Friday, Apr 25, 2008
Keep those rates up
Telegraph: Northern Rock's Ron Sandler is right not to pass on rate cut
"Doesn't the Chancellor understand we need to dissuade people from borrowing more? Has he missed the fact that the credit crisis was caused by there being too much debt?"
Quite. Now all the banks have to do is keep savings rates up too.
Posted by letthemfall @ 10:02 AM (787 views) Add Comment
14 Comments
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1. Bystander said...
"Quite. Now all the banks have to do is keep savings rates up too."@letthemfall
Fat chance!!!!!!
2. greytornado said...
Is the current thinking by the BoE all wrong ? - should they in fact be putting interest rates up and not down ?
(Have alook at rates in Oz & NZ.) Gordon wants rates kept down, because he has got this daft idea that you can somehow stop a bubble that's already started to explode and of course HMG owe billions........... I bet he wishes he hadn't offloaded all that gold at rock-bottom prices too. What a Berk.
3. bystander said...
"Quite. Now all the banks have to do is keep savings rates up too."@lettehmfall
Fat chance!!!!!!!!!
4. shipbuilder said...
What a mess. If the banks are justified in tightening lending criteria and keeping rates high, then there is only one way the housing market can go to regain affordability and that is reduced prices, and no amount of bleating by Darling or Brown will make any difference. The danger is that the BoE rate cuts designed to achieve this affordability without falling prices will do nothing but destroy the pound.
5. paul said...
Actually, I think you'll find that many banks are trying to maintain savings rates, to raise cash which they desperately need.
Icesave has not lowered its savings rates once. Admittedly, they have high rates in Iceland (and £5bn of UK savings) but you can see why the UK banks are getting a but frustrated with these foreign banks sapping their opportunities to raise cash.
If a UK bank really stepped up, they could grab a large share of UK savers money, and in doing so solve some of their solvency problems. So far, I think Northern Rock actually offers some of the best savings accounts - guess why ...
6. Chasbmw said...
Cahoot pushed its savings rates for £50K and more UP .25% the day before the last BOE decrease in rates.
7. Gordon-is-a-moron said...
I think Darling & Brown are playing a game here. They know that interest rates need to remain at current levels or higher, but as elected politicians, they need to be seen to sympathise with the plight of the common man. It's all very cynical.
8. Rental John said...
The banks make money by lending.....and also from investing savers deposits.....if they reduce lending that screws up a chunk of their business model.
Otherwise are the banks to become glorified 'savings' banks? Under the matress is looking favourable - instant access, no minimum deposit, no management fees...though the interest rate is crap, at least you don't have to pay additional tax on the interest...but hey, the banks aren't exactly giving a great deal for 'looking after' your money.
From my broker Mr Soddoff Baldrick - Turnips are looking a good bet
9. jonb said...
Looking at the best buy tables, savings rates have mostly not gone down since the last bank of england "rate cut", and a few have actually gone up.
10. letthemfall said...
Paul:
N Rock have reduced theirs, along with others at the top of the best buy tables. Of course the Icelandic and other overseas banks are still offering top rates, but then they are in an uncomfotable position. Given that Icesave, for example, has a mixed compensation scheme, future problems with that bank could give savers an anxious time. Anyway, I think we will see a few more of those letters that begin: "Tha Bank of England recently cut base rates ...."
11. paul said...
letttemfall, the Icelandic compensation system is actually more straightforward than the UK's, and I've heard from moneysupermarket that this means you would probably get compensation more quickly than the UK system.
12. letthemfall said...
Paul: As I understand it, Icesave's scheme means that compensation is divided between the home country and the UK. One would have to claim, I think, the first 16K from Iceland, the rest from the UK. From what I've read this could take a lot more time. Kaupthing, on the other hand, is the standard UK scheme. Moneysavingexpert.com has got some information on all this. Either way you should eventually get your money back, unless Iceland goes bankrupt.
13. dohousescrashinthewoods said...
I think the banks will need to attract depositors' money as much as money market funds, so there should be a similar rate of interest.
I was interested to hear the comments from the BoE that they want to ease up liquidity in order to raise rates to fight inflation. Gives at least some hope that elements of the MPC are still on the target.
I think you could write an whole volume on the phrase "Gordon Brown says he will cut interest rates to save home owners" (which I'm sure I heard on the radio recently) - BoE intependence, remit of monetary policy, market manipulation, "sound" and "prudent" fudamentals of the UK economy being in fact ever-increasing house prices.. I could go on.
14. justwatching said...
Quite simply a short and sweet piece of business editorial comment. I don't imagine we would have read this a couple of months ago.
'Doesn't the Chancellor understand we need to dissuade people from borrowing more? Has he missed the fact that the credit crisis was caused by there being too much debt?'
Lets all insist on calling it a DEBT crisis.