Society & Culture1 min ago
Uk Interest Rates Cut To 0.25%
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I am not really sure what the Governor of the Bank of England is trying to do here .....can anyone please explain ?
I am not really sure what the Governor of the Bank of England is trying to do here .....can anyone please explain ?
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Unfortunately all cheap borrowing does is encourages feckless personal spending on borrowed money that cannot be repaid once interest rates return to a proper level. It doesn’t do businesses too much good either because it encourages them to borrow possibly more than they should.
The real problem for the UK is that people are simply living beyond their means. Average household debt is enormous; people buy new cars that they don’t need, take holidays they really cannot afford and lavish money and gifts upon their “kids” that raises their expectations to unreasonable levels. Much of this is done with borrowed money and the cheapness of it is supported by savers. In effect savers (who outnumber borrowers by about seven to one) are subsidising overly-lavish lifestyles.
The excrement will eventually hit the air conditioning and the bubble will burst. Then we’ll really see what good the Bank of England’s monetary policy has visited upon the land.
By the way, only six months ago Mr Carney warned that interest rates were likely to rise in the event of the electorate voting for Brexit:
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Well, we did vote for Brexit and interest rates have fallen. I based my vote on Mr Carney’s prediction (being a saver rather than a borrower). Should I insist on a re-run for being told lies?
The real problem for the UK is that people are simply living beyond their means. Average household debt is enormous; people buy new cars that they don’t need, take holidays they really cannot afford and lavish money and gifts upon their “kids” that raises their expectations to unreasonable levels. Much of this is done with borrowed money and the cheapness of it is supported by savers. In effect savers (who outnumber borrowers by about seven to one) are subsidising overly-lavish lifestyles.
The excrement will eventually hit the air conditioning and the bubble will burst. Then we’ll really see what good the Bank of England’s monetary policy has visited upon the land.
By the way, only six months ago Mr Carney warned that interest rates were likely to rise in the event of the electorate voting for Brexit:
http://
Well, we did vote for Brexit and interest rates have fallen. I based my vote on Mr Carney’s prediction (being a saver rather than a borrower). Should I insist on a re-run for being told lies?
I think interest rates will rise before too long NJ unless as inflation will pick up because of the falling pound (higher import costs) and because spending and hence inflation will pick up as savings fall.
And I think the measure is not aimed at encourage more borrowing by the feckless, NJ- it's aimed more at getting those with maybe £50000 in the bank to start spending some of it .
And I think the measure is not aimed at encourage more borrowing by the feckless, NJ- it's aimed more at getting those with maybe £50000 in the bank to start spending some of it .
Economics is a complex subject though. I have a degree in it but still find myself puzzled by some things and I can always see two answers (one the one hand this and on the other hand...). For example it's not immediately obvious how the aim to encourage spending rather than saving at the moment as the economy slows fits in with the calls in recent times for us to save more to fund our retirements. Maybe the cut in rates is aimed mainly at those who have already saved for retirement and also have a large pot in the bank.
From what I remember seeing on the news earlier, this interest cut will mean a £200 000 mortgage will be reduced by £28 per month.
Two things to consider here:
1. This rate cut will not necessarily/automatically be passed on, especially for fixed rate and standard variable rate mortgage payers. We're lucky - we're on a tracker rate, we pay 0.75% + base rate, so our new rate is now 1.00%.
2. £28 per month better off ...... wit woo ..... need I say more??
Someone paying a £200 000 mortgage is going to be paying a hefty whack - £28 per month is not going to make any difference (assuming the discount is even passed on).
As already said, this is just more bad news for savers. It hardly seems worth saving at the mo .... which is probably what the government want - they want us to go out and spend spend spend - get all your dosh and pump t back into the system to help boost it.
Sod off ..... I'll stuff it under the mattress if I have to :P
Two things to consider here:
1. This rate cut will not necessarily/automatically be passed on, especially for fixed rate and standard variable rate mortgage payers. We're lucky - we're on a tracker rate, we pay 0.75% + base rate, so our new rate is now 1.00%.
2. £28 per month better off ...... wit woo ..... need I say more??
Someone paying a £200 000 mortgage is going to be paying a hefty whack - £28 per month is not going to make any difference (assuming the discount is even passed on).
As already said, this is just more bad news for savers. It hardly seems worth saving at the mo .... which is probably what the government want - they want us to go out and spend spend spend - get all your dosh and pump t back into the system to help boost it.
Sod off ..... I'll stuff it under the mattress if I have to :P
ff - from the horses mouth (mucj more complex than just the effect on borrowers and savers):
http://
http://
yes the average easy access accounts do have pitiful rates on £20000 (or other figures) but in real terms there are some excellent ones around- Santander still pay £3% and have a linked regular saver paying 5%. I remember when you could earn around 10% pa interest- the problem was prices were going up at an even faster rate
It's self evidently pathetic, FF. It is clearly not worth being in the business of funding someone else's venture for 3%.
You think the "Dragon Den" folk are happy with that ? Inflation has nothing to do with it. Do you think a shop owner would say to itself, "Oh well inflation is zero so why would I want a decent profit on what I do ?" ?
Why would one agree to be manipulated into spending the reserve one has put away for a rainy day. Or worse the money put away to live on whilst retired ? Seems a rather a foolish thing to agree to.
No, I don't see that paying an adequate lending rate as being catastrophic. If they can't make more than 13% then they are doing something wrong and should not borrow in the first place. Save it until they have a legitimate business opportunity.
And banks in particular have the privilege of effectively printing money anyway, as they are legally allowed to lend the some money to umpteen different lenders on the assumption not all will want the actual cash at the same time; but they still charge all borrowers the same rate for borrowing ! If you tried something similar then that it'd be classed as counterfeiting.
No you are duped by them. They grab what they want from you and then squeeze you until the pips squeak.
You think the "Dragon Den" folk are happy with that ? Inflation has nothing to do with it. Do you think a shop owner would say to itself, "Oh well inflation is zero so why would I want a decent profit on what I do ?" ?
Why would one agree to be manipulated into spending the reserve one has put away for a rainy day. Or worse the money put away to live on whilst retired ? Seems a rather a foolish thing to agree to.
No, I don't see that paying an adequate lending rate as being catastrophic. If they can't make more than 13% then they are doing something wrong and should not borrow in the first place. Save it until they have a legitimate business opportunity.
And banks in particular have the privilege of effectively printing money anyway, as they are legally allowed to lend the some money to umpteen different lenders on the assumption not all will want the actual cash at the same time; but they still charge all borrowers the same rate for borrowing ! If you tried something similar then that it'd be classed as counterfeiting.
No you are duped by them. They grab what they want from you and then squeeze you until the pips squeak.
But putting your money in a bank account and earning interest is not running a business, O-G. Hardly anyone would bother running a business if you could get your 10-13% interest figure from any bank account. Maybe that's another driver for the move- encourage savers to invest their money into a business that will help the economy
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