Interest Rate Cuts... Will it help?

LilacPixie

Is borrowing really getting cheaper?? It certainly doesn't seem to be.

Sir_Humphrey

This will make little difference alone. Bear in mind that IRs are still positive (0.1 points above RPI).

Generali

purch wrote: »

Actually I think the real reason is that they sit around in their nice conference room, and they really want to DO SOMETHING to help, and cutting interest rates is the only ammo they have !!!!

Well my opinion is that the best advice to Government right now is:

"Don't just do something, stand there!"

We'll see what the Labour Government's ideas about spending UK taxpayers' money being the way ahead for the future. My belief is it'll be a monumental screw-up. Future school kids won't learn about it because they won't be able to afford the school books.

chewmylegoff

Snooze wrote: »

Cue the tracker mortgage brigade arriving any second now gloating about how their £1000 per month mortgages in 2007 are now only £2.50 per month.

Rob

ah well, they're still paying the same percentage of the market value of their house as before.

Mini_Bear

i havent seen credit card interest rates or personal loan rates getting cheaper - they actually seem to be getting more expensive!
and us savers who do spend a fair bit now feel poorer and less likely to spend. so surely many businesses wont benefit from increased sales just cheaper debt? - seems like a no win situation here for the vast amjority of people!

Old_Slaphead

Generali wrote: »

When a company looks to invest in a particular project they weigh up costs vs benefits. A big part of costs will be interest. If interest rates fall then more new projects will be viable and so more people will be employed to work on those projects.

Also, if interest rates are low, more people will borrow to consume and fewer will save meaning more people will have jobs.

Difficulty is that 'projects' tend to be funded by loans or leases and these rates have barely moved. Current 3 year rates are around 7-9%

Overdraft rates are usually linked to BR and have come down but they usually represent a relatively low cost against the total overhead....still every little helps - but it's not a major costdown.

Biggest problem (for many SMEs anyway) is not overdraft interest rates but availability of credit.

In my industry, credit insurance agencies are running scared and reducing credit limits on most businesses, even profitable ones. That means suppliers are obliged to tighten credit terms or they will not be covered under their CI policy.
Banks are (or were up to a week or two ago) still refusing to increase credit on overdrafts (but would consider via loans/leases at exorbitant rates) hence the only way to square this particular circle is to cut productivity.

Lower interest rates are helping businesses but only marginally. Lack of credit from banks and suppliers is the major issue. Getting retail depositors to spend rather than save will not improve the situation.

CDes

It's likely that the student loan rate will drop to 2% now. Good for me on that front but I have more than my loan in savings right now- oh dear!

stephen163

I'd be fed up if I worked in the loans department of a bank and I was continuously presented with applications from busines plans with very little chance of making a return given the economic environment.

stephen163

CDes wrote: »

It's likely that the student loan rate will drop to 2% now. Good for me on that front but I have more than my loan in savings right now- oh dear!

As long as you can keep savings in an account with a greater interest rate than 2% then it should still be better to save rather than repay the loan. I wonder what the best rate is out there for instant access savers after today's cut?..hmmm

Max_Headroom_3

Cannon_Fodder wrote: »

If we all spend until there are no savings left anywhere in the country, where will they find mortgage funds from????
.

Presumably from the deposits of companies we've spent our cash with. It's got to go somewhere.