Interest Rate Rise (merged)

Jim_B_3

I'll be damned. They finally did it. Base rate up to 4.75%

Now, let's see how many savings accounts follow it up as quickly as they followed it down a year ago. Who knows, it might even have an effect on the property bubble!

Debt_Free_Chick

Jim_B wrote:

I'll be damned. They finally did it. Base rate up to 4.75%

Now, let's see how many savings accounts follow it up as quickly as they followed it down a year ago. Who knows, it might even have an effect on the property bubble!

According to the Telegraph today, parents are giving their kids an average of £18k to fund their first rung on the property ladder. That's more than a 10% deposit on the price of an average property.

If that continues, I doubt there will be any effect on the property market at all.

Kazza242

Jim_B wrote:

I'll be damned. They finally did it. Base rate up to 4.75%

Now, let's see how many savings accounts follow it up as quickly as they followed it down a year ago. Who knows, it might even have an effect on the property bubble!

I think a lot of banks will delay increasing their savings rates until the 1st September 2006. However, whenever there has been a BOE base rate decrease, they usually lower rates on the same day of the MPC meeting!

Everest

Whenever the rate goes up by 0.25% then accounts only seem to go up 0.20%, and yet mortgage rates track precisely. Hmmm...

Will be interesting to see what happens. Just glad I'm on a fixed rate mortgage! For now anyway.

Stonk

Everest wrote:

Just glad I'm on a fixed rate mortgage! For now anyway.

Money markets have been pricing in the expectation of a rate rise for a long time now. It is nice to know that your mortgage bill won't increase, but in reality you've already been paying for the rise in advance. Overall, you'll be about even.

Moggles_2

As widely predicted, the Monetary Policy Committee has raised the BOE base rate by 0.25 to 4.75 per cent, in an attempt to control inflation.

Moggles_2

Apologies to Jim B for cross-posting.
(I managed to overlook this thread)

Now, let's see how many savings accounts follow it up as quickly as they followed it down a year ago.

What's more, for some 12 months, savers have watched banks & building societies steadily slice the rates they pay on savings accounts still further, even though the BOE base rate remained unchanged.

There's no doubt, UK savings providers have a cosy arrangement. We need another foreign bank, like ICICI, to launch a market-leading account. The UK savings market needs shaking up!

Swipe

I am off to the US on holiday in a few weeks. The pound has gone up 2 cents with today's interest rate rise. Should I change my pounds to US$ this week in case the Fed decides to rise again next week? Or if the Fed decides to hold will the pound increase even more? Does anyone have any ideas if they will raise US rates again?

Everest

Stonk wrote:

Money markets have been pricing in the expectation of a rate rise for a long time now. It is nice to know that your mortgage bill won't increase, but in reality you've already been paying for the rise in advance. Overall, you'll be about even.

Priced in I would agree with, but surely discounted to reflect uncertainty as to when rates would rise? Most commentators were not expecting rates to rise this month, or as soon as they have done, and it would seem the market has been suprised by it too. The housebuilding sector for instance has taken a bit of a plunge on the news (down 4-5%) - this wouldn't have happened if the market (and this includes the money markets) had fully priced in this rate change expectation.

the_observer_3

Have just had an email from Alliance & Leicester advising that interest rate on online saver account is being reduced from 4.5 to 4.4.

Time to move my business elsewhere I think

equitydealer

It will be interesting to see which provider raises savings rates first, and if it would be the full 0.25%!