 BUSINESS 4NETWORKING [Bank of Interest Rate Comes Down Again] |
| Author: |
Post: |
|
|
Posted on 04th Dec 2008 at 12:07
Bank of Engand policymakers have cut the cost of borrowing again - by a full 1%.
Last month the Bank of England slashed the interest rate by 1.5%
It takes the base rate of interest to 2% - its lowest level since September 1939.
The Sky News Money Panel had called for at least 1%, saying it was needed to stave off a deep and prolonged recession.
Two of the 12 members had urged an even bigger reduction of 1.5%, the same as last month.
Britain's biggest lender has said it will pass on any future rates cuts in full to existing customers with tracker mortgages.
Halifax Bank of Scotland said it would not exercise an option in its tracker deals not to pass on all or any reduction once the base rate fell below 3%.
Last month the Bank's Monetary Policy Committee (MPC)surprised markets by slashing the base rate by 1.5% to 3%.
However, the reduced rates did not benefit all customers with mortgages tracking the base rate, due to clauses many had in their loans.
Business body the CBI said it was critical that any cuts are passed on by banks to consumers and businesses.
John Cridland, CBI deputy director-general, said: "The CBI believes that the Bank will need to cut interest rates by 1.5% during the winter months.
"What is critical for business and consumers alike is that the reductions are passed on.
"[Thursday's] cut will need to be at least half a point but more important than the size of the cut will be its effectiveness."
The European Central Bank (ECB) was also expected to lower its main lending rate by at least 0.5% today to counter the effects of the eurozone's first recession.
|
   |
|
|
Posted on 04th Dec 2008 at 12:57
|
| |
|
|
Posted on 04th Dec 2008 at 13:12
Wow 12.07pm? That's fast work Mr.
oddly, cutting interest rates provides incentives for borrowing and spending - isn't that what got us into trouble in the first place????
Dan Matthews
Editor
LaunchLab.co.uk
Champagne for your business brain
www.launchlab.co.uk
t: 0203 004 8819
e: dm@pointandfiremedia.co.uk
|
| |
|
|
Posted on 04th Dec 2008 at 13:21
Measured, moderate and balanced changes are where its at!!
I am glad most of my savings are on a fixed rate long term deal!
Paul Norman 4N North Tyneside and Oxford
Gibside Associates - a different approach
www.gibside.co.uk
Training for business with, no jargon. Consultancy that makes you think. Helping you be deliberately excellent.
Check here for training courses that might just suit you!
|
| |
|
|
Posted on 04th Dec 2008 at 13:23
I'm glad I spend every penny I have on frivolous things. I told my folks that saving was a bad idea. I love being right. lol
Sarah Howells
sarah@thepassionatepa.co.uk
www.thepassionatepa.co.uk
01202 802863 / 07835 749835
The Passionate PA...making things happen. Getting your 'to-do' list done.
|
| |
|
|
Posted on 04th Dec 2008 at 13:25
Delighted that I have a nice fat base rate-linked mortgage!
January 4N Member Offers:
"DB&B for the price of B&B" or "Dinner for 2 with Free Wine" Click here for details
A Hotel for Business or Pleasure (but better for BOTH!)
01404 831278
|
| |
|
|
Posted on 04th Dec 2008 at 13:30
On a more balanced note(!) I am a bit surprised to see such a large reduction so soon after the other one, as the economic impact of these changes will not really be measurable in such a short period of time.
Obviously, this will have a positive impact on spending, I suspect. The fear is, that collectively we overshoot, and inflation hits. I hope that the bank has the balance right, I really do, because if they dont, the long term impact will be massive beyond anything we ever could imagine.
The impact on most individuals is relatively small in the long term I guess, good for borrowers less good for savers (although as I stated above, most of our rates are not directly linked to this). Of course, what we need is for the economic environment to gather pace, and for that we will have to wait for the statistics to come through...
Paul Norman 4N North Tyneside and Oxford
Gibside Associates - a different approach
www.gibside.co.uk
Training for business with, no jargon. Consultancy that makes you think. Helping you be deliberately excellent.
