two interest rates? one for savers and one for borrowers?

white_noise

this may sound like a really strange idea and likely stupid, but what is it that stops the bank of england having 2 types of interest rate, one for borrowers and one for savers, thus they could reward one and punish the other depending on the circumstanes at the time?
anyone?
WN

Debt_Free_Chick

Nothing - and there's nothing to stop individual banks from using rates that are different to the BOEBR either.

There are many, many credit agreements drawn up with interest rates that bear no resemblance to the BOEBR.

But think of this ..... you are a bank. You receive money from savers. You lend some of that money to borrowers.

How would you decide which rate to offer to each group?

Cannon_Fodder

They do...

Mortgage rates, with the exception of trackers, are often 8 to 10 times the new base rate...

Loans are stil 8%+
Credit cards rates have been increased recently, instead of following the B0E rate.

The punishment of savers is underway for their sheer cheek in having been prudent.

Really2

white_noise wrote: »

thus they could reward one and punish the other depending on the circumstanes at the time?
anyone?
WN

Because thats what is all about isn't it reward and punishment.:rolleyes:

Loan rates are way higher than savings rates so it already happens.

Why not become a loan shark?

withabix

There is nothing stopping banks from offering savers higher interest rates, other than their perpetual greed.

Thrugelmir

Cannon_Fodder wrote: »

They do...

Mortgage rates, with the exception of trackers, are often 8 to 10 times the new base rate...

Loans are stil 8%+
Credit cards rates have been increased recently, instead of following the B0E rate.

The punishment of savers is underway for their sheer cheek in having been prudent.

Both Northern Rock and Coventry BS are offering fixed term deposit rates for savers over 3% Gross. So its untrue that savers are being hard hit.

More likely that savers still expect rates as offered by IceSave etc which were always unsustainable.

Really2

Thrugelmir wrote: »

Both Northern Rock and Coventry BS are offering fixed term deposit rates for savers over 3% Gross. So its untrue that savers are being hard hit.

More likely that savers still expect rates as offered by IceSave etc which were always unsustainable.

True I fail to see why people do not see

Boom = Everyone better off
Bust = Everyone worse off

Savers may get less intrest but if it is for a house deposit property prices are falling.

If it was as a back up for hard times.. Hello we are in hard times.

I fail to see the punishment in any of it.
Interest rates show the state of the economy, inflation etc and are not a yard stick for reward or punishment.

Generali

white_noise wrote: »

this may sound like a really strange idea and likely stupid, but what is it that stops the bank of england having 2 types of interest rate, one for borrowers and one for savers, thus they could reward one and punish the other depending on the circumstanes at the time?
anyone?
WN

The Bank of England has traditionally had a single rate of interest known as the Repo Rate or Base Rate - that is the rate of interest at which the BoE will lend money to banks against the security of Gilts which in turn impacts the price banks have to pay to borrow money to lend to you and me.

The Bank of England at present doesn't take money in from savers in the way that I suspect you mean and so has only a very indirect influence over the rate of interest they receive.

The simplest way to explain what is going on right now between the Government's spending plans and the Bank of England's plans for printing money is that it's all a complete and utter disaster.

There's little or nothing you can do about it so just enjoy the ride and it'll most likely work out ok in the end. Things usually do.

Really2

Generali wrote: »

The Bank of England has traditionally had a single rate of interest known as the Repo Rate or Base Rate - that is the rate of interest at which the BoE will lend money to banks against the security of Gilts which in turn impacts the price banks have to pay to borrow money to lend to you and me.

The Bank of England at present doesn't take money in from savers in the way that I suspect you mean and so has only a very indirect influence over the rate of interest they receive.

The simplest way to explain what is going on right now between the Government's spending plans and the Bank of England's plans for printing money is that it's all a complete and utter disaster.

There's little or nothing you can do about it so just enjoy the ride and it'll most likely work out ok in the end. Things usually do.

:T You have pipped back:)

SamIAm_3-2

Generali wrote: »

The simplest way to explain what is going on right now between the Government's spending plans and the Bank of England's plans for printing money is that it's all a complete and utter disaster.

Nicely put.

Welcome back!

Really2

SamIAm wrote: »

Nicely put.

Welcome back!

Thank god, I can stop being the "brains" on the forum now.

It is hard work pretending to know what I am on about.:D