http://news.bbc.co.uk/1/hi/business/7713006.stm A bit drastic? But I suppose the big question is will it be passed on by the banks.
Not really sure how it's a shock move, this was widely expected for the past 2 weeks.... As for it being passed on, I understand Abbey on monday I believe, actually increased its interest rate. Before the cut had even happened. Great.
Llyods TSB are going to match the drop. But still dosnt ease inter bank lending which is where the credit crunch problems have stemmed from, but lets face it theres been far too much borrowing I have a mate at 22 with no house or bills and hes 9k in debt with nothing to show for it he was alot worse off at one point. Our amount of debt against our GDP is a joke and banks lent far too freely in the first place. Still at least were not as bad as Japan
How does this affect me? Not trying to be a jerk, but I simply don't understand what this is going to do to affect me.
If you have a tracker mortgage it is likely to mean your monthly payments will be less, and if you have a savings account or ISA without a fixed rate your interest will be less each month. thats the direct effect to the populus. it also means business's can get loans at cheaper rates which they hope will mean production will increase, and people will be able to get cheap credit to buy stuff they can't afford for christmas.
Interest rates get dropped, then the banks raise their rates, it's ****ing silly, and pointless. Want to sort out the UK in a few months? Stop mortgage payments for a few months, people would be able to sort out their finances and banks would get their money at the end, it would sort my family out big time.
exactly, it means the interest rate on your savings account will drop 1,5% too. In theory, the interest on loans / mortgages should drop too, but it most likely wont as banks are not passing the adjustment on to the customer there to make money.
Bah, Fixed my mortgage at 6.24% on Monday. Never mind, by the time my rate runs out in 2018, the economy may well be different.
this pushed me into getting an ISA. i was lazy with my savings and just had them in an e-saver but now i have nearly 4 grand earning just over 6% the rest will live in e-save for now. i don't have that many savnigs (ooh look at the shiny shiny. buy! )
Banks are using the drop in interest rates to recover their losses, rather than passing it on to the customers. Who would have thought that they'll look out for no. 1 first? You can't stop mortgage repayments for a few months. This would effectively mean that lenders are losing interest. And if they are not getting interest, what's the point in lending? Banks should be taking the long-term view of course, but their shareholders don't --they want return on their investment now. At the bottom of all this misery is human greed. Get used to it, or get socialism.
Sorry, but a few months will be just fine for them, but for the masses at the moment, it will be a god send. Repossesions would be cut low, the general public would have more money, and once everyone is stable, mortgage repayments would become on time, more people will spend money in shops, shops gain more profit, more people are once again buying second homes, and once all that is up, then everything will become stable. Do you really think if the general public had money we would be in the situation we are in now? Right now, my family's business is employing around 10 people, that's 10 families we are supporting at the moment (only just also), without us, they would not have a job.
Yes, the wealth of the general public has little to do with this and spending our way out, effectively on credit will just set us up for another fall.
Yeah. I had that. Was working out great, I was earning around 6% on my few grand. 'till my bank collapsed. Now I'm awaiting an email from the FSCS to find out when I can get me monies back. Personally untill this all settles down I'm giving up on earning any proper interest on my savings and I'm keeping 'em in a bog standard savings account with my hooge bank (RBS) which won't go bankrupt. I hope. Do you understand how the banking system works? Or why the credit crisis is killing banks? Liquidity is vital right now. Almost no banks can afford to just say to customers "Oh we know you're good for it, take a few months off". They do that, then when other banks and masses of customers call in the money the banks owe them, the banks have no money to do that. So they default. This is a big part of the reason governments have been lending huge sums of money to the private sector, to maintain liquidity. In short: you are extremely wrong in your analysis of the situation.
I think the bit in bold possibly illustrates where you are coming from. As spec says: it is about liquidity. You think that three months' deferral on, say, your parents' mortgage is only, what, £3000,--? £4500,--? No great shakes for a bank, no? But the current total UK mortgage debt tops £1 trillion pounds (yes: £1.000.000.000.000,--). At an interest rate of, say, 5% the monthly repayment comes to about £5 billion pounds, of which £4 billion is interest. You are effectively asking banks to write off £12 billion pounds and to defer another £3 billion, so that some customers who overreached themselves and got unstuck can get their act together. There are indeed people who are now suffering economic hardship through no fault of their own. But the whole mess started because banks lent money to people who could not really afford the repayments. Many people are in massive debt because they handled their money badly. A three-month deferral on their mortgage won't fix that; they are massively in debt now, and they will be massively in debt three months down the line. Yes they would; they just would have other jobs.
Not exactly, my parents monthly mortgage payments are 5 times that, maybe even more, I'm not sure on exact amounts, but let's just say the banks said to everyone "We'll give you 3 months to sort yourself out, and after that, we want that 3 months in full", the family business would be pretty damn stable because we would have time to find the funds, sort ourselves out, and be financially stable.
Right, and by the time your three months were up half the banks would have collapsed. That'd be super for stability.