Check here for training courses that might just suit you!
|
| |
|
|
Posted on 04th Dec 2008 at 14:08
watch out for those trackers though, some have floors on how far they will go
Anybody checked LIBOR recently, last time I did it was 3.9, so benefits should really be feeding through
By the way I managed to find out where the money is going that the banks aren't lending to each other - apparently it is going into buying government bonds. It is the penion funds that are doing this (instead of lending to banks and businesses via bonds etc..). This sounds great to me, the government is lending to the banks at a rate of something like 12%, and is borrowing that at something like 3 or 4% - probably less now. Maybe that black hole is a bit smaller than some of us have feared.
Graham Smith Business Services
Helping To Make Your Accounts A Useful Tool For Business Success
Bookkeeping
Management Accounts
Project Accounts
Call us: 01993 771100
Want a fully online bookkeeping system – check out our 60 day free trial
|
| |
|
|
Posted on 04th Dec 2008 at 14:21
Quote:
Delighted that I have a nice fat base rate-linked mortgage!
Well have a drink to that Friday night Steve - I too am benefiting.... about time too!
|
| |
|
|
Posted on 04th Dec 2008 at 14:38
|
| |
|
|
Posted on 04th Dec 2008 at 15:50
This is good news for existing borrowers with rates linked to the bank base rate and hopefully for businesses, as has been said not so good news for others.
Those relying on investment income are seeing a reduction in their income and there are others that have fixed rate mortgages.
What is needed is something that generates new lending which will then generate new business and as Graham has said this is dependent on the inter-bank lending rate LIBOR. It is coming down but nowhere near as much as it should, last time I looked the 1 yr rate was 3.9% 3mth rate 3.1%. This is not going to make new lending attractive. Only when this gets low enough to make new lending/borrowing as attractive as it is for existing customers will we see things start to improve.
Just for example, I have mortgage clients on the lenders' standard variable rates which are currently far better than what is on offer on the remortgage/ new mortgage market. I've been in this business for nearly 20 years and it's the first time that's been the case since fixed/capped/tracker etc rates were introduced.
email: charmian@poldenfs.co.uk
tel: 07899983478
Group leader of Bridgwater - the birthplace of 4Networking
Next meeting: Thursday 15th January 2009
www.4networking.biz/events/4585.htm
|
| |
|
|
Posted on 04th Dec 2008 at 15:53
Prior to the November BoE decision, the LIBOR rate was above 6%, so this would indicate that the margin is narrowing - surely we may be about turn a corner. I would have thought that the repossession scheme announced yesterday should help things as well
Graham Smith Business Services
Helping To Make Your Accounts A Useful Tool For Business Success
Bookkeeping
Management Accounts
Project Accounts
Call us: 01993 771100
Want a fully online bookkeeping system – check out our 60 day free trial
|
| |
|
|
Posted on 04th Dec 2008 at 15:56
1% by Easter predicted before today's cut.
Our economy is in a fearful mess.
Chris Slay, Director | Specialist Provider of Polish Jobs | 07977 131 389 | enquiries@skillsprovision.co.uk
Skills Provision Ltd is registered under the Gangmaster Act 2004
|
| |
|
|
Posted on 04th Dec 2008 at 16:16
Indeed the margin is narrowing but it takes a while for it to work through to the front end.
There's no information yet on how the scheme announced yesterday is going to work (there's a surprise) and then ofcourse, this is for existing borrowers which much as it will hopefully stem the flow of repossessions does nothing to encourage or generate new lending or borrowing which, whether we like it or not, is what is needed to stimulate the market.
email: charmian@poldenfs.co.uk
tel: 07899983478
Group leader of Bridgwater - the birthplace of 4Networking
Next meeting: Thursday 15th January 2009
www.4networking.biz/events/4585.htm
|
| |
|
|
Posted on 04th Dec 2008 at 21:20
In addition, the rate at which the owners of established wealth lend to the banks need to come down. That will lag by months, as much of the money is on long term rates.
And when the rates come down, these providers of wealth will negotiate hard.
At the moment, the banks are being asked to lend by the governments at rates less than those at which they bought their money.
Paul Norman 4N North Tyneside and Oxford
Gibside Associates - a different approach
www.gibside.co.uk
Training for business with, no jargon. Consultancy that makes you think. Helping you be deliberately excellent.
Check here for training courses that might just suit you!
|
| |