View Full Version : Interest Rates down to 1%? (YES they have! now just 0.5%)
The actual rate drop occurs the minute they announce it, but a lot of banks only pass them on at the start of the following month. Some pass them on straight away though (often to savers quicker than borrowers :| ).
I'm sure the Natiowide won't drop the rates for savers in there is a base rate cut!
If past drops are anything to go by they will drop it and then some.
Grandmaster
06-01-2009, 15:42
I'm still struggling to see the advantages of dropping the rate any further. What does it actually achieve?
The idea is that businesses can borrow money cheaper, but this will involve the banks actually passing on the cuts to businesses in loans etc. Mortgage rates are second in line really as do not gain as much from cuts here, mostly just cuts in LIBOR that effect them both though.
I'm still struggling to see the advantages of dropping the rate any further. What does it actually achieve?
its good at increasing inflation which is already high and going to get higher from how much we import.
One of the Bank of England's two core purposes is monetary stability. Monetary stability means stable prices - low inflation - and confidence in the currency
they are failing miserably. their current ways seem that they are again government controlled, clearly Gordon has got more control over them than being independant would suggest.
its good at increasing inflation which is already high and going to get higher from how much we import.I must have been at the ganja because i thought inflation went down? :thinking:
DVDWotcha
07-01-2009, 10:52
I must have been at the ganja because i thought inflation went down? :thinking:
Only because the major contributor to inflation was oil and which has dropped through the floor. Cheap oil affects most things so inflation should drop.
However, the pound has devalued against most currencies so prices of imports will go up and as we import far more than we export this results in inflation.
DVDWotcha
07-01-2009, 10:55
The idea is that businesses can borrow money cheaper,
Lower interest rates are only beneficial if the banks are lending money. But they're not. They've used the bail out money to pay off their debts and they're still broke. Nothing to lend out ! :brickwall
Lower interest rates are handy for those who already have debts as well. It gives them breathing room on repayments or the chance to speed up paying off those debts.
The rate of inflation has reduced but it is still positive. What HM Treasury and the Bank of England fear is genuine deflation, through inflation undershooting their target if they don't act quickly enough. They've been employing rate cuts to counteract this. They believe that cutting rates to encourage borrowing and encourage spending will mean we avoid deflation.
Things are never that simple. As a nation we are in a huge amount of debt. Cutting rates has made existing borrowing cheaper for all but those on fixed rates, and people seem to be clearing their debts in preference to maintaining their retail spending or continuing the borrowing merry go round.
As they have slashed interest rates the £ has weakened. It could be the case that the weakening £ has supported inflation (due to imported goods going up) while slashing interest rates has not.(due to people not spending and/or chosing to clear their debts quicker) It's also a problem that the inflation they are trying to combat was in part due to a spike in oil prices.
nutter45
07-01-2009, 12:21
Most analysts predicting a .5% cut tomorrow, with some down to 1% :eek:
http://uk.reuters.com/article/businessNews/idUKTRE5054YQ20090107?pageNumber=1&virtualBrandChannel=0
My rate is down to 1.69% (or something close to that) at the moment - I could be <1% tomorrow. Quite unbelievable.
I hope mine goes down, although it does not kick in until the start of the following month for me (but neither do rises if we ever get there).
I think a 0.5% drop is possible, I very much downt they would go a full 1% cut so early in the new year (preferring to go cautios and split into two 0.5% cuts).
B0zza - How long is your rate at that discount for?
There has been talk that rates would get down to effectively zero. The discussion has been more about when rather than if.
There is also a newish term, entering the lingua franca :- 'quantitative easing'. Basically a fancy term for printing money to pump-prime the economy , once the interest rate route is exhausted. The fact that this is under consideration must signal the fact that the government is seriously worried about the deflation risk.
What must worry Gordon and Alistair is that if UK acts in isolation, out of step with European Central Banks progress, then the effect on the £ is harsh.
I hope we can avoid extended deflation. What worries me is the prospect of excess inflation next year, if the economy recovers quickly whilst all this excess cash is swilling around in the system. High inflation will hit those with savings particularly hard.
I hope mine goes down, although it does not kick in until the start of the following month for me (but neither do rises if we ever get there).
I think a 0.5% drop is possible, I very much downt they would go a full 1% cut so early in the new year (preferring to go cautios and split into two 0.5% cuts).
B0zza - How long is your rate at that discount for?
Sometime around the end of the year. Who knows what sort of new deals will be on the market then? (I know you're unlikely to be looking yourself with your for-life base + a small bit tracker.)
Yeah, with current rates no plans on chaning if they keep tracking ok.
End of year is still good really, that should be a nice amount of time on very little interest making a huge dent in the actual capital :thumbs:
Yeah, with current rates no plans on chaning if they keep tracking ok.
End of year is still good really, that should be a nice amount of time on very little interest making a huge dent in the actual capital :thumbs:
I'm confused. I can only assume "making a huge dent in the actual capital" is another way of saying "******* money up the wall" :thumbs:
No, you are paying the actual capital off at these low rates as more of your mortgage should go towards the capital of the loan and not the interest. That is of course presuming you are not pocketing the reductions and just spending it on beer :D What you should really do is just overpay the mortgage (or into a savings account to overpay later if you cannot make extra payments right now or have not filled your ISA) and then when the rate goes up you will not miss the extra money and also you can knock many years off your mortgage.
