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Why are savings rates on the floor?

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  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    The banks are a little between a rock and a hard place, but my experience is that they are still willing to lend to businesses if there is a sensible investment story.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • Glen_Clark
    Glen_Clark Posts: 4,397 Forumite
    UKSBD wrote: »
    Are there restrictions on what the banks can do with this?

    Fair enough if the banks are forced to pass this on as small business loans, but allowing them to just use it to then provide 3.5% mortgages seems crazy.

    I understand they have to lend a minimum amount to small businesses to get it all at 0.75%.
    Clearly much of it is going to sustain house prices, as best buy fixed mortgages have dropped from 2.99% to 1.99% since Funding for Lending was introduced.
    “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    nilrem wrote: »
    Would not surprise me if they are not just sitting on it, building up their reserves perhaps, does not seem to be much evidence of it going to small businesses. :)

    The money has to be lent out. That's a term of the scheme. Failure to do so. Would result in a penalty for the bank.
  • pqrdef
    pqrdef Posts: 4,552 Forumite
    nilrem wrote: »
    does not seem to be much evidence of it going to small businesses.
    They're just lending out FLS money instead of money from other sources, like savers.

    If it helps, they'll create new loans by calling in existing loans.

    But they won't increase their exposure because, as SurMerv has been pointing out, they're overgeared and overexposed already. To lend more, they have to increase their capital base, and currently the only way to do that is make profits and not pay them all out in dividends, bonuses, mis-selling claims and malpractice fines.
    "It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis
  • nilrem_2
    nilrem_2 Posts: 2,188 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Thrugelmir wrote: »
    The money has to be lent out. That's a term of the scheme. Failure to do so. Would result in a penalty for the bank.

    I understand that to be the case but we continually hear from businesses that the banks won't lend to them?
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    nilrem wrote: »
    I understand that to be the case but we continually hear from businesses that the banks won't lend to them?

    Lenders will have criteria in order to lend. Business will only borrow if there's a profitable opportunity. So simplistic to say banks won't lend. Issue is far more complex.
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    The banks are being besieged by businesses wanting to borrow so they can keep shuffling along and losing money. Sorry, zombies need to die so that stronger businesses can take their place.

    If you go to a bank with a serious investment case then the money is there. We're about to borrow an eight figure sum to (hopefully) make an acquisition and we have a number of banks willing to fund this.

    Do people really want banks to lend without being diligent about the investment case? Really? Really?
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • nilrem_2
    nilrem_2 Posts: 2,188 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Thrugelmir wrote: »
    So simplistic to say banks won't lend. Issue is far more complex.

    Not me saying they won't lend I am just repeating what I hear continually on the various news and financial channels.
  • Glen_Clark
    Glen_Clark Posts: 4,397 Forumite
    gadgetmind wrote: »
    Do people really want banks to lend without being diligent about the investment case? Really? Really?
    Apparently the Government does, so as to stave off the worst of the crisis until after the next election.
    “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    Glen_Clark wrote: »
    Apparently the Government does, so as to stave off the worst of the crisis until after the next election.

    Yes, but surely people can see through this?
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
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