FED cuts by 0.5%

StevieJ

sabretoothtigger wrote: »

Im not sure the tories will get in, back in the early 90's even with a bad economy they held on for another term.
Strange but this crisis might have stopped the rot for labour, depending if any news is good by the election

I dont think its a global cut this time so .25 is more likely in uk

I am amazed that anyone could think the next UK interest rate cut will only be .25%, I hope you are not a gambling man.
I have said for a few weeks that this crisis could easily save Labours bacon, before this recent crisis they were out on their ear.

adr0ck

BACKFRMTHEEDGE wrote: »

I think you might be right. I belong to a generation that would never, ever vote Conservative. Anyone who was a young adult in the early 80's will never forget. I think that is why the tories have been out of power for so long. I have friends who haven't voted for ages who intend to vote this time to "Keep the Tories out". Margaret Thatcher was a witch

funny how times change

most young adults you speak to now seem to say that they would vote conservative

go back 10 years and it would defo be the other way round

moanymoany

It is unlikely that the mortgages - and boy, there are a lot of different types - will reflect low BOE rates - hasn't happened so far.

As for trackers, it is important to read the small print.

Important things to consider
As with any loan, it’s important to check the small print on a tracker mortgage. The interest rate will be set at a certain amount – say, 0.11% below base rate for 2 years. However, your lender may specify that they reserve the right to review the situation should the base rate fall too low. Or they may specify a minimum rate that you will have to pay if the base rate plunges below expectations, in order to protect them from your paying an extremely low mortgage rate. Such clauses defeat the object of the tracker mortgage.

From this site http://www.lcplc.co.uk/three_col_1.aspx?id=0:35044&id=1:31084&id=10:21990

Jonbvn

moanymoany wrote: »

As with any loan, it’s important to check the small print on a tracker mortgage. The interest rate will be set at a certain amount – say, 0.11% below base rate for 2 years. However, your lender may specify that they reserve the right to review the situation should the base rate fall too low. Or they may specify a minimum rate that you will have to pay if the base rate plunges below expectations, in order to protect them from your paying an extremely low mortgage rate. Such clauses defeat the object of the tracker mortgage.

From this site http://www.lcplc.co.uk/three_col_1.aspx?id=0:35044&id=1:31084&id=10:21990

Some tracker mortgages do have lower IR limits, but certainly not all. As an example, the very popular HSBC lifetime tracker has no such limit, although the rates are all BoE+.

sabretoothtigger

How about that newly advertised woolich one

WTF?_2

StevieJ wrote: »

I am amazed that anyone could think the next UK interest rate cut will only be .25%, I hope you are not a gambling man.
I have said for a few weeks that this crisis could easily save Labours bacon, before this recent crisis they were out on their ear.

Ironic that Labour's best chance of staying in power is to point at the mess that they were complicit in and scare people into re-electing them on the basis that it isn't a good time to be changing leadership. Of course it helps when you've got the BBC on side to blame everyone else but you for the crisis ... Those damn short selling hedge funds! If only everyone had listened to Gordon who was doing his best to warn the world about the dangers.


Also helps when you have a couple of superficial planks as the potential alternative PM and chancellor and all the more so when one of them is caught up in an enormously embarrassing incident about soliciting donations from rich foreign associates.

If Cameron had any sense he'd dump Osbourne and name Ken Clark as a 'war chancellor'.

ad44downey

Michael Portillo said last night that our interest rates need to go UP to encourage a savings culture as opposed to our present debt culture that caused all this mess. I am in total agreement with him. +0.5% would be good for starters although I don't expect it to happen as yet.

WTF?_2

ad44downey wrote: »

Michael Portillo said last night that our interest rates need to go UP to encourage a savings culture as opposed to our present debt culture that caused all this mess. I am in total agreement with him. +0.5% would be good for starters although I don't expect it to happen as yet.

Ken Clarke has been cautious on the 'Quick! Cut interest rates to the bone, inflation doesn't matter" culture too, based on TV interviews that I have seen.

Although it's generally accepted that deflationary pressures are stronger at the moment, there is plenty of danger that all these desperate measures to 'inject liquidity' could very easily backfire. Here's a good piece from Moneyweek:

http://www.moneyweek.com/news-and-charts/economics/inflation-could-make-a-comeback-sooner-than-you-think-13946.aspx

Put it this way, I wouldn’t want to put Bernanke in charge of road safety. His idea of efficient traffic management would be to impose ever-increasing minimum speed limits and then employ lots of extra morgue attendants and road sweepers in the hope that the carnage from multiple pile-ups could be cleaned up more quickly and so avoid traffic jams.
..

The reality is we borrowed lots of money - arguably too much - and now we have to pay it back, regardless of what the world’s governments and central banks would like us to do. It’s not that hard to understand. Lots of people don’t seem to like the idea, because it sounds moralistic. But it’s no more moralistic than pointing out that if you throw an apple into the air, at some point it will fall back down again.
So what do you do if you have big debts? You either repay them, which means you have to accept that your present-day consumption is going to fall as you pay for the consumption you borrowed from the future. Or you don’t pay them back at all, which results in a loss of status and assets, and usually means you’ll have a tough time getting more loans in the future.
Of course, there is one other option. You could print counterfeit money in your back garden and pay your creditors back with that. As an individual, if you do that, you’ll be arrested. But as a government, you can print away to your little heart’s content. And the bigger the player you are, the more likely you are to get away with it.
That’s clearly the Fed’s desired outcome. And if there’s any world government that can do it, it’s America’s. That’s why oil and other commodities bounced yesterday.
It’s early days yet, and deflation is likely to set in before we see anything else. But if the Fed has its way, inflation could make a comeback sooner than anyone expects.

Realy

ad44downey wrote: »

Michael Portillo said last night that our interest rates need to go UP to encourage a savings culture as opposed to our present debt culture that caused all this mess. I am in total agreement with him. +0.5% would be good for starters although I don't expect it to happen as yet.

I think the only problem with that is that it is hard to save when the company you work for goes in to administration.:rolleyes:

WTF?_2

Realy wrote: »

I think the only problem with that is that it is hard to save when the company you work for goes in to administration.:rolleyes:

But of course, low interest rates will stop that happening, right?

We are going to have recession and job losses no matter what happens to interest rates.

The market is telling us "Enough reliance on credit, pay down debt until things are more balanced".

Our government is responding by trying to drag us back to the heady days of early 2007 (using borrowed/taxpayer money) because they don't see any way way of running the economy other than piggybacking on easy consumer credit.


It's one thing to introduce emergency measures to prevent complete implosion of the financial system, it's another to pursue fruitless and dangerous policies of monetary laxness in the misguided hope of flogging your dead horse back to life.

But of course the electorate expect to be kept in the manner to which they have become accustomed in the last decade so like any good politicians facing election the Government will do whatever it takes to stave off the problem just that little bit longer. If that means trying to rekindle a credit boom after it goes bust, no matter what the longer term cost, so be it it would appear.