Interest Rates
Poll: Interest Rates
Total Members Polled: 25
Discussion
At some point the BOE are going to put the rates back up....it is inevitable!
With the banks not passing on the full cuts: 0.5% cut in Base rate, but only passing on 0.25% what do you think the banks will pass on with the next rise?
So if 0.5% is put back on to the base rate...will the banks pass on 0.5% or 0.25%??
With the banks not passing on the full cuts: 0.5% cut in Base rate, but only passing on 0.25% what do you think the banks will pass on with the next rise?
So if 0.5% is put back on to the base rate...will the banks pass on 0.5% or 0.25%??
The longer they stay low the more adjusted people will get to them being low and in the end 0.5 will be seen as "normal" , 1.0 seen as "high", etc.
We have now had over a decade of rates under 6%, about half of those years under 5%. A good portion of the years under 5% were at four or less.
Two decades ago six would have been low and twelve would have been high. This would be politically impossible now.
The banks will probably hold at their current rates and wait for the base rate to rise up to meet them before tracking it up. I think that this will happen purely due to the politics of the situatation. The banks don't want to lose money but they have to lend to make any and the government, having saved them, will be watching. So the banks have no choice. They can't (because it will scare customers) and daren't (the government) raise their rates too quickly so waiting for the rates to come to their current hold position is a safe bet.
Of course the real number to watch is LIBOR. The above will be true because those are the numbers in the news and the ones that the Bank of England and the government like to think are important. LIBOR will however affect the real availabilty of money to lend at any given rate. Expect the difference between it and the base rate to be related to the size of the deposit required and the income multiple allowed.
We have now had over a decade of rates under 6%, about half of those years under 5%. A good portion of the years under 5% were at four or less.
Two decades ago six would have been low and twelve would have been high. This would be politically impossible now.
The banks will probably hold at their current rates and wait for the base rate to rise up to meet them before tracking it up. I think that this will happen purely due to the politics of the situatation. The banks don't want to lose money but they have to lend to make any and the government, having saved them, will be watching. So the banks have no choice. They can't (because it will scare customers) and daren't (the government) raise their rates too quickly so waiting for the rates to come to their current hold position is a safe bet.
Of course the real number to watch is LIBOR. The above will be true because those are the numbers in the news and the ones that the Bank of England and the government like to think are important. LIBOR will however affect the real availabilty of money to lend at any given rate. Expect the difference between it and the base rate to be related to the size of the deposit required and the income multiple allowed.
Remember that lifting US rates after they were cut to almost zero post Sept 11 is at the heart of the current credit crunch.
For example: People took out loans at 0.75% - the fed lifts rates by a miniscule 0.5% but your mortgage goes up by 66%.
The BoE is going to have to be VERY VERY careful this time. VERY careful.... You're right, people are going to get used to having rates at 0.5%!
I see 0.5% here for at least a year. That F**K Alister Darling has no idea - his growth forecast for 2010 is absolutely fantasty.
For example: People took out loans at 0.75% - the fed lifts rates by a miniscule 0.5% but your mortgage goes up by 66%.
The BoE is going to have to be VERY VERY careful this time. VERY careful.... You're right, people are going to get used to having rates at 0.5%!
I see 0.5% here for at least a year. That F**K Alister Darling has no idea - his growth forecast for 2010 is absolutely fantasty.
The banks will put back on 100% of any rise for existing mortgage customers.
LIBOR of course makes a difference too but for a one-off move such as a 50bp rise from the BoE the banks always raise the full amount since their costs have just gone up by that much.
That's if you are a borrower on SVR.
If you are a saver - they will probably not pass on the full amount since it makes them more money not to.
For someone looking at a new mortgage product the rates are likely to jump that day but will be more influenced by LIBOR in between MPC meetings.
LIBOR of course makes a difference too but for a one-off move such as a 50bp rise from the BoE the banks always raise the full amount since their costs have just gone up by that much.
That's if you are a borrower on SVR.
If you are a saver - they will probably not pass on the full amount since it makes them more money not to.
For someone looking at a new mortgage product the rates are likely to jump that day but will be more influenced by LIBOR in between MPC meetings.
munky said:
m4tt said:
It's all based on LIBOR and Swap rates, BoE rates have very little influence on the average bank product.
Except that every time there was a BoE cut, I got a letter from ING, A&L and Egg all saying they were cutting the savings rate in direct response to the BoE rate cut.m4tt said:
munky said:
m4tt said:
It's all based on LIBOR and Swap rates, BoE rates have very little influence on the average bank product.
Except that every time there was a BoE cut, I got a letter from ING, A&L and Egg all saying they were cutting the savings rate in direct response to the BoE rate cut.Gassing Station | Finance | Top of Page | What's New | My Stuff