Monday, January 5, 2009

“The banks” basically are calling Gordon’s bluff, even they don’t believe him !!!

We Cannot Be Held To Ransom By Senior Bank Managers

Interest rate cuts alone won’t be enough to provide a New Year’s tonic; Commenting on the choices facing the MPC at its January 2009 meeting next Thursday, David Kern, Chief Economist at the BCC, said: “The rapid worsening in the economic situation and growing fears over rising unemployment reinforce the need for the MPC to continue with aggressive interest rate cuts. To alleviate the most devastating consequences of the serious recession, we urge the MPC to cut rates by a full one per cent on Thursday, to one per cent. A prolonged depression can still be averted if the authorities adopt forceful measures. But interest rate cuts, though important, are no longer adequate on their own. ..."

Posted by fahrenheit451 @ 11:02 AM (1137 views)
Please complete the required fields.



7 thoughts on ““The banks” basically are calling Gordon’s bluff, even they don’t believe him !!!

  • fahrenheit451 says:

    Some time back mortgage rates started to separate from base rates, now it makes no difference how low the base rate goes mortgages will not go any lower, this is probably very sensible, in an ironic sort of way.

    Mortgages (and loans generally) need to be higher to provide revenue for savers, we all know that just because GBH (sorry BoE) moves the Base Rate to 1% that this has no effect on inflation, which is why savings need to have better interest rates. Now bank rates are separating from this foolhardy dive to 1%.

    You just can’t blame the banks for stepping right bank into (small c) conservative policies. Or in other words, Labour’s fundamental policies will not actually get us out of this mess, its time to ring the bells of change and move into Conservative policies.

    Reply
    Please complete the required fields.



  • Since interest rates are volatile, and can even change from month to month, it perplexes me that people attach such importance to it when embarking on a commitment which can last 25 years or longer. If interest rates are low now, that suggests that they are more likely to increase than to decrease during the term of a new mortgage.

    Reply
    Please complete the required fields.



  • Can someone explain exactly what IS the BoE interest rate… I mean I know what what a savings rate is. I put in 100 ponds and at the end of the year I’m payed a number of pounds equal to the annual interest rate. So when the BoE sets the base rate what exactly are they setting?

    From what I see interest rates on loans are set based on risk… so at the moment loans with hight LTV secured on property are less risky so interest rates should go UP? but the BoE and Government are trying to force them down??
    Mean while the Banks need us to save more to improve their capital ratios and yet are cutting savings rates??
    The world has gone mad!

    Anyway… if someone can explain what the BoE base rate REALLY IS? I’d be grateful.

    Reply
    Please complete the required fields.



  • The whole reason why building societies and goverment, not banks, should fund mortgages.

    Reply
    Please complete the required fields.



  • 2. Fly By Night

    People will realise that, now all other inventive post peak options have been removed. I very hard lesson awaits many.

    Just how far prices need to come down to allow for future rate rises will be interesting to see.

    I get the feeling that first time buyers purchasing so called bargains this year, may end up heavily burdened in the not too distant future.

    Reply
    Please complete the required fields.



  • Pre peak I mean.

    Reply
    Please complete the required fields.



  • Solo – BoE base rate is the rate at which the BoE lends money to banks. Banks can then set their independent rates, and they make a profit at the gap between interest rate and mortgage (lending) rate, times the volume of money made by fractional reserve lending, anything up to 30:1.

    I think Moneyweek did a piece on how the BoE base rate is set and how it works a month or two back, if you want to look it up.

    More money in circulation is created by creating the lending debts than by people saving (atleast in our, or the Western, culture), this is what is collapsing; consequently the government wants everyone to borrow more to reinflate the volume of money available to everyone, and consequently keep prices up for everything, particularly houses; but the savings and lending rates move together (they are slightly elastic in that the gap between them can grow or shrink, but obviously when it grows it drives the public mad).

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>