Won't it make a run on the banks more likely...

Wookster

Reaper wrote: »

The problem is that the government has been bullying them into dropping rates when they didn't want to. The obvious acton to make banks more solvent is to increase rates to reduce lending and attract savers but that just want the government doesn't want.

Persoanlly I think the governemnt took it too far and should have just let the banks pocket the last rate cut.

Absolutely - I can see why Crash never misses an opportunity to bash the banks but they do need to rebuild their balance sheets, they aren't not for profit organisations after all and if Crash wants taxpayers money back then they will need to price risk in more appropriately.

Its good electioneering to bash the banks to pass on rate cuts, and the lower interest rates are the faster debt can be paid off but there is a balance to be struck. Hence why the government should not be interferring with the markets.

Thrugelmir

Andrew64 wrote: »

The bank run seems to be occurring:

http://www.thisismoney.co.uk/saving-and-banking/article.html?in_article_id=478349&in_page_id=7

Banks were put on red alert today after customers withdrew more than £2bn from savings accounts in just one month. Industry figures showed deposits at High Street banks fell by £2.3bn in January, the first significant drop since 1999 and the largest since British Bankers' Association records began in 1997. It came as customers shifted money to more attractive investments after banks cut interest payments in line with the Bank of England, which has reduced rates from 5% to an all-time low of 1%.

Seems the 2.5% cut in VAT maybe having an impact :rolleyes:

Taken in isolation this is a one sided stat as the money withdrawn will end back in the banks in one form or another. Providing liabilities fall correspondingly no need for concern.

JFC_2

I suppose you could use your savings as a loan to others who are finding it hard to borrow from the banks. Charge a rate of interest suitable to both partys...you make money, they get a cheaper loan. You would have to trust the person you lent it to and draw up a proper contract but Its one way you could make some money on your savings.

Wookster

JFC wrote: »

I suppose you could use your savings as a loan to others who are finding it hard to borrow from the banks. Charge a rate of interest suitable to both partys...you make money, they get a cheaper loan. You would have to trust the person you lent it to and draw up a proper contract but Its one way you could make some money on your savings.

There is always www.zopa.com which might give you more attractive rates.

mr_jetlag

Wookster wrote: »

There is always www.zopa.com which might give you more attractive rates.

Zopa is great for what it is, but you have to remember that they lock away your money for 36 months; also not all of your capital will earn the same rate (since some of it will languish in the holding account while they go away and find borrowers).

I used to have £££'s in but when they removed the 12-month option I've let my ZOPA cash wind down.

Lifeisbutadream

dopester wrote: »

It has only just started. Deflation. You're right in one way but crazy to go out on a total spending spree right now - right near the beginning of the deflationary process, as this is a long term process - and inflation can't be magicked up like some of the forum believe.

Even if your money is earning near 1% interest, its purchasing value is increasing all the time. Just look at that "gypsy v tradesmen" thread yesterday which confirmed all I've said for a year+.... that electrician saying he would do the job for a lot less pay than before.

You seem to be getting similar better value employing your electrician, but £50K for an extension? You should be able to build a pretty decent house for that in my opinion. Are you sure you couldn't get better value there. Even with the top firms. As an aside, I'd be wary of paying upfront as well.

In recession/depression times, its been said houses are built better (and maybe extensions) as workers aren't in mad-rush to throw up buildings one after the other, job after job on the go, but take their time, are grateful for the work, and get things right - but a bit of oversight also always helps.

An extension will cost around the same now as it did last year - you might get a slightly better rate on the labour charge, but materials in general havent gone down (and some have gone up if they are imported) - you can work out the cost as around £1K per square metre, so £50K may be perfectly reasonable, depending on the size.