Interest rates

farmergiles

So we've had another half point off the interest rates to give the lowest bank of england interest rate in over 300 years. The question is, "will the banks pass it on?"
I don't think they will this time. They need to try and look after the savers and if they are charging even lower mortgage rates, they could loose savers who need some sort of return for their savings.
What do you think?

Bluewednesday

But surely if you have a tracker mortgage then they have no option, the mortgage tracks the bank of england rate regardless of whether they like it or not! I thought they only couldn't pass it on if there was a minimum in the terms and conditions (which thankfully my tracker hasn't).

Diannew

farmergiles wrote: »

So we've had another half point off the interest rates to give the lowest bank of england interest rate in over 300 years. The question is, "will the banks pass it on?"
I don't think they will this time. They need to try and look after the savers and if they are charging even lower mortgage rates, they could loose savers who need some sort of return for their savings.
What do you think?

I am with you on this..............they can not afford to pass it on it would be suicide for the banks.

sarahwilson

Forgive my stupidity but what the point in cutting the rate if the banks cannot afford/ will not pass it on?:blushing:

farmergiles

Bluewednesday wrote: »

But surely if you have a tracker mortgage then they have no option, the mortgage tracks the bank of england rate regardless of whether they like it or not! I thought they only couldn't pass it on if there was a minimum in the terms and conditions (which thankfully my tracker hasn't).

A lot of the banks/bs are invoking a little known clause which means that they don't have to pass on with trackers if the rate goes too low. I would check with your mortgage provider if you have a tracker

Bluewednesday

I already have - no minimum rate, some terms and conditions say they won't go lower than a certain rate but that's the only way a tracker won't follow the bank rate

Buff

Bluewednesday wrote: »

I already have - no minimum rate, some terms and conditions say they won't go lower than a certain rate but that's the only way a tracker won't follow the bank rate

Nice for the trackers out there - not so nice for the ones on fixed rate deals... saying that, I did fix mine at a relatively low 4.3% lol - not looking forward to 2011 when it runs out.

blobbyh

I'm a bit thick on these kinds of matters but I do have two questions;

1) How does printing extra money introduce it into the nations cashflow? Will we get a free fiver in a packet of Cornflakes or something?

2) If interest rates became so low that people withdrew their savings wouldn't this reduce the liquidity of banks and thus prolong the credit crunch rather than eliminating it?

sarahwilson

I too am thick on these matter and I don't understand how printing more money will devalue the pound. If I've got twenty pounds in my pocket and Alistair Darling prints another million pounds off, the contents of my pocket will still be worth twenty pounds won't it?

PAMDILL

I tried an economics course years ago and still did not understand after months of studying. All something to do with how much money is floating around in the economy and supply and demand.

As my old mum keeps saying at the moment ' where has all the money in the world gone, someone must have it and they should spend it doing something that will benefit all the others'

blobbyh

sarahwilson wrote: »

I too am thick on these matter and I don't understand how printing more money will devalue the pound. If I've got twenty pounds in my pocket and Alistair Darling prints another million pounds off, the contents of my pocket will still be worth twenty pounds won't it?

The way I was taught it was this. A ten pound note is only paper and has to be backed up by something more tangible and trade-able, usually gold. So for that ten pounds on paper the government should in theory have around ten pounds worth of gold to honour the note. If you then print off another paper tenner, you now have twenty pounds in paper currency but still only ten pounds in gold. In effect this devalues the paper currency since each of those two paper ten pound notes is really only worth five.

I'm sure someone can probably explain this better?

Gem7321

Does anyone want to lend me £20,000 for a deposit so we can get a mortgage?

No?

mark130273

i will lend you it ? cost you 59%apr and repaid over 10 years and reayments of £20,000 a month ?hhaahahahahahaa