Banks not playing fair following base rate cuts

This thread is to discuss the following news story:
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  • edited 2 June 2009 at 6:22PM
    opinions4uopinions4u
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    edited 2 June 2009 at 6:22PM
    Borrowing risks have gone up, so lending rates have gone up.

    A year ago savers would have got 6.5% on a 1 year fixed rate bond.

    Bank of England rates have plummeted by 5%.

    You will typically get around 3.5% on a 1 year fixed rate bond today, not the 1.5% the BofE rate would suggest "appropriate".

    Headline: "Banks being far too generous told to cut rates to savers in order to subsidise borrowers". Nah, doesn't work for me either.
  • RayWolfeRayWolfe Forumite
    3K Posts
    opinions4u wrote: »
    You will typically get around 3.5% on a 1 year fixed rate bond today, not the 1.5% the BofE rate would suggest "appropriate".
    Don't be silly, that doesn't make a story.
    The journalistic origins of Martin are still showing. :rolleyes:
  • withnellwithnell Forumite
    1.6K Posts
    To be honest, anyone with a £1000 o/d with nationwide at near 18% in the first place before the rate rise was a bit foolish
  • withnell wrote: »
    To be honest, anyone with a £1000 o/d with nationwide at near 18% in the first place before the rate rise was a bit foolish
    Since when? My overdraft's been at about 13% yearly for a while now! :p
  • withnellwithnell Forumite
    1.6K Posts
    Since when? My overdraft's been at about 13% yearly for a while now! :p

    Not according to original linked article:

    "Nationwide Building Society hiked its standard overdraft interest rate from 17.9% to 18.9%"
  • lemonjellylemonjelly Forumite
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    1,000 Posts Combo Breaker Mortgage-free Glee!
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    I agree wholeheartedly with the sentiment of the article.

    In addition to the BoE rate dropping, LIBOR has repeatedly fallen, essentially meaning that inter bank borrowing (& therefore banking costs) have fallen substantially.

    They have repeatedly slashed rates for a variety of savings accounts, yet charges for borrowing have regularly crept up.

    Therefore, is it not reasonable to ask whether the banks are playing fair here? Or are they profiteering at our expense?

    NB - FWIW I hear that part of why LIBOR is dropping is because banks are still concerned about lending to each other!
    It's getting harder & harder to keep the government in the manner to which they have become accustomed.
  • RayWolfeRayWolfe Forumite
    3K Posts
    lemonjelly wrote: »
    NB - FWIW I hear that part of why LIBOR is dropping is because banks are still concerned about lending to each other!
    No dear, that would cause LIBOR to increase.
  • withnellwithnell Forumite
    1.6K Posts
    Loads of people are on mortgages paying about 1.5% or so - For savings rates to be maintained at 3%, you need an equal number of people to be borrowing at 4.5% to break even, before you've even considered the costs of running a banking network

    Very easy to look at the headline rates offered and say there's a slightly bigger difference - but that doesn't take into account the greater risk of default in a recession.

    You're not forced to borrow money, and you're not forced to save with UK banks
  • edited 3 June 2009 at 3:50PM
    opinions4uopinions4u
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    edited 3 June 2009 at 3:50PM
    NB - FWIW I hear that part of why LIBOR is dropping is because banks are still concerned about lending to each other!
    Short term inter-bank rates are falling, but the market for medium/long term lending (anything over a year) isn't functioning properly, hence the 2 year savings deals being pushed at higher rates.

    Unfortunately the demand for 6 month mortgages and 3 month personal loans is miniscule, so lower short-term LIBOR rates are basically useless.
  • nzseries1nzseries1 Forumite
    2.2K Posts
    Is it just me, or is there quite dramatic language in this news story?
    average rates on best-buy easy access saving accounts have plummeted by 0.95% points
    overdraft rates will rocket by up to 3.9% points.

    In my opinion, savings rates dropping by 0.95% is not a "plummet" and overdrafts rising by 3.9% is not a "rocket". I thought news stories were supposed to remain impartial. It's this kind of media hype that doesn't help during a recession.
    You're spelling is effecting me so much. Im trying not to be phased by it but your all making me loose my mind on mass!! My head is loosing it's hair. I'm going to take myself off the electoral role like I should of done ages ago and move to the Caribean. I already brought my plane ticket, all be it a refundable 1.
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