At the moment by far the best I can get on my money is offsetting my mortgage (40% tax payer and 2.75% mortgage rate) so that is where most of my spare money is going at the moment. I can get that back at any time though should I need to (e.g. to move to an ISA which is better overall in April).
DVDWotcha
07-01-2009, 13:55
I hope we can avoid extended deflation. What worries me is the prospect of excess inflation next year, if the economy recovers quickly whilst all this excess cash is swilling around in the system. High inflation will hit those with savings particularly hard.
I don't understand the issue with a period of deflation. Doesn't the economy need a correction for all the inflation busting rises ?
Problem as I see it is that by massacring the pound while you might stave off deflation you'd lining up a for a period of high inflation and massive hikes in interest rates.
In effect what the government are doing is printing money (inflation) to pay off all the money they are borrowing now. The debts then become cheaper to service because money is worth less. Neat trick.
Mean while joe public don't get any pay rises "because we are in a recession" and our savings are devalued. We all get poorer (well savers anyway).
No, you are paying the actual capital off at these low rates as more of your mortgage should go towards the capital of the loan and not the interest. That is of course presuming you are not pocketing the reductions and just spending it on beer :D What you should really do is just overpay the mortgage (or into a savings account to overpay later if you cannot make extra payments right now or have not filled your ISA) and then when the rate goes up you will not miss the extra money and also you can knock many years off your mortgage.
At the moment by far the best I can get on my money is offsetting my mortgage (40% tax payer and 2.75% mortgage rate) so that is where most of my spare money is going at the moment. I can get that back at any time though should I need to (e.g. to move to an ISA which is better overall in April).
Yes I know, I was joking. :(
I don't understand the issue with a period of deflation.
Because it can be very, very difficult to get out of. Simply: why would anyone buy anything today if it will be cheaper tomorrow? So spending gets into a vicious circle that is, as I say, difficult to break. Jobs, the economy, everything starts going down the plughole.
Yes I know, I was joking. :(
******* it up the wall may well be more fun though :D
DVDWotcha
07-01-2009, 16:04
Because it can be very, very difficult to get out of. Simply: why would anyone buy anything today if it will be cheaper tomorrow? So spending gets into a vicious circle that is, as I say, difficult to break. Jobs, the economy, everything starts going down the plughole.
It's a nice excuse but I don't really buy it.
Let's look at the RPI... The major causes of upward trend in RPI have always been oil and food. Gas, elec, petrol, food. All things which we can't just stop buying on the off chance it will get cheaper.
Items generally causing downward (already) trend in RPI; plasma TVs and other consumer goods. Low volume items so what does it matter ? Little Jonny gets his PS3 at Christmas instead of his birthday... boo hoo... :cry:
Won't somebody think of the children ? :( :suspect:;)
I don't understand the issue with a period of deflation. Doesn't the economy need a correction for all the inflation busting rises ?
Problem as I see it is that by massacring the pound while you might stave off deflation you'd lining up a for a period of high inflation and massive hikes in interest rates.
In effect what the government are doing is printing money (inflation) to pay off all the money they are borrowing now. The debts then become cheaper to service because money is worth less. Neat trick.
Mean while joe public don't get any pay rises "because we are in a recession" and our savings are devalued. We all get poorer (well savers anyway).
I understand your points. I've never lived through a deflationary era, but its definitely seen as the biggest problem we currently face by the government. I have to accept its not considered a good thing.
I must have been at the ganja because i thought inflation went down? :thinking:
its still way above target. and with shops making orders or new contracts now/soon prices will be rising a lot as they will have to pass most/all of it on to us. Whereas over christmas that had mostly been ordered and paid for before the pound became worthless.
It seems very short sighted to reduce them again and add even more to the inflation time bomb which is going to happen soon.
DVDWotcha
08-01-2009, 09:37
It seems very short sighted to reduce them again and add even more to the inflation time bomb which is going to happen soon.
Agreed. Just wait until the OPEC output cuts coupled with normalisation of demand for oil and we'll see oil prices start to rise and then inflation will take off. Then get ready for the interest rates....
I hope I'm wrong of course.
The problem is given the current state of the markets oil will not go up that much even with reduced output unless oil output is reduced well below demand in which case it could go high. However I am not sure oil alone can push inflation up so high again at the moment. Deflation is a real risk (and as stated is technically worse than inflation a lot of the time) but I agree that the need to balance another inflation period is essential.
At the moment reduced interest rates are having very little effect at freeing up the credit markets, banks are happy to just pocket the extra to sure up their own balance sheets so that their share holders see profit and the board get their bonuses etc for profitability. At the moment only the banks which are government controlled can be in any way forced to start offering credit, but even that is not happening and what they are offering is at an overly high interest rate compared to the BofE rate and even LIBOR.
EDIT: I just did a very quick search and a 10k loan over 4 years is running at over 8% on average compared to a current 2% BofE and a 2-3% LIBOR. I know the last loan I got was at 6% when the BofE and LIBOR were both at around 5%.
DVDWotcha
08-01-2009, 10:06
There's nothing much we can do about the banks. The rate cuts have gone far enough already. Most people are now on a reasonable manageable rate.
Either the banks don't want to lend for their own financial reasons or don't have any money to lend. Further cuts don't change that one bit.
What we need is for the government to stop mucking about with pointless VAT cuts and destabilising the pound, and start pumping money directly into where it's needed. Financial assitance for small businesses, grants for creation of jobs etc.
