Are interest rates strangled?

purch

So has bought a flat in Berlin instead.

.........and I used to complain about my commute :eek:

michaels

Let me see - you can borrow money at 0.68%, you could put it in to a top paying interest access account paying about 3.25% gross, 1.95% net for a high rate tax payer (more for standard rate) and make a tidy risk free profit but instead you are overpaying - I bet the banks wish more of those on the low trackers were like you...

hillcats wrote: »

I'm happy with my existing deal also, and I wont be changing it - thanks.
Full details below

michaels

Re the OP - yes the BoE no longer has control over the effective cost of borrowing, this happened as rates fell below about 4% and mortgage rates decoupled (and remember it is not just mortgage rates, the same applies to business loans, credit card rates and personal loans). It is a sort of 'can't push on a piece of string' argument, and so an interesting monetary experiement is taking place where short rates are relate to the supply of and demand for savings and borrowings rather than govt dictat. Classical theory would say why are institutions offering savers 3% plus instant access when they could borrow at libor o/n for 0.6% but Northern Crock illustrates why savers money is an important source of funding. Of course those banks who can fund at LIBOR (and below) are laughing all the way to the 'bank' - funding huge write-offs and bonuses still generating profits, allowed to do so by the govt so that other institutions without access to the cheapest funding can stay afloat.