BOE Rates hit 1.5%

chucky

ad9898 wrote: »

I was reasonably happy with the cut today, it could have been worse and knocked to 1%. My opinion is the rate cuts have virtually no effect on house prices anymore, as I have always said they are good if you have a mortgage, thats all.

i think you could be right here - house prices are the least of the governments worries and the drop will not move the market and may be the least of the governments economic worries. if we're talking political worries, i think it is much more important to them.

Nakedspark

I'm due to finish my current term soon (5year fixed) as the rate has fallen am i wise to follow a tracker to lower payments ?

I currently pay 615 a month Fixed at 5.89% (90,000)
Being a contractor my job is also uncertain

Really2

Old_Slaphead wrote: »

I never mentioned business - you did!

Problem for businesses at moment is lack of credit availability and sales. I'd be interested to know how, with the banking system in the mess that it's in, how lowering interest rates helps this?

Clearly the drop from 5% to 2% (prior to today) hasn't done much to help thus far and I don't see how lower interest rates in US & Japan have helped.

Really2, if poss, try to resist patronising me and give the benefit of your obvious wisdom.

If you could do likewise:rolleyes: .

Ok business borrow money (overdrafts, loans) to cover every day running costs. In tight times any money saved on these helps maintain profitability, staff etc.
If rates were higher that would increase costs, thus there would be even more unenployment and more business failures (which could hurt your savings if banks go bust).
So there you go, low rates are not to punish savers or reward mortgages holders they are to help business's.
You can now go to bed and not feel victimised.

Kez100

ad9898 wrote: »

I was reasonably happy with the cut today, it could have been worse and knocked to 1%. My opinion is the rate cuts have virtually no effect on house prices anymore, as I have always said they are good if you have a mortgage, thats all.

I'm still glad I don't have a house at this time, IR's don't bother me much either way, I'm losing out on my savings but with house price falls continuing I'm in line to buy outright in 3 years anyway, which is far better than paying any kind of interest rate on a mortgage.

Just to point out though if I did have a mortgage I would be ploughing every single spare penny I had into getting it as low as possible, these low rates will not be around long, 12 months maybe 2 years at most, then they will be on up. I wouldn't fancy being on a tracker 2% above base rate in 2 years, thats for sure.

But most people on Trackers won't be +2 as those on these higher margins are late on the band wagon. Most of us have been on them for ages when the rates were well under the +1 and no one imagined decreases of this ilk.

However, I agree we need to plough in money. I am.

ad9898_3

Nakedspark wrote: »

I'm due to finish my current term soon (5year fixed) as the rate has fallen am i wise to follow a tracker to lower payments ?

I currently pay 615 a month Fixed at 5.89% (90,000)
Being a contractor my job is also uncertain

It's difficult to say, I'm quite risk averse and if I had a house with a good amount of equity I would be fixing at the lowest rate I could, for the longest period I could. Trackers are good if you have disipline, and use the low rate to overpay, much to Brown's dismay, as he would like you to blow as much of your savings as possible.

As I think Kez said in not so many words, you've probably missed the boat on trackers, with the amount of time left before rates go up, go for a good fixed and relax that you don't have to wait with baited breath on the first Thursday of every month.

Really2

Nakedspark wrote: »

I'm due to finish my current term soon (5year fixed) as the rate has fallen am i wise to follow a tracker to lower payments ?

I currently pay 615 a month Fixed at 5.89% (90,000)
Being a contractor my job is also uncertain

Tracker or SVR for the moment (whichever is lowest) then get a good fix when they come down low enough (hopefully under 4% in a couple of years)

Old_Slaphead

Really2 wrote: »

If you could do likewise:rolleyes: .

Ok business borrow money (overdrafts, loans) to cover every day running costs. In tight times any money saved on these helps maintain profitability, staff etc.
If rates were higher that would increase costs, thus there would be even more unenployment and more business failures (which could hurt your savings if banks go bust).
So there you go, low rates are not to punish savers or reward mortgages holders they are to help business's.
You can now go to bed and not feel victimised.