How can you encourage people to spend if they are concerned about their jobs ?
nutter45
08-01-2009, 10:53
EDIT: I just did a very quick search and a 10k loan over 4 years is running at over 8% on average compared to a current 2% BofE and a 2-3% LIBOR. I know the last loan I got was at 6% when the BofE and LIBOR were both at around 5%.
I did same yesterday, thinking it might be a good time to take on a bit of debt for new car & home improvement. The rates are absolutely shocking!!! :help:
0.5% cut to 1.5% just announced for BofE rate
It's a nice excuse but I don't really buy itThe Japanese economy's experience with deflation in the 90's gives empirical evidence that the phenomenon is real.
I like being a C&G tracker customer :)
DuncanSWardle
08-01-2009, 12:02
I like being a C&G tracker customer :)
thinking something similar, although guess thats rather selfish as I am just thinking about my mortgage as apposed to those trying to save
how long can we expect such low rates ? weeks ? months ? years ?
guess its all well and good being on a tracker at moment - but if they put the rates back up to 5% or so its not going to be so great
AdamBrunt
08-01-2009, 12:10
thinking something similar, although guess thats rather selfish as I am just thinking about my mortgage as apposed to those trying to save
Still waiting to see what HBOS are going to do. From what I read last week, so far, only Nationwide (and a couple of other 'smaller' lenders) have said their tracker rates would not go any lower.
how long can we expect such low rates ? weeks ? months ? years ?
My discount BoE tracker deal ends in November so hopefully the rates will be low for another few months in order for the long term 4-5% Fixed Rates to come back when I need to remortgage - which I would probably be more than happy with.
guess its all well and good being on a tracker at moment - but if they put the rates back up to 5% or so its not going to be so great
indeed.
No, it's not going to be great then. However, I'll have moved and changed mortgage. And my mortgage has no time lapse on it either, so a year of this would be very nice (in one way).
I'm not claiming financial genius - just luck really.
It's what to do with the extra cash that's the interesting bit.....
Rate cut not so great for savers. I may look into the stock market as some FTSE 100 stock is under valued.
Deflation, here we come.
DuncanSWardle
08-01-2009, 12:14
Still waiting to see what HBOS are going to do. From what I read last week, so far, only Nationwide (and a couple of other 'smaller' lenders) have said their tracker rates would not go any lower.
My discount BoE tracker deal ends in November so hopefully the rates will be low for another few months in order for the long term 4-5% Fixed Rates to come back when I need to remortgage - which I would probably be more than happy with.
indeed.
Our original 2 year deal came to an end at end of December but as we did not want to spend the Xmas month looking for new mortgage we took gamble and went and got it sorted beginning of November
The best we managed then worked out at £89 more a month than our current deal, however we could afford it (we had been overpaying arounf £100 a month anyway) and we wanted to stay on full repayment
Now though, as of last week, we where about £150 a month better off. Decided to put at least half of this aside just in case
AdamBrunt
08-01-2009, 12:16
It's what to do with the extra cash that's the interesting bit.....
If I didn't have £500 odd still owing on our only credit card, I'd be pumping the 'difference' (between what we used to pay a 3/4 months ago to what we pay now) into the mortgage as overpayments.
In fact what I should have done is pay off the credit card with savings (rather than £100pm) and start the overpayments straight away.
my fixed rate with nationwide ends in June if i dont take another deal i go on to there standard rate is that right? does anyone know what it is at the moment?
nutter45
08-01-2009, 12:40
Yes, and Nationwide BMR is 4%
well at the moment thats better than my fixed rate then then god knows what it will be by june
DVDWotcha
08-01-2009, 13:21
The Japanese economy's experience with deflation in the 90's gives empirical evidence that the phenomenon is real.
Real maybe but check the 1st line on Wiki's entry:
http://en.wikipedia.org/wiki/Deflation_(economics)#Deflation_in_Japan
The Bank of Japan and the government have tried to eliminate it by reducing interest rates (part of their 'quantitative easing' policy), but this was unsuccessful for over a decade.
Doesn't that indicate that you can't dig your way out of it by cutting interest rates ?
Plus it says further up not all episodes of deflation correspond to periods of poor economic growth historically.
i.e. it's not certain that deflation would lead to an deflationary spiral, maybe for the reasons I pointed out earlier.
Edit:
Furthermore
Despite Japan's sustained near zero interest rates, the quantitative easing strategy did not succeed in stopping price deflation
(Quantitative easing = the BoE printing new money.)
Deflation, here we come.
all this talk of deflation when inflation is still near double the target and lots of price rises on the way. seems just a bit :cuckoo: to me.
Also are wages taken into account with inflation? I expect a lot of peoples yearly reviews will consist of 'your lucky to still have a job' rather than a rise to help with last years huge inflation so spending power is falling added to a still very high inflation figure.
If I didn't have £500 odd still owing on our only credit card, I'd be pumping the 'difference' (between what we used to pay a 3/4 months ago to what we pay now) into the mortgage as overpayments.
If you look around, there are quite a few accounts where you can get quite high interest (I just opened up an A&L current account which is 6.5% on the first £2.5k). I am dumping the money 'saved' from these rate cuts into such accounts...when interest rates go back up again I will do a lump sum overpayment.
pompeyfan
08-01-2009, 16:12
Greedy banks aren't exactly passing these cuts on, on loans - Dad needed a loan for the work needed at home - Natwest want 28% interest and LloydsTSB 17.2%.
AdamBrunt
08-01-2009, 16:22
I didn't think banks had to pass on the cuts in those cases.
they are being pressure to pass on the full cut in terms of their tracker rates and SVR but that's different.
