Banks cutting interest rates for savers

[55palfers]

I have a few saving accounts spread about amongst a number of different crooks venerable financial institutions.

Thus far, over the last few weeks; Lloyds, Nationwide and Sainsbury's have written to me informing of reductions in interest rates, some as high as 0.25%.

They are giving "changing market conditions" as the reason for the cuts.

Any of the gurus on here care to speculate as to the "conditions" please?

I have spoken to my "Banking Consultant" at Lloyds but she was less than useless.

Many thanks

[Jon39]

I have not changed my savings / investment method at all, but after the sudden lowering of bank base rates during the financial collapse, I gave up searching for better savings accounts rates. Returns from savings accounts since 2008 have generally been continually below retail inflation rates, so the actual returns are of course negative and savings balances devalue. We lose money.

A broad spread of mainly FTSE 100 equity holdings, as at the close last Friday, is producing an annual dividend income return of 6.1%. The total dividends increase since 1st January this year has so far been 3.42%.

That 3.42% increase in total dividends received, has not been entirely due to higher dividends being paid by companies. There are a number of big FTSE 100 firms, which have not been able to increase their dividends for a long time. However, with a number of the UK based international companies having their accounting in US Dollars, the changes in the Pound/US Dollar relationship has resulted in UK residents recently receiving an increase to their dividend payments.

Over the long-term with any cash savings account, we are guaranteed to lose money (real value).
There are much better returns available, but the only guarantee then, is we might do very well, but not necessarily. -

Edited by Jon39 on Monday 12th August 16:53

[Stella Tortoise]

There is some background chatter about the Bank of England dropping rates, in lending terms swap rates (which mortgage rates are loosely based upon) are reported as dropping so I guess that savers will be affected as a result.

Of course, the above may not happen and your savings rates can go back up, or not.

[Hoofy]

Or they'll reduce savings rates and keep mortgage rates up. All glory to the banks!

[NickCQ]

Hoofy said:

Or they'll reduce savings rates and keep mortgage rates up. All glory to the banks!

Then switch banks! It's really not that hard.
Back to OP's question there have been a couple of articles about a mortgage price war, maybe banks are responding to that?

[BoRED S2upid]

NickCQ said:

Then switch banks! It's really not that hard.
Back to OP's question there have been a couple of articles about a mortgage price war, maybe banks are responding to that?

Mortgage price war bring it on! How low can they get? 1%? Lower?

[Hoofy]

NickCQ said:

Hoofy said:

Or they'll reduce savings rates and keep mortgage rates up. All glory to the banks!

Then switch banks! It's really not that hard.

It's not an issue for me but it's still a time consuming activity. I'm working on switching my broadband at the moment.

[bmwmike]

BoRED S2upid said:

Mortgage price war bring it on! How low can they get? 1%? Lower?

Negative..

[Edible Roadkill]

UK’s economy contracted in the second quarter of 2019 for the first time since 2012.

Time to slash interest rates and get people spending.

[anonymous-user]

Edible Roadkill said:

UK’s economy contracted in the second quarter of 2019 for the first time since 2012.

Time to slash interest rates and get people spending.

I think most people are too far in debt to start spending.

[gibbon]

BoRED S2upid said:

Mortgage price war bring it on! How low can they get? 1%? Lower?

I took out a 2 year fix at 0.99% 18 monnths ago, so it has been that way for some time.

As has been said, we are through the hike cycle and into a cut cycle it seems, US cut at the end of last month, Euro curves pricing lower and lower and the UK, well, maybe the politest thing to say is the next rate change is unlikely to be up....

I suspect mortgage fix rates will get slashed in the next couple of months, as they were before.

[gibbon]

speedyguy said:

I think most people are too far in debt to start spending.

Thats the point, reduce the benefit of saving / reduce the cost of borrowing, so people spend.

[Terzo123]

gibbon said:

BoRED S2upid said:

Mortgage price war bring it on! How low can they get? 1%? Lower?

I took out a 2 year fix at 0.99% 18 monnths ago, so it has been that way for some time.

As has been said, we are through the hike cycle and into a cut cycle it seems, US cut at the end of last month, Euro curves pricing lower and lower and the UK, well, maybe the politest thing to say is the next rate change is unlikely to be up....

I suspect mortgage fix rates will get slashed in the next couple of months, as they were before.

My mortgage is due for renewal in December. Pretty much guaranteed the rates will get slashed in January just after I've signed uk to a new deal.

[dreamcracker]

speedyguy said:

I think most people are too far in debt to start spending.

I think that once Brexit is done, everyone will start spending again.

[MKA29]

dreamcracker said:

I think that once Brexit is done, everyone will start spending again.

Spending on what though? More than likely higher priced imports? Or highly priced domestic goods?

I think Brexit will have the opposite effect, people tend to save and squirrel away in uncertainty

[gangzoom]

bmwmike said:

BoRED S2upid said:

Mortgage price war bring it on! How low can they get? 1%? Lower?

Negative..

Haha, but surely negative equality is a real risk for anyone whos bought a house on a 90% LTV rate in the last 12 months?

Low mortgage rates is the only thing keeping house prices steady, but they really cannot go any lower. But as long as interest rates stay low and people can afford the repayments its not a big deal.

If interest rates did have to go up for what ever reason than there is going to a whole load of pain for lots of people.

Fear of rising rates is the only reason why I'm really trying to reduce our mortgage debt, yes the loan is very cheap/often less than inflation so mathematically no rush to clear it, but I don't want our family home to be put at risk by factors outside my control.

[Jimmy Recard]

You can’t find bank interest as high as you could 15 years ago, but I tend to find you can do better than the main banks.

Last year I was getting 1.3% with Tesco Bank, this year 1.5% with Marcus. No, it’s not as much as inflation, but it’s better than 0.2% or whatever Lloyds and HSBC offered on similar accounts

[bmwmike]

gangzoom said:

bmwmike said:

BoRED S2upid said:

Mortgage price war bring it on! How low can they get? 1%? Lower?

Negative..

Haha, but surely negative equality is a real risk for anyone whos bought a house on a 90% LTV rate in the last 12 months?

Jyske bank in Denmark has negative interest rate on a 10yr mortgage (-0.5%).

Is the help to buy ISA so different? Narrower scope for sure but it's still paying people to buy houses and keep the pyramid going.

[BoRED S2upid]

bmwmike said:

Jyske bank in Denmark has negative interest rate on a 10yr mortgage (-0.5%).

Is the help to buy ISA so different? Narrower scope for sure but it's still paying people to buy houses and keep the pyramid going.

How does that work then? You take out £100k mortgage and the bank pays you? I can’t get my head around that.

Dangerous for the U.K. I would think everyone will pile in and be mortgaged up to their tits

[bmwmike]

BoRED S2upid said:

How does that work then? You take out £100k mortgage and the bank pays you? I can’t get my head around that.

Dangerous for the U.K. I would think everyone will pile in and be mortgaged up to their tits

Yep - You pay back less over the term than you borrowed.

Wait till savings rates are negative. You pay a fee or get an actual negative rate but either way the tables are turned. You pay to save money and are paid to borrow it.