Michael O'Flynn Posted November 3, 2008 Share Posted November 3, 2008 Morning all. Looks like we'll see a half point or even a full one per cent rate cut this week. But with lenders still tightfisted I do wonder whether it will make any difference? If they don't pass it on should the gov lean on them? Or should the market be left to find a natural level? We're running a poll about this over on http://blog.findaproperty.com/general/quic...-good-bad-news/ I'd really appreciate it if you could drop by and vote ... and if you have time, please leave a comment too. cheers Michael Property Blog: http://blog.findaproperty.com/ Quote Link to comment Share on other sites More sharing options...
redgenieuk Posted November 3, 2008 Share Posted November 3, 2008 Michael, Been a while! Thought you'd forgotten about us! Thank you for the oppertunity to vote in the poll! It looks like it needs "rebalancing"! Regards Charlie Quote Link to comment Share on other sites More sharing options...
Captain Coma Posted November 3, 2008 Share Posted November 3, 2008 Will rate cuts make a difference? Well, it'll make mortgages more expensive. The pound will fall, making imports dearer - including the imported foreign money needed to be borrowed for gov spending, in turn making real interest rates - the ones the banks charge - higher. Quote Link to comment Share on other sites More sharing options...
bomberbrown Posted November 3, 2008 Share Posted November 3, 2008 Will Rate Cuts Make A Difference Nope. I think the banks have finally decided to price in some risk. Quote Link to comment Share on other sites More sharing options...
worzel Posted November 3, 2008 Share Posted November 3, 2008 For those people on tracker mortgages it will make a massive difference, for averyone else it will be limited. I am currently pleased to be in the former group, although I am aware of the chances of substantially higher rates in the not too distant future. Quote Link to comment Share on other sites More sharing options...
Jim B. Posted November 3, 2008 Share Posted November 3, 2008 Well, last week the US rate went down to 1% or something and the mortgage rates went up to 7%, so it seems to have no effect. Quote Link to comment Share on other sites More sharing options...
bomberbrown Posted November 3, 2008 Share Posted November 3, 2008 For those people on tracker mortgages it will make a massive difference, for averyone else it will be limited. I am currently pleased to be in the former group, although I am aware of the chances of substantially higher rates in the not too distant future. I'm glad you mentioned this as I've been meaning to ask it for ages. I keep seeing banks changing the margins with which they track the base rate, effectively making them completely worthless for tracking the base rate.......or have I got it wrong somewhere? Quote Link to comment Share on other sites More sharing options...
Jim B. Posted November 3, 2008 Share Posted November 3, 2008 I'm glad you mentioned this as I've been meaning to ask it for ages. I keep seeing banks changing the margins with which they track the base rate, effectively making them completely worthless for tracking the base rate.......or have I got it wrong somewhere? No, you're right, I read something along those lines at the weekend. Some trackers have a base line as well that they can't fall under, say 4% or something. Quote Link to comment Share on other sites More sharing options...
worzel Posted November 3, 2008 Share Posted November 3, 2008 I'm glad you mentioned this as I've been meaning to ask it for ages. I keep seeing banks changing the margins with which they track the base rate, effectively making them completely worthless for tracking the base rate.......or have I got it wrong somewhere? True, the spreads seem to be getting bigger all the time. So whilst I bougtt an overpriced house, I obtained what now appears very cheap credit 19 bps above base rate for 3 years, moving to 69bps, which is looking like very cheap money by todays prices. Quote Link to comment Share on other sites More sharing options...
Guest Mr Parry Posted November 3, 2008 Share Posted November 3, 2008 Will rate cuts make a difference?Well, it'll make mortgages more expensive. The pound will fall, making imports dearer - including the imported foreign money needed to be borrowed for gov spending, in turn making real interest rates - the ones the banks charge - higher. Yes indeedy. When the yanks dropped to 1% the other day, the 30 year mortgage thing jumped from 5 point summut to 6 point summut. I think the Forex markets have priced in the UK demise already. I hope. Quote Link to comment Share on other sites More sharing options...