I don't see Amex/Barclaycard/etc passing cutting their rates over the past few months either.
pompeyfan
08-01-2009, 16:31
I didn't think banks had to pass on the cuts in those cases.
they are being pressure to pass on the full cut in terms of their tracker rates and SVR but that's different.
I don't see Amex/Barclaycard/etc passing cutting their rates over the past few months either.
No they don't but it's a bit off when interest rates are lower than ever that personal loans have shot up - a few years ago the rates were 8.9%, now they're higher than some store cards and for no other reason than them being greedy ************ like Natwest asking 28% interest on a low-risk £2.5k loan.
Real maybe but check the 1st line on Wiki's entry:
http://en.wikipedia.org/wiki/Deflation_(economics)#Deflation_in_Japan
Doesn't that indicate that you can't dig your way out of it by cutting interest rates ?Yeah, it says once you have deflation it's a bugger to sort out. So best to avoid it in the first place.
i.e. it's not certain that deflation would lead to an deflationary spiral, maybe for the reasons I pointed out earlier.Maybe, if your not in " periods of poor economic growth", but I'm sure we can agree we are in one of those now.
No they don't but it's a bit off when interest rates are lower than ever that personal loans have shot up - a few years ago the rates were 8.9%, now they're higher than some store cards and for no other reason than them being greedy ************ like Natwest asking 28% interest on a low-risk £2.5k loan.
Not quite - they're charging high interest because there isn't the cash to splash around any more. The whole point of the credit crunch is that there is less money available for lending - and as is the case when supply and demand are used to set prices, interest rates WILL be high because demand for loans is currently outstripping the supply.
A few years ago, when 8-9% was the standard rate, the banks thought they had loads of cash to lend out. However, now that they've stopped lending imaginary money to each other, they no longer have the ability to give loans to everyone who asks, and those that do ask will expect to pay a premium.
The current low rates haven't meant more mortgages are available - the fact is, mortgages are only available to a select few people at the moment and even those that could comfortably afford one are likely to find new applications hard to come by. The only reason rates are as low as they are is because mortgage lending rates are almost always tied directly to the BoE base rate. Standard personal loans aren't.
mikegray
08-01-2009, 18:46
I've got about a 35% deposit for the houses in the price range I'm looking at, and I'm a first time buyer, but the news is saying that if I want the best rates, I'll need 40%.
Seriously, WTF? It's a bloody miracle that I've got what I perceive as quite a high deposit and they want even more? I suppose I'll wait for the price of the houses to drop so it's equal to 40%!
nutter45
08-01-2009, 19:23
Yep, Nationwides top rates are for 60% LTV, although they're not massively different to 75%. Above 75% is a different game altogether.
mr starface
09-01-2009, 11:44
So is it confirmed that Nationwide wont be passing this cut onto people with trackers?
DVDWotcha
20-01-2009, 11:10
Well confirmed I get 0.2% of the 0.5% cut. Really absolutely no point to any more rate cuts.
AdamBrunt
20-01-2009, 12:28
Got a letter from the Halifax today (according to the OH) saying our mortgage payment would be £578pm from beginning of Feb ... the full 0.5% dropped being passed on giving a current rate of 1.44% :clap:
I called B&B today as my 4.99 fixed rate mortgage is coming to and end and they stated that the SVR is 2.02% above BOE base rate. So I'm quite happy that I'm going from 4.99 to 3.52% overnight from April. Let's hope there are more cuts and it stays that way for a good few years!!!
AdamBrunt
20-01-2009, 15:07
Indeed, but presumably the BoE rate is only this low to try and get the country out of recession and, eventually, the rate will go back up to 'normal' levels eventually and tracker deals will be as 'variable' as they used to be.
Spooky_uk
20-01-2009, 21:56
received a letter from Hfx today as well confirming the drop :thumbs:
stoneranger
22-01-2009, 21:07
I've had a letter from Nationwide today saying they will pass on the drop in BR for my tracker, even though they'd previosuly stated they would stick at 2%. Weird, but I'm not compaining.
So another rate cut is expected tomorrow, 0.5% cut to 1% is being talked about it seems and I reckon is very likely.
So far I am luck in that my mortgage company has been passing on the cuts in full (rate now 2.25%) but this has got to be getting to as low as a lot of banks will want to pass on to borrowers?
farmroad38
04-02-2009, 08:22
I've started to look at mortgages as I still intend to buy in the summer. A lot of the SVRs are very low - in the realms of 3%ish - and no, I can't see them getting much lower really.
Difficult to know what to go for in this situation, as I think rates could go up almost as quickly as they went down once the economy starts to pick up. It would only take some perceived fuel crisis for oil to make inflation go back up again and the BoE would then have to combat it with the only weapon available to them.
I've been looking at the First Direct offset tracker - currently at a fixed 1.89% over base for the life of the mortgage. Whilst that looks like a good deal now, it might not look so attractive with base rates at 6 or 7%.
neilalford
04-02-2009, 08:31
I've been looking at the First Direct offset tracker - currently at a fixed 1.89% over base for the life of the mortgage. Whilst that looks like a good deal now, it might not look so attractive with base rates at 6 or 7%.
