Interest rates cut to 0.25% from 0.5% discussion

Ballard

robin58 wrote: »

Just been on Santander and they have page on the effects of the rate cut on saving accounts. Doesn't give any new rates yet but says basically interest will go down.

But what gets me is that they have already trimmed their interest rates in the last few weeks, now they want an extra bite of the cherry. Barstewards!!

I'm not sure what they're paying for savings rates but specifically on the 123 it doesn't make economic sense for them to pay so highly with market rates so low. They can get interbank or Old Lady funding well below 1%. They do need a customer base but why pay 3% when dropping 25 or 50 points would still offer a decent rate in this climate?

It's not simply a case of simply using the current account deposits to fund loans at a higher rate either as banks are rightly compelled to keep within liquidity ratios to stop a run on them. This means that they will be lending a large proportion of 123 money in the market at very low rates.

I should point out that this isn't a plea for pity for banks. They (mostly) make a fair whack out of their operations. I'm merely saying that it should be no surprise if rates fall.

gadgetmind

bottleandahalf wrote: »

24 IT's??? Crikey that's a lot for 15k.

Agreed, I'd go for minimum £2k per holding and would happily have just three ITs for a sum like that assuming they are diversified generalists.

badger09

ffacoffipawb wrote: »

I had a 5 year 5% pa cash ISA with Birmingham Midshires mature at the end of June. I transferred it to a shares ISA with Hargreaves Lansdown so I now have 24 investment trusts yielding just over 4% tax free. There was no cash ISA worth moving it to and I didn't want to lose the tax shelter.

bottleandahalf wrote: »

24 IT's??? Crikey that's a lot for 15k.

How do you know it was £15k?

Might have been many years' accumulated cash ISA balances:cool:

Glen_Clark

chucknorris wrote: »

I'm yielding around 4% on both property and shares,

You were yielding that based on past returns. What will future returns be?
How do you know that those buying Ebillions worth of German Bunds at negative interest rates are all idiots?

Nick_C

Glen_Clark wrote: »

You were yielding that based on past returns. What will future returns be?

And your point is?

Obviously, no one knows what the future rate of return will be on any form of investment. What we do know is that in the long term investing gives you a better return than saving.

chucknorris

Glen_Clark wrote: »

You were yielding that based on past returns. What will future returns be?
How do you know that those buying Ebillions worth of German Bunds at negative interest rates are all idiots?

I don't care if they are idiots or not, I only care that our future will be financially comfortable. I am perfectly happy with the approx £200k gross combined (equivalent) dividend and rental income that we receive annually, it is a nice top up on our salaries. If it drops slightly, so what? We do also have some other assets too. That is going to allow my wife to retire either this or next year, and myself to drop down to one day a week this December (it is a lifestyle choice to continue working one day a week).

EDIT: If we decided to sell all our shares and property, we would have to pay about £800k capital gains tax, so the income would be lost on that £800k, so that is a benefit in delaying selling the property a few years. But also it would be madness to give up approx £200k income and opt for savings interest instead, which would give a much poorer return.

tommysaver

tommysaver wrote: »

I don't even live too near to London, well outside the M25.

For me, it's looking like 10 times salary and even then it won't be a 'proper' house or anything. Like a flat..

And I'm on more than most of my friends, too.

EDIT;

Even a 2 bed flat in the rubbish town local to me come in around £270,000.

A normal, half decent, semi is like £400,000. So adjusting my figures, more like 17 times my salary... yaaaay!

gadgetmind

tommysaver wrote: »

Even a 2 bed flat in the rubbish town local to me come in around £270,000.

If only humans had evolved to be motile rather than sessile.

Nick_C

gadgetmind wrote: »

If only humans had evolved to be motile rather than sessile.

Not thanking you for the comment per se, but for expanding my vocabulary. Sessile. That's a new one for me!

Pincher

The "motile" American Indians were decimated by the "sessile" Europeans.

Let's make it illegal to settle anywhere permanently.

It does mean reducing world population by 99%, say, and letting wild life grow back, so foraging and hunting can sustain a hippy life style.

Caribou or reindeer tonight?

Tepees, not houses.