Guest Mr Parry Posted November 3, 2008 Share Posted November 3, 2008 Well, last week the US rate went down to 1% or something and the mortgage rates went up to 7%, so it seems to have no effect. Seems like an effect to me, Jim. Quote Link to comment Share on other sites More sharing options...
Jim B. Posted November 3, 2008 Share Posted November 3, 2008 Seems like an effect to me, Jim. : ) Yes, quite right, should have said it seems to have the opposite effect if any at all. Quote Link to comment Share on other sites More sharing options...
time 2 raise interest rates Posted November 3, 2008 Share Posted November 3, 2008 Well it won't to HSBC as their chief executive, David Hodgkinson, has announced they won't be passing on any rate cuts to their customers if the BoE cuts rates this week. And his reason being was 'credit had been mispriced in recent years'. Anyone holding on for rate cuts to sell their overpriced house best do themselves a favour and slash the price now as interest rates for mortgages and credit will stay high regardless of what the BoE does and when the recession kicks in next year house prices will fall by another 40%. Get out while you can. Quote Link to comment Share on other sites More sharing options...
TT1 Posted November 3, 2008 Share Posted November 3, 2008 I keep seeing banks changing the margins with which they track the base rate, effectively making them completely worthless for tracking the base rate.......or have I got it wrong somewhere? The banks keep upping the % above base rate for new customers, when the BOE base rate is cut. Once you've taken out a tracker e.g. 0.99% above base rate, it stays like that so the rate cuts would get passed on. However, they do have a limit that they won't drop below e.g. 4%. Quote Link to comment Share on other sites More sharing options...
Guest Skint Academic Posted November 3, 2008 Share Posted November 3, 2008 The only point of the rate cut should be to make slow down the rate of repossessions and this won't work if the banks do not pass it on. I do not think that we have to worry about the housing boom being reinvigorated, we are not in danger of another 2005. Rate cuts just buy people more time. Quote Link to comment Share on other sites More sharing options...
tegan Posted November 3, 2008 Share Posted November 3, 2008 The lower rates go, the less lending banks will do. Brown should have that equation etched into his stupid brain. Banks would have to be insane to lend to people in the current conditions when it's all risk and virtually no reward. So the rate cuts will have 2 effects - 1) Make banks more reluctant to lend and 2) Increase rates for new loans. Not to mention the possibility that sterling might slump and the government goes bust. Quote Link to comment Share on other sites More sharing options...
interestrateripoff Posted November 3, 2008 Share Posted November 3, 2008 The base rate is irrelevant now. Globally we seem to be heading towards the Japanese scenario without the positive of being able to trade our way out of debt, after 15 years+ Japan still hasn't got rid of the debt from it's credit bubble. The only difference it will be make is to the banks profit margins when borrowing from BoE. Quote Link to comment Share on other sites More sharing options...
Nerd Posted November 3, 2008 Share Posted November 3, 2008 Personally its good news my tracker is currently .5 above the base rate so the extra money I’ve save will come in handy… The bad news for be is my deal will come to an end in January and the best deal I can find is 1.25 above the base rate for 3 years (this has been offered by my current Bank) and I’ve accepted it but will be looking around for a better deal They way I look at it 4.5% better the say 9%, the money I save will be spent in the shops helping the economy. Even very low interest rates aren’t going to push up or “save” house prices because the lenders are no longer willing (able) to give out big multiplies or indeed 3x mortgagees to people without a massive deposit. Being selfish I want high inflation, low inertest rates and house prices to drop until I can afford a 4 bed detached. So things are looking good… Quote Link to comment Share on other sites More sharing options...
mitchbux Posted November 3, 2008 Share Posted November 3, 2008 I'm glad you mentioned this as I've been meaning to ask it for ages. I keep seeing banks changing the margins with which they track the base rate, effectively making them completely worthless for tracking the base rate.......or have I got it wrong somewhere? We got a deal for BoE+0.5% and luckily had the foresight to take the lifetime tracker, so no margin change for us on the horizon. I personally think that short term a tracker is still a good idea, there are still some semi decent rates out there. The problem comes in calling it right for when they go the other way. Are you going to have saved enough, between now and when they start to rise quickly, to cover the arrangement fee? and the one we are going to be faced with at some point in the future. At what point do we go for a fixed rate instead? Quote Link to comment Share on other sites More sharing options...