Just gone for that one myself, sent off the paperwork on Monday, figure I might as well get the low rate now and overpay\offset as much as I can and then change if it looks like rates are going to rise significantly (as there's no tie in). Did consider a fixed rate but obviously then just end up in the same situation in a few years when the fixed period comes to an end.
welshmatt
04-02-2009, 09:28
Got a letter from A&L a few days ago saying they will pass on the last cut in full. My repayments are now less than when I bought my house 5 and a half years ago on an interest only mortgage. :nuts:
KennyVader
04-02-2009, 09:56
Read a story at the weekend which said that (I think after the cut this week, assuming it happens), some people on a strict interpretation of their mortgage T&Cs will be in a negative interest position and technically their lender will owe them interest every month. I think it was C&G or some other fairly small provider. Don't all rush to check your mortgages, as nearly all t&cs have a collar that prevents any lower than it already is or certainly prevents it going below zero ... it was only one or two stupid and reckless lenders that had forgotten to put a no-sub-zero clause in. And it's only for the remainder of the affected customers' introductory discount period, not for ever. nevertheless an interesting position.
Hopefully anyone that's lucky enough to have a mortgage tending towards zero interest will be taking advantage like a crazy person and overpaying mucho. Particularly people with interest-only mortgages, whose monthly payments may now be very small indeed, trouble is the large capital amount still needs repaying at the end of the loan, and cheap interest now isn't making that go away.
cjanderson
04-02-2009, 10:08
I have not got around to changing the overpayment from last year - that was already pretty healthy, though interest charge now about £70 or so when it was £400.
However, its not actually worth overpaying - its better to save for me. But the principle of doing SOMETHING with the spair cash before it just gets "spent" is a good one :)
Got a letter from A&L a few days ago saying they will pass on the last cut in full. My repayments are now less than when I bought my house 5 and a half years ago on an interest only mortgage. :nuts:
Blimey, I haven't got that letter yet :mad:
cjanderson
05-02-2009, 11:02
and now down to 1% :clap:
pyrogena
05-02-2009, 11:20
and now down to 1% :clap:
Good news for mortgages, but pretty soon I'll be paying the bank interest to put my savings there!
Read a story at the weekend which said that (I think after the cut this week, assuming it happens), some people on a strict interpretation of their mortgage T&Cs will be in a negative interest position and technically their lender will owe them interest every month. I think it was C&G or some other fairly small provider. Don't all rush to check your mortgages, as nearly all t&cs have a collar that prevents any lower than it already is or certainly prevents it going below zero ... it was only one or two stupid and reckless lenders that had forgotten to put a no-sub-zero clause in. And it's only for the remainder of the affected customers' introductory discount period, not for ever. nevertheless an interesting position.
Hopefully anyone that's lucky enough to have a mortgage tending towards zero interest will be taking advantage like a crazy person and overpaying mucho. Particularly people with interest-only mortgages, whose monthly payments may now be very small indeed, trouble is the large capital amount still needs repaying at the end of the loan, and cheap interest now isn't making that go away.
...and I thought I was doing well with current deal of base minus 0.4% with no collar :( ;)
1% is good for us with variable mortgages, but doubt it will have any effect on lending. Hopefully mortgage company will pass it on again this month...
KennyVader
05-02-2009, 11:43
Hmm well we knew it was coming so it's not a surprise but I won't pretend to be pleased about it, as being on a fixed rate mortgage it doesn't affect my outgoings but it does affect the pittance of interest i receive.
what's slightly concerning is that as far as I can see none of the previous cuts appear to have made ANY difference, in terms of new loan availability or encouragement to buy new cars/houses/etc, so got to wonder whether the "powers that be" that we entrust to make these decisions really know what they're doing!
cjanderson
05-02-2009, 11:44
yeah, whilst i am very excited about having ohhh an extra £20 a month, i'm not sure what its supposed to be doing - encourage business investment? doesn't seem to have much effect apart from benefit the canny tracker people (who won't be splashing the savings around anyway as they are sensible types :dork: ) and annoying everyone else in the country (other mortgage holder not on trackers, savers etc.
simonmac
05-02-2009, 11:48
Whats plan B? As i assume they can't drop any lower and the cuts so far do not appear to have had a major impact (although Halifax are saying house prices jumped 1.3% in Jan and new mortgages were up by 4,000) I doubt this is anything but a blip.
AdamBrunt
05-02-2009, 12:03
yeah, whilst i am very excited about having ohhh an extra £20 a month, i'm not sure what its supposed to be doing
That would depend on what you're doing with the extra £20 ? And compared with 5 months ago, you could easily have been at least £250 better off a month in terms of the mortgage.
cjanderson
05-02-2009, 12:39
i'm saving it/overpaying the mortgage, as jobs are insecure, and who knows what will happen to mortgage rates in the future.
If they hope that people who are nervous about the economy will take the amount saved and blow it on consumer goods (rather than save it or have more money to cover rising fuel bills), then they are a bit daft.
i'm saving it/overpaying the mortgage, as jobs are insecure, and who knows what will happen to mortgage rates in the future.
If they hope that people who are nervous about the economy will take the amount saved and blow it on consumer goods (rather than save it or have more money to cover rising fuel bills), then they are a bit daft.
I just bought a plasma TV (made by a Japanese and purchased form an American one!) but that is about it. My monthly savings are going straight back into the mortgage right now and other savings. No way I'm going to blow it all on consumer goods all the time.
As a slight aside, is it worth withdrawing my ISA funds? I'm not sure what the interest rate on that is right now (probably low) but I've got a fixed rate Egg Savings account giving me 6.3% until October. I've left it till now but is it as easy as thinking '20% tax from the 6.3% is still more than the ISA rate'? Or is it worth keeping my ISA in terms of allowances, etc... (I will probably fund it more and more over the coming months).
