at 18:33

shine said:
Sounds like a good deal, what's the catch?

Probably penalties for early repayment and whacked with a big arrangement fee.

Just got mine fixed for 5 years last month.

crashuk · 11 Jan 2007 at 19:14

aardvark said:
awesome - i just made £149 by betting for a rise - haha!!!

not counting the extra interest on my savings

Hehe sorry got drunk today, too ka few friends out for a drink

, placed a £50 on 45-1 made £2250, i wasnt going to place a bet but i thought why not.
Anyway things shoudl start to change still sticking to 2nQ.

aardvark · 11 Jan 2007 at 20:10

crashuk said:
Hehe sorry got drunk today, too ka few friends out for a drink , placed a £50 on 45-1 made £2250, i wasnt going to place a bet but i thought why not.
Anyway things shoudl start to change still sticking to 2nQ.

45-1, damn - i only got 29-1 and that was a month ago - oh well, thats betfair for you.
i should have bet more but didn't really think the mpc had the balls to raise rates, despite the fact that they should be a lot higher to combat real inflation anyway.

its quite funny how businesses and estate agents are saying its a disaster on the news - all for a tiny 0.25% rise - 5.25% interest rate is still pretty low - especially compared to what its going to be in a years time

Duke · 11 Jan 2007 at 20:11

Few more pennies a month on the savings is good

Morba · 11 Jan 2007 at 20:12

Visage said:
They decided that a while ago.

Cue crashuk: 'WE'RE ALL DOOMED'

i wasnt going to post in here, but i saw that crashuk was the last to post, so I have to see what he is saying

eddiemcgarrigle · 11 Jan 2007 at 20:36

shine said:
Sounds like a good deal, what's the catch?

The only catch was that I'm tied in for two years and after that I'm free to leave whenever I like with no penalties. Mortgage was courtesy of the Leeds Building Society.

Dolph · 11 Jan 2007 at 23:07

*pets 5 year fixed rate and decent sized savings*

HEADRAT · 11 Jan 2007 at 23:09

AJUK said:
The problem with the savers' smugness is that they are often slow to make a rise and then the rise in rates is less than the base rate

Also how many savers have made £150K profit on £150K invested in the last 5 years, that's how much my house has gone up, even it dropped significantly it's still a better investment than saving.

HEADRAT

Brum Man · 11 Jan 2007 at 23:16

Samtheman1k said:
I guess that also means they make more profit and thus more tax for the GVT!

You are literally obsessed aren't you?

Mat · 11 Jan 2007 at 23:19

There is a graph here on the last 22 years base rate just to give you some idea of whats been going on if you didnt already know.

http://www.houseweb.co.uk/house/market/graph.html

make of that what you will... things might bob up and down for a few more years or, as in 88, there might be a spike! Can anyone remember why rates went up that sharply in 88??

Rotty · 11 Jan 2007 at 23:21

Mat said:
There is a graph here on the last 22 years base rate just to give you some idea of whats been going on if you didnt already know.

http://www.houseweb.co.uk/house/market/graph.html

make of that what you will... things might bob up and down for a few more years or, as in 88, there might be a spike! Can anyone remember why rates went up that sharply in 88??

collapse of the ERM ( or rather the efforts made to try and prevent it collapsing )