Interest Rate Cut Yet Again !!!

[Kodiak]

The Bank of England has cut the interest rate down to its lowest ever rate to 0.5%. Surely this can not go any lower. It looks like this is good news for all who have a Mortgage, but is it?

The Bank also said it would expand the amount of money in the system by £75 Billion in an attempt to boost bank lending. Does this mean they are just gong to print another £75 Billion?

This coming when it has just as Gordon is in America sounds just like he is showing Obama what he can do.

What do you all think on this cut in the rate?

http://news.bbc.co.uk/1/hi/business/7925620.stm

K

[Melancholy Man]

I don't think wise virgins are being punished nearly enough to assist the foolish virgins.

[cazmanian_minx]

I'm torn - it's great news for me, because I've got a tracker mortgage, but for my mum, who's retired, mortgage free and relies on investments for most of her income, it's not so good. Because of her age, the stock market isn't an appropriate investment vehicle for her now, she can't take the risk with her capital, so it's all invested in fixed rate bonds, most of which expire in the next couple of months. So money she was previously earning 5-6% on now has to be reinvested, the rates aren't anywhere near as good and her income is going to drop very sharply.

They were explaining the £75bn thing on Sky News this morning - they don't print actual physical cash, they just adjust the balance on the central account at the Bank of England to be £75bn higher, so that money becomes available for retail banks to borrow and lend to their customers i.e. us.

[Bad Manners]

If it gets any lower we will have to pay the bank to leave our money in.

[davie]

So its really more smoke and mirrors from old Cyclops Broon (Saviour of the World). No jam today and no tomorrow.
Latest press release from #10 is that the Pope has requested an audience with Mr Broon and wishes to kiss the ring of the man who kissed the ring of 'my friend Obama'.
It is reported that Mr Broon is now on his way back from the USA but in his normal prudent manner he is walking across the Atlantic to save Joe Public (and the World) a few groats in avgas costs.

[Melancholy Man]

So its really more smoke and mirrors from old Cyclops Broon (Saviour of the World).

Don't you mean a one-eyed Scottish idiot? Every one a fact.

[MadPict]

"We're all doomed Captain Mainwaring..."

Now there was a good bank manager...


I am seriously having to review my finances - the endowment policies are not doing at all well and I'm fed up with the 'red warning' letters we're getting. My thoughts are to surrender them while they are still worth something and pay off the majority of our mortgage.
Got an appointment on Monday with a financial advisor to see if we'd be doing the right thing. I fear that the worse has yet to come, so I'm abandoning the sinking ship while there is still a lifeboat handy!!!

[Penelope Pitstop]

I believe one of the reasons for the cut in bank of england base rate will be to help businesses. From what I've been told some banks have increased their interest rates to business customers (some paying as much as 12% on overdrafts - those are "lucky" ones who still have an overdraft!). The banks claim that the interest rates being charged to them by the government is very high.........?? What ever the reason the country is in a shambles [disgust]

I feel sorry for the retired folk who've worked all their lives and put a bit of money away to live off during retirement.....now they'll have to dip into the money to live off....before they know it it'll all be gone...

If your in a fairly "guaranteed" job (if there is such a thing !!) with a tracker mortgage then I suppose you'll be feeling flush at the moment.

I suppose if you're on benefits you won't notice any difference at all.

[Penelope Pitstop]

" I fear that the worse has yet to come, so I'm abandoning the sinking ship while there is still a lifeboat handy!!!


I think you're right. :~(

[Countryman]

"Bad Manners If it gets any lower we will have to pay the bank to leave our money in."

I think we are doing that now - Alliance & Leicester - was paying interest on premier current account at a premium rate now is almost nil. The others are the same so much for saving for your retirement.

[David Banks]

The Bank of Canada has a 0.5% interest rate, and is talking about increasing the money supply - I assume because there is nowhere else to go with interest rates.

[Dadie]

Good news for my mortgage but not so good for the savings we have..
swings and round abouts here!

[Bazeye]

Most of my work colleagues have overdraft facilities available and use them. one in particular pays £500 back every month when he gets paid and then goes overdrawn again by £500 and so on. Ive never been overdrawn in my life, so I guess we are technically the same ,except that were out of sync with each other but he insists he cant manage without being overdrawn. Why cant he therefore just "rough" it for a month to get back on track or am I missing something?

[percy toboggan]

So far savers are the sacrificial lambs. Too much sibilance perhaps but here's more...


SOS

save our savings!!

[daviddd]

Savers are losing money of course because most interest rates are below the rate of inflation. Having said that it is possible that property is losing even faster than this according to some reports.

Investec bank are still offering 3.5% gross with their High5 account - the rate paid is the average of the top 5 instant access rates - so it is guaranteed to be competitive (but how low will it go?) http://www.investec.com/UnitedKingdom/PrivateBank/BankingandTreasuryServices/High5.htm Oh, and let me know if you open an account 'cos we'll both get given £50 for the privelege lol.

[weeboyagee]

Print money and inflation will rise - therefore the savers or those with money and no debt are going to loose out even more. But consider this:

Without lending practice the businesses who require the money will go under. Jobs will be lost, employment will rise and the jobs for those seeking will not be there because the economy is not in a position to provide them - too many business going under. More people will not be able to find credit, obtain it and use it to buy - houses in especial. No housing demand, problem for construction industry and mortgage market - problem in future financial market investing etc, etc, etc.

It's one thing reducing the intrest rate and trying to kick-start the economy by forcing the banks to lend - but the other thing is - who is monitoring the spend of the banks ensuring that it is being delivered??? If the businesses don't get it and the banks simply swallow the funds or hold on to them as long as they can, they are guilty of an even bigger crime than that which they have already committed with the country's economy!

WBG :cool:

[davie]

For a weeboyagee you have a fair financial knapper on you. I think you have it in a nutshell.

[oldmarine]

Bad news for we old codgers who live on fixed retirement income.
Could be good news for young people who plan to buy their first home. Probably bad news in the long run as events like this can cause severe inflation.

[Tristan]

I thought this (http://www.pagetutor.com/trillion/index.html) was a good link to show how much money some of the world governments are throwing around without (IMHO) a clue as to what they are doing.