I thought about that as I could almost pay off my mortgage, but it is the problem of building back up your ISA when the rates go higher again as you are limited to the 3600/year deposit so could take years to get back to a decent amount. At the momnet my ISA is paying higher than my mortgage (just) so it still makes total sense to keep it there, and hope to move my ISA to a better one before April.
Weve just got a letter from C&G and our mortgage is going down to £257 a month!!:eek: Thats more than £100 lower when it was at 7%
I couldnt even rent the house for that!!
What I don't get about running interest rates down to zero and below is we hear there are eight savers to every one mortgage payer which presumably means they're ******* off the millions of savers to help a few people (not on fixed-rates) pay their mortgage, which sounds to me like election-sucide.
AdamBrunt
17-02-2009, 08:53
Letter arrived from the Halifax today confirming my tracker rate was now 0.94% :)
DVDWotcha
17-02-2009, 14:57
What I don't get about running interest rates down to zero and below is we hear there are eight savers to every one mortgage payer which presumably means they're ******* off the millions of savers to help a few people (not on fixed-rates) pay their mortgage, which sounds to me like election-sucide.
Rule out the "savers" with less than £100 on deposit and that statistic would be reversed I expect.
There's a lot more money loaned out than on deposit.
Spooky_uk
20-02-2009, 10:41
Letter arrived from the Halifax today confirming my tracker rate was now 0.94% :)
ours arrived too. :thumbs:
Spooky_uk
02-03-2009, 22:00
rumours of another cut on thur to 0.5%. we'll see I suppose...
That will be very tough for them to justify I think, I would not complain too much (although savings will take a real hit) but unless they can show positive movement in lending then lowering the rates is not much use.
Average mortgage rates for fixed rates still seem to be ~5% too with 20% deposit needed so not really helping the situation for buyers.
Helping those with tracker mortgages though ;)
Yes and I am lucky enough to be one, but in the overall picture it is not helping that much unless it is passed onto new borrowers
Helping those with tracker mortgages though ;)
Only if its passed on by the lender. My tracker had a minimum of 2.5% and whilst the lender passed on an additional 1%, the last change they wouldn't pass on. Not that I'm complaining as I'm now overpaying my mortgage by as much as I can afford!
thomasc1982
03-03-2009, 10:42
Seems a total waste of time cutting it any further...dont see how it will stimulate spending at all. Although I am on a tracker so wouldnt mind!
Of course starting to get concerned about just how high they will end up going in a couple of years to compensate for this though...
neilalford
03-03-2009, 10:52
Of course starting to get concerned about just how high they will end up going in a couple of years to compensate for this though...
I don't think they will neccesarily go very high just because they've been low, though obviously might seem high to people who get mortgages while they are low.
I'm more worried about what will happen to taxes in a few years, already know we've got VAT going back up to 17.5% (if not higher) plus a 1% increase in National Insurance to look forward to and national debt still rising quickly, already way over what Darling was predicting in the pre-budget report (not that that is a suprise to anyone).
Though at least we have the economic recovery to look forward to later this year ;)
KennyVader
03-03-2009, 15:18
I don't think they will neccesarily go very high just because they've been low, though obviously might seem high to people who get mortgages while they are low.
I'm more worried about what will happen to taxes in a few years, already know we've got VAT going back up to 17.5% (if not higher) plus a 1% increase in National Insurance to look forward to and national debt still rising quickly, already way over what Darling was predicting in the pre-budget report (not that that is a suprise to anyone).
Though at least we have the economic recovery to look forward to later this year ;)
Plus aren't they forecasting negative inflation soon? Which many companies will use to justify continued pay freezes or even annual pay cuts!
farmroad38
03-03-2009, 15:22
I've already had to take a 3% pay cut this year, "in order to prevent redundancies". Sickening thing is that the company still made $60m-odd profit, but it was down 10% or so from what it was supposed to be.
neilalford
05-03-2009, 08:38
Just got a letter from my mortgage company letting me know that my fixed rate mortgage comes to an end at the end of the month and that I'd be moving onto their standard variable rate, which is unbelieveably, still actually higher than the fixed rate which I took out when interest rates were at one of their highest points of the last few years! 5.79%!
Luckily I've already got a new mortgage sorted at about half that rate (or at least, accepted and moving forward) but was still amazed at the rate, guess they really don't want any mortgage customers at the moment!
stillill
05-03-2009, 09:46
Getting more and more gutted with each cut. Savings being hosed for minimal benefit to the economy - even those on trackers aren't seeing any more plus points.
The economy's already pumped, Brown is merely giving the vinegar strokes to a dead horse. When's the general election?
ben.bayliss
05-03-2009, 10:00
BBC News expecting yet another 0.5% cut today. What an absolute joke! Who exactly are these last few cuts helping? Mortgages have been slashed and savers now struggle to get any inflation-beating returns at all. Other credit products have an artificial floor that they won't ever go below (6-7% loans, 10-12% credit cards) so what does this achieve?
The main idea is really to help businesses be able to borrow as that is the starting point to stability really, but businesses are still struggling to get decent loans.
BBC News expecting yet another 0.5% cut today. What an absolute joke! Who exactly are these last few cuts helping? Mortgages have been slashed and savers now struggle to get any inflation-beating returns at all. Other credit products have an artificial floor that they won't ever go below (6-7% loans, 10-12% credit cards) so what does this achieve?
They're helping me, with this latest cut my mortgage will be about half of what it was when I took it out last August.