Still can’t resist it can you?

The problem most businesses have is getting credit.

The decrease in interest rate does not have a material effect on most companies overheads – given the huge increase in fuel costs in 2008/9, proposed NI increases in 2010, cost of funding pension shortfalls, cost of minimum wage over last few years etc etc.

Ultimately, the only person who spends money is you, Joe Public, the consumer (or Government).

The reason why the BoE has reduced interest rates is to try and get the consumer spending again – it’s not, as you seem to think, about reducing the odd percent off of a company’s overheads.

But reducing interest rates simply moves wealth from 1 group of people (ie savers) to another (ie borrowers). If the latter group, because of lack of confidence, uncertainty or whatever, decides to reduce their debts rather than increase spending then it makes absolutely no difference to the economy. Many mortgage holders will use their windfall to pay down their debts. Many savers will still not go out and spend - it's not in their nature, they're a cautious lot.

Reducing interest rates hasn’t worked so far in the UK or USA.

Reducing interest rates didn’t work in Japan in the last decade.

The blokie from Nissan said on TV tonight – it’s not high/low interest rates that are the problem it’s the lack of credit and lack of confidence (of consumer to go out and spend) !! The Gov't needs to reduce state spending and encourage & incentivise the manufacturing/skill sector. More skilled trades and less emphasis on universities courses on nebulous and oversupplied subjects like legal & media studies, golf course management etc etc.

The current interest rate policy doesn’t work. The Gov’t have increase banks Tier 1 capital requirements which effectively inhibits their ability to lend money. It then bales them out and expects them to pay 12% for the priviledge. They need to make a decent profit to pay taxpayer back so they’re unlikely to want to pass on interest rate falls if they can get away with it!

THe Labour Government, because of their deliberate policy of keeping interest rates low and encouraging excessive consumerism and asset price inflation must bear significant responsibility for getting us into this mess - they now ought to come up with some innovative ways of getting us out of it.Of course, that won't happen - in a few years they'll all sail off into the sunset with their inflation -proof, gold plated pensions, lucrative after dinner speaking engagements and/or their seats firmly wedged their big-company, non-executive directors' chairs.

Snarf999

Really2 wrote: »

Tracker or SVR for the moment (whichever is lowest) then get a good fix when they come down low enough (hopefully under 4% in a couple of years)

I'm not sure fixed rates will do this though. They're already higher than when we fixed 2 years ago when interest rates were much higher. I think ad9898's advice is more realistic. Getting onto a Tracker or SVR now just because rates are low means a short term gain, however as soon as interest rates stabilise or start to rise again I think fixed rates may be harder to come by or will just increase with the bank and BS lenders with an eye on where rates might be headed.

I would also be tempted to fix for as long as possible, as after the end of this year I think it will be much harder to fix and rates will start to climb. Although it is slightly gutting that we're fixed for 5 years with rates so low, we're happy that we can afford the payments for the next 3 years at least.

Sapphire

As far as I can see, the cut in interest rates is a very bad thing for the economy and many individuals.

It is very bad news for savers, including those who are trying to supplement meagre pensions, as well as for companies that rely on exports to make money. We cannot as a country afford to have the remains of our manufacturing destroyed. It will not make banks lend more money to individuals (thank God) or businesses (unfortunately). It will also not make people spend more – hopefully individuals are just beginning to learn that they cannot spend endlessly, often on borrowed money, on meaningless fripperies.

All round, then, another 'winner' from Clown and his cronies.:cool:

Old_Slaphead

Sapphire wrote: »

We cannot as a country afford to have the remains of our manufacturing destroyed.

Maybe not but it's a democratic country and the people have voted for a Government that's seemed intent on doing just that for the last 12 years.

Seems the only game in town has been the public sector and the (great God) financial service sector. Now FS sector has imploded the emperor is seen to have no clothes. Thanks Gawd for all the support you've given us small manufacturers !!

Chickens and roost springs to mnd !!