Interest rates cut 0.5%

brit1234

neas wrote: »

Gas, Elec rises:
Other comodoties will rise as our currency is devalued... from these bank funds.

Hopefully not, interest rates have been cut internationally including the US. Oil and gas are sold in dollars so with the US cutting rates as well at the same time it should cancel out extra costs here. OK we may have to pay a little more for say Togo bananas but in the frame of it it should be mostly inflation neutral.:cool:

On the bad side it effects the interest rate yet again of my high interest acount of my house deposit.

epz_2

always a good idea when banks are in need of capital and the perceived risk of saving in banks is much higher to decrease the reward for saving.

Generali

Conrad wrote: »

I've put 3 offers on 3 repos this morning. All new build 2 bed flats for around £80k that sold for £180+ at peak to 'investors' that have thrown in the towell.
If I wait the EAs will find more investros flocking to thier doors, so be less inclined to recommend lower offers to the repossessing Banks.

Yield is about 7% and I do not think the prices can fall much further.

BTW - Im only going to buy one of them for now (I think)

As a very seasoned savvy investor said to me only yesterday - there comes a point where you have to grabb opportunitites as they arise and take a long term position.

Over on housepricecrash I kept argueing some time ago that the uber bears would not commit in the trough as they will be fearful things can only get worse. Many will want to see definite rises before they committ and even then some will claim its just a short term / spring bounce

Of course, things could get worse, hey ho

Beware! Many a savvy investor has lost his shirt on the basis that the asset has lost xx% and looks very cheap.

7% doesn't look that great a gross yield on a pretty high risk asset (probably leveraged, certainly an illiquid market), especially once you knock off the service charge which is unavoidable in a flat.

Don't forget, flats can end up with just about nil value if you can't get a mortgage on them. I don't know if you remember that story a while back in one of the Scottish papers that was posted here (by me???) about a block of new build flats where many flats were BTL places making a loss and the LLs were trying to save costs by refusing to pay the service charge.

The management company had run out of money and the local water company was about to cut off the sewerage to the building. I don't know how that resolved itself but imagine trying to let or sell a flat with no sewerage connection to the building! I suspect that potential tenants or buyers would spot something was amiss pretty fast!

Generali

epz wrote: »

always a good idea when banks are in need of capital and the perceived risk of saving in banks is much higher to decrease the reward for saving.

Surely interest rates to savers are based on supply of and demand for savers' money. If demand remains high, rates will remain high.

epz_2

Generali wrote: »

Surely interest rates to savers are based on supply of and demand for savers' money. If demand remains high, rates will remain high.

yeah fair point though I cant see the banks rushing to keep savings rates too high with a 200billion base rate over draught

Generali

epz wrote: »

yeah fair point though I cant see the banks rushing to keep savings rates too high with a 200billion base rate over draught

Too true sadly.

They do have to try to unblock the interbank lending markets. Nothing works without that - commerce, retail banking. Everything comes to a halt.

I do rather feel that the money could be better spent on setting up a parallel system via the central banks. Other, presumably wiser, people think otherwise.

Joke (shamelessly nicked/adapted from Jokers Corner on fool.co.uk):

Young shaver: What do you think of Alistair Darling
Old Timer: He's a post turtle
YS: A post turtle?
OT: You see a turtle on top of a fence post. You have no idea what's he's doing there or how he got there but you know someone put him there. You don't know why but know that they shouldn't've.

Running_Horse

pizzagirl wrote: »

So much for curbing inflation then.!!!!!

Inflation is good. I'll get a pay rise that makes my mortgage even lower than the £50 cut anounced today (tracker mortgage). Now all we need do is bring UK interest rates in line with the 1.5% in the USA. Or is there any reason we should have uniquely higher rates in this country? What a bunch of miseries.

mr.broderick

StevieJ wrote: »

Bank cuts rates

There was definitely an air of inevitability surrounding it.
I think now is probably a good time to buy a house.

Generali

Running_Horse wrote: »

Inflation is good. I'll get a pay rise that makes my mortgage even lower than the £50 cut anounced today (tracker mortgage). Now all we need do is bring UK interest rates in line with the 1.5% in the USA. Or is there any reason we should have uniquely higher rates in this country? What a bunch of miseries.

We have to have higher interest rates in this country as we are (and have been for a while) net importers and have had higher inflation than many other developed nations.

To persuade foreigners to hold sterling denominated assets (which have to be sold to finance exports) they demand a higher rate of return than holders of lower inflation countries' assets to counteract the risks from inflation to their assets values.

Basically it's the price we pay as a country for living beyond our means and trying (in the 1970s) to print money to pay for it.

neverdespairgirl

Running_Horse wrote: »

. Or is there any reason we should have uniquely higher rates in this country? What a bunch of miseries.

WE don't have uniquely high rates in this country.

Australia's are now 6%, down from 7%, for example.