The extra cash each month is making a big, big difference to me and my family.
Helping me too, my Mortgage rate will be 0.7% if this cut is passed :nuts: saving me another £40-50 a month :).
Well presuming this happens and is passed on mine will be down to 1.25% but the savings are getting small and the interest on my savings is virtually nothing now
stillill
05-03-2009, 10:40
Oh well, at least debtors are happy.
I'm currently on nmationwide's stanadard variable rate, so an extra cut would help me :thumbs:
KennyVader
05-03-2009, 11:00
There you go, another 0.5% off
It's as low as it can surely go!
bye bye savings
stillill
05-03-2009, 11:02
Just makes savers save more, keeping as much money out of the economy as possible. Are those who are saving a few hundred a month on their debt spending that money?
mikegray
05-03-2009, 11:03
Just makes savers save more, keeping as much money out of the economy as possible. Are those who are saving a few hundred a month on their debt spending that money?
Nah, they're overpaying the mortgage, surely?
I just had a few months of spending from Dec to now and now will be back onto overpaying mortgage heavily and reducing all debt.
neilalford
05-03-2009, 11:10
Nah, they're overpaying the mortgage, surely?
That's what I'll be doing (once my new mortgage starts), intend to keep my monthly payments the same as they currently are, plus I am moving to an offset mortgage so any extra money I save each month will also be counting against the mortgage, rather than getting rubbish interest elsewhere.
KennyVader
05-03-2009, 11:11
Going ahead with the printing new money thing too it seems, wonder if they will get Andi Peters to start the presses?
£75bn being printed which is not a small amount either!
Oh well, at least debtors are happy.
Not sure about others, but the only debt I have is my mortgage, and given that these cuts will save me close to four grand a year, yes, I am happy.
cjanderson
05-03-2009, 11:17
I now have a mortgage payment (interest only) of £20 :nuts:
glad i got that fixed rate isa locked up at 3.7% last month, savings rates are nuts now. though hsbc have an 8% reg saver, save £250 first month, rising £250 each month from what i can see. looks worth looking into.
great, savings more worthless by the week and will be worth even less as they are devaluing currency by inventing money. the banks invented money and it caused these problems, now the gov is giving it a go, why cant they just step back and accept this is a problem that needs a bit of time to settle and not every month try more and more to fix it quickly but longer term making it worse.
danielsesay
05-03-2009, 11:25
Desperate to win votes obviously!
Fat chance that's going to happen.
I now have a mortgage payment (interest only) of £20 :nuts:
:lol:
Financial insight of the day from Vince Cable for the Lib Dems on BBC News:
Mervyn King is not like Robert Mugabe
Phew.
Spooky_uk
05-03-2009, 11:54
They're helping me, with this latest cut my mortgage will be about half of what it was when I took it out last August.
The extra cash each month is making a big, big difference to me and my family.
same with us, the halifax are passing on all cuts to tracker customers and it is indeed helping us at this moment in time. :thumbs:
campdave
05-03-2009, 12:01
I now have a mortgage payment (interest only) of £20 :nuts:
glad i got that fixed rate isa locked up at 3.7% last month, savings rates are nuts now. though hsbc have an 8% reg saver, save £250 first month, rising £250 each month from what i can see. looks worth looking into.
There's bound be some people on discount tackers now who should have the banks paying them!
I'd enjoy it while it lasts folks.
If the QE works, we should see significant inflationary pressure in the not too distant future.
Ragnarak
05-03-2009, 12:39
If the QE works, we should see significant inflationary pressure in the not too distant future.
Will that then help savers? Will the interest rate for saving go back up before the QE devalues all the savings too much?
KennyVader
05-03-2009, 12:46
There's bound be some people on discount tackers now who should have the banks paying them!
I hope those lucky people with these negative interest payments haven't forgotten that they still have to repay the capital sum one way or another! If the plan for doing that is just to sell the property at or before the full term of the loan, the current financial outlook is just as gloomy for them as it is for everyone. If they're sensible they'll be putting their mortgage interest savings away so as to reach the capital sum sooner - but then that would most likely be in savings accounts that are now earning next to nothing - not sure I'd be partying yet.
Luckily I am still getting 6.5% on savings and ISAs through to November.
cjanderson
05-03-2009, 13:10
I hope those lucky people with these negative interest payments haven't forgotten that they still have to repay the capital sum one way or another! If the plan for doing that is just to sell the property at or before the full term of the loan, the current financial outlook is just as gloomy for them as it is for everyone. If they're sensible they'll be putting their mortgage interest savings away so as to reach the capital sum sooner - but then that would most likely be in savings accounts that are now earning next to nothing - not sure I'd be partying yet.
surely thats just covered by the capital side of the mortgage repayment?
I must admit i have not yet adjusted my mortgage overpayment to pay it off quicker, its all happened too fast, but i will do soon, then again what IS the point of overpaying a 0.68% mortgage when i can get an isa for 3.5% easily. or savings accounts around 5% (so 3% after tax).
KennyVader
05-03-2009, 13:36
surely thats just covered by the capital side of the mortgage repayment?
If there IS a capital side! Or a parallel capital repayment vehicle! A couple of my friends/colleagues just have interest only mortgages without a repayment vehicle, just intending to "sort it out later" :eek:
cjanderson
05-03-2009, 13:45
well thats just :nuts: though you could well think of it as a very long term rental, at lower rates than renting and more security from being kicked out by the landlord. just need to work out that you have enough money to pay the rent "forever"
farmroad38
05-03-2009, 13:49
well thats just :nuts: though you could well think of it as a very long term rental, at lower rates than renting and more security from being kicked out by the landlord. just need to work out that you have enough money to pay the rent "forever"
I know someone who has done exactly the same thing - IO mortgage and no repayment vehicle.