Wait & See Posted November 3, 2008 Share Posted November 3, 2008 Why interest rates aren't falling Quote Link to comment Share on other sites More sharing options...
mitchbux Posted November 3, 2008 Share Posted November 3, 2008 Even very low interest rates aren’t going to push up or “save” house prices because the lenders are no longer willing (able) to give out big multiplies or indeed 3x mortgagees to people without a massive deposit. Spot on. There is no way the housing market can be propped up by any amount of interest rate cutting, prices will fall until a two-bed terrace can be bought for 20% deposit plus 3x the local average wage for someone in there early to mid twenties. Quote Link to comment Share on other sites More sharing options...
Nerd Posted November 3, 2008 Share Posted November 3, 2008 . Are you going to have saved enough, between now and when they start to rise quickly, to cover the arrangement fee? The arrangement fee is added to the back of the loan 1K My paln is to try and over pay while intest rates are low. My bank allows you to under pay as much as you've over paid in the past. would like to get fixed in at the bottom whic could be as low as 2.5% when BOE base hits rate 1.5% . As for the move that where savings come into it ... This is all if i can keep my job! Quote Link to comment Share on other sites More sharing options...
5lab Posted November 3, 2008 Share Posted November 3, 2008 i've got a deal for boe -.25 but sadly only for another year (2 year tracker). Wish i'd taken the 5 year at +.5 but hindsight is one of those things. I'm hoping that by then the rates of fixed mortgages will have dropped (but i don't think they'll be much below 5%) i can take up to 8.5 before I increase my payments (overpaying at the mo) so should be ok whatever happens Quote Link to comment Share on other sites More sharing options...
Son of Taeper Posted November 3, 2008 Share Posted November 3, 2008 Morning all. Looks like we'll see a half point or even a full one per cent rate cut this week. But with lenders still tightfisted I do wonder whether it will make any difference? If they don't pass it on should the gov lean on them? Or should the market be left to find a natural level? We're running a poll about this over on http://blog.findaproperty.com/general/quic...-good-bad-news/ I'd really appreciate it if you could drop by and vote ... and if you have time, please leave a comment too. cheers Michael Property Blog: http://blog.findaproperty.com/ Only two options in the poll.??? One should know what they're getting into with a mortgage. All the options, advantages and disadvantages are laid out in the contract. Why choose a cheap option when there is no security attached? The same goes with ppl that tied up millions in high interest savings accounts..... greed. And let's not forget that greed started this ball rolling in the first place. If your question is, should Joe Public bail out the greedy, the answer is no, if your question is should Joe Public bail out the gullible, no. I think the answer is to make the finance industry more accountable and if that results in bad lenders being compulsorily bought out by good ones, so be it. The government would be foolish to lean on the banks as it would open the floodgates Quote Link to comment Share on other sites More sharing options...
mitchbux Posted November 3, 2008 Share Posted November 3, 2008 The arrangement fee is added to the back of the loan 1K So is that 1K before or after you've taken into account the compund interest on the fee My paln is to try and over pay while intest rates are low. My bank allows you to under pay as much as you've over paid in the past. would like to get fixed in at the bottom whic could be as low as 2.5% when BOE base hits rate 1.5% . As for the move that where savings come into it ...This is all if i can keep my job! I would love to think that we'd be able to fix at 2.5% but even if the BoE rate gets to 1.5% the fixed rates are unlikely to ever get to that level. Just look at what is happening at the moment. I reckon a good call would be to get a fix at 6%, or below, just before it goes rocketing up to 14%. Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.