Interst Rates Down again by 1%

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Milarky wrote: »

There was an interesting comment of Radio 4's PM today; banks must depend on savers because wholesale markets are dead. We knew that. But the commentator suggested (when asked about mortgages at 2.5% and deposits @ 5%) banks would consciously wear this obvious loss-making situation for some time as they were trying to keep depositors loyal.

And it does actually make sense. Banks could obviously hold deposits on which they 'lose' 2.5% pa for quite some time before they have react. Shareholders cannot do anything to the banks for having operating losses as a result since dividends are on-hold under the government's preference share scheme.* If banks are having to write down substantial chunks of mortgage-debt in the current climate, does running a 'deficit' on deposits really hurt their prospects that much? Their working assumptions must be that once conditions start to improve they can raise prices again, and can move into profitability. What would happen re. savings rates which have proved to be 'sticky downwards' is that they will then become 'sticky up' I imagine.

*Nationwide BS ins't taking the cash - hence their scorched earth policy towards their saving members. It will be interesting to see what becomes of this atitutude a year down the line...

I closed 2 Nationwide accounts this week because of the lousy way they are treating members, by paying extremely poor rates. What is the point of being a mutual if this is the way they they treat loyal members ?

Oblivion

ScarletBea wrote: »

I'm feeling so... disillusioned...
Why do I save anyway?

You save, and get taxed on your savings, so that the government can bail out the banks and city high-rollers and subsidise their huge bonuses.

You save, so that people who have bought property way beyond any expectations of ever paying for it, are given a free ride.

You save, because you are just another prudent person, who thought that we lived in a just society and all the promises of a fair Britain might just come true ... EVER FELT DUPED? Welcome to Little Britain.

Dave.

LongTermLurker

This probably isn't going to be popular, but I really don't understand why so many people complain about lower interest rates. So long as they are passed on to mortgagees, are there really so many people who save but don't have mortgages? I can understand pensioners complaining because a big part of their income is from savings & investments, but are so many of the forum members so much older than me?

I can also understand, to a degree, people who had money in Icesave and couldn't get it back in time to take advantage of the last lot of high interest bearing accounts - but surely they heeded the warnings to spread their money and didn't have 100% of their cash in Icesave?

But for those who are still saving earned income or had a lump sum to save over the last few months, why aren't they all protected in high interest accounts? I'm earning an average of 7.6% gross/AER on all my savings and have secure at least 6% instant access until next November.

What I would like to see is Mortgage lenders forced to reduce their rates within 1 month and the same goes for the VAT decrease. Not dropping rates is simply an increase in real terms.

I'll probably get flamed now but it seems odd that everyone is saying "borrowers are getting the best deal and savers are being sh't on" and forgetting about the 6%, 7%, 8%, 10% and 12% unprecedented savings rates that they've been enjoying at the expense of homeowners, not all of which are anything like subprime.

tuggy12

New / Old Labour's Legacy

Private Pensions............................Knackered

Interest Rates................................Knackered

Inflation.........................................Knackered

Jobs..............................................Knackered

House Prices.................................Knackered

Gold reserves.................................Knackered

Exchange Rates.............................Knackered

UK Gilts.........................................Knackered ( Thanks to miserly Martin )

Immigration Control........................Knackered

World Peace.................................Knackered

Please feel free to add

LongTermLurker

tuggy - is that savings or politics?

Masomnia

You're blaming Labour for lack of 'world peace'... I'm not their biggest fan that the moment but that's a bit pathetic.

People need to stop taking these rate cuts so personally, and as if they've cut them just to p*** us all off. If it saves jobs and lessens the severity of the recession I'll be willing to lose a few quid. And besides, with inflation falling you're still likely to be beating infation even with lower rates.

tuggy12

LongTermLurker wrote: »

I'm earning an average of 7.6% gross/AER on all my savings how/where? and have secure at least 6% instant access until next November.where?

I'll probably get flamed now but it seems odd that everyone is saying "borrowers are getting the best deal and savers are being sh't on" and forgetting about the 6%, 7%, 8%, 10% and 12% when/where? unprecedented savings rates that they've been enjoying at the expense of homeowners, not all of which are anything like subprime.

We're all dying to know.

MiserlyMartin

Masomnia wrote: »

You're blaming Labour for lack of 'world peace'... I'm not their biggest fan that the moment but that's a bit pathetic.

People need to stop taking these rate cuts so personally, and as if they've cut them just to p*** us all off. If it saves jobs and lessens the severity of the recession I'll be willing to lose a few quid. And besides, with inflation falling you're still likely to be beating infation even with lower rates.

Inflation is 4.5%. Base rate is 2%, please explain how we are beating inflation?

MiserlyMartin

LongTermLurker wrote: »

...So long as they are passed on to mortgagees, are there really so many people who save but don't have mortgages? I can understand pensioners complaining because a big part of their income is from savings & investments, but are so many of the forum members so much older than me?

I think there are a lot of people who refused to buy into the housing pyramid selling scam that it was and put the money in the bank for later on. There are a lot of wise people on this forum many of which sold their houses because they foresaw this crash - despite the majority of popular opinion that houses would never crash and they were mad. Thats why there is a lot of money sitting in peoples accounts. And thats why people are annoyed. The prudent bail out the irresponsible who were encouraged by the most irresponsible man of all - Gordon Brown.

tuggy12

Masomnia wrote: »

If it saves jobs and lessens the severity of the recession I'll be willing to lose a few quid.
Current Student Debt - £6,595.52

But you're in debt, so you won't be losing a few quid.