Problem is that she only has 7 years left to run on the mortgage and now has no way of paying off the capital. She had a lot of equity, but with the way prices are falling, that's being wiped out pretty quickly - could very well end up with no house AND and an outstanding debt to pay off!
cjanderson
05-03-2009, 14:18
there is no debt to pay off.
you just keep paying the interest until you die and then the house gets sold, the debt dies with you.
just the same as renting forever, as long as you can pay the rent/interest, you are sorted. (assuming no need to move of course)
farmroad38
05-03-2009, 14:21
there is no debt to pay off.
you just keep paying the interest until you die and then the house gets sold, the debt dies with you.
just the same as renting forever, as long as you can pay the rent/interest, you are sorted. (assuming no need to move of course)
Surely when you get to the end of the mortgage term, the lender is going to want the capital repaid?
KennyVader
05-03-2009, 14:27
there is no debt to pay off.
you just keep paying the interest until you die and then the house gets sold, the debt dies with you.
just the same as renting forever, as long as you can pay the rent/interest, you are sorted. (assuming no need to move of course)
no you would at some point get to the end of the original mortgage and have to pay off the capital then and there. You could ask for a new mortgage and a new 25-year term but as you would now be 25 years older and sicker and 25 years nearer death, the lender may not be willing to lend another 25 year term! Plus if it is a flat of a particular age when 99 year leases were common, that might be an issue - expensive to extend.
there is no debt to pay off.
you just keep paying the interest until you die and then the house gets sold, the debt dies with you.
just the same as renting forever, as long as you can pay the rent/interest, you are sorted. (assuming no need to move of course)
I can't believe any bank would give you an infinite mortgage term even if it is interest only.
They would be nuts to allow that.
farmroad38
06-03-2009, 09:24
I notice that First Direct have changed the terms of their offset tracker now. Was base rate + 1.89% for the life of the loan, now base rate + 2.39%. What's the betting that when base rates start going back up that they won't absorb the first half percent?
This quantitative easing just seems like a spin word when what they're really doing is devaluing the £, if they're printing money they haven't got then the real value of the £ will fall.
neilalford
06-03-2009, 12:29
I notice that First Direct have changed the terms of their offset tracker now. Was base rate + 1.89% for the life of the loan, now base rate + 2.39%. What's the betting that when base rates start going back up that they won't absorb the first half percent?
They changed it a while back as well, I think it was just before the last but one rate drop. Of course, it will only be for people who apply for the mortgage from now on though (I assume), so people who previously took out mortgages with them (like me) will still get the old base rate+1.89% rate.
farmroad38
06-03-2009, 12:37
They changed it a while back as well, I think it was just before the last but one rate drop. Of course, it will only be for people who apply for the mortgage from now on though (I assume), so people who previously took out mortgages with them (like me) will still get the old base rate+1.89% rate.
Stuffs me up though, as I was going to start looking for a house in a couple of months time. Whilst a rate of 2.89% is okay now, if rates go to 5, 6 or 7% then base + 2.39% is going to really hurt and to change it I'd have to pay another arrangement fee.
************! :mad:
pyrogena
06-03-2009, 13:13
Will that then help savers? Will the interest rate for saving go back up before the QE devalues all the savings too much?
I've given up on getting any interest on my savings. I wasn't savvy enough to lock down a high interest paying account - didn't have enough at the time to think I should. Now wish I had.
Most of my savings are now invested in premium bonds as it's "safe" and if I win anything then I'll have a little hurrah moment. With the money in a crappy savings account every month I get a "is that all?" moment.
And I just bought 1 share in Ladbrokes. I had some cash left sitting in my share account so just went crazy and spent it all!
simonmac
06-03-2009, 13:18
I'm loving it and hating it at the moment trying to sell the house so on an interest only mortgage at 3%, hopefully I can sell my house before the down turn ends which is unlikely as people are waiting for the down turn to end to buy houses :doh:
AdamBrunt
06-03-2009, 13:38
I hope those lucky people with these negative interest payments haven't forgotten that they still have to repay the capital sum one way or another!
Surely no one is on negative interest payments ?? With the latest cut I am down to 0.44% (if Halifax pass the full cut on to their BoE tracker customers) but I don't expect to ever be in the situation where they start paying me for me borrowing from them :lol:
If the plan for doing that is just to sell the property at or before the full term of the loan, the current financial outlook is just as gloomy for them as it is for everyone.
Surely, that (a) depends on how long there mortgage has left to run (ie if they still have 20 years to go then in all likelihood house prices will be back up by then) and (b) is their own fault for being, arguably, stupid enough to think that house prices always went up and never down.
If they're sensible they'll be putting their mortgage interest savings away so as to reach the capital sum sooner - but then that would most likely be in savings accounts that are now earning next to nothing - not sure I'd be partying yet.
If they're sensible they'd surely be on a repayment mortgage so they'd be no capital sum at all by the end :shrug:
farmroad38
07-05-2009, 12:28
So, rates held at 0.5% again. Worryingly, though, Gordo, Captain Darling & Merv are going to increase their rate of production with the printing presses - quantative easing upped by £50bn. Doesn't sound like much when you say it quickly, does it? :brickwall
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