Interest rate cut from 4.5 to 3 % [shock]

[morningpaper]

Bank of England just announced 1.5% cut

the real irony being that my bank did pass the last rate cut on...

you can't win!

I bet my savings rate gets cut pretty bloody sharpish. Am on fixed rate mortgage till September.

This actually worries me. 1.5% makes me wonder what the B of E know that we don't about whats coming.

Stillenduringsurrey - Im with RBS and they pass the cuts on to me! I had a letter last week saying they were putting it down, and I guess with this cut again with any luck will cut again. Shame my tracker runs out in Feb though

We're with Virgin which is part of RBS, yes, I lie, they did do a .5% cut last week didn't they? But they didn't before.

It would be v funny if they passed the rate cuts on to you and not to me!

we have 3 year tracker just done 3 mths ago
We got both cuts passed on next day so this will help loads!

Despite my mortgage terms saying "guaranteed to be 0.5% above Bank of England base rate", they had to have a meeting last month to discuss whether or not to pass it on and finally did, very reluctantly. I think it's scandalous - when I called them, they said they could do what they liked as the small print said they can alter or withdraw the product at any time. Doubt they'll cut this time.

Interesting item here on how Libor rates are still high and how many people have tracker or discounted mortgages, I hadn't realised it was 40%:

news.bbc.co.uk/1/hi/business/7711689.stm

we are natwest fwiw

I am with Northern Rock, coming to end of fixed rate mortgage at beginning of Jan, was 5.29, they wrote before the last cut (.5) to say it would be 7.49, so any guess at what it would be now, given that the rate has been cut 2% since the letter was sent? if they are so inclined to pass it on that is!

Even though BOE cut the Interest rate, the inter Bank lending rate is higher as banks are still being reluctant to lend to each other. So not really a case of banks being mean not passing the cut on, just that they are struggling to lend us at 3%, when they can only borrow money from others at 5.5% etc.....Not saying this right or anything, just trying to shed some light on why the cuts aren't willingly passed on to us.

Certainly needed. But in the wider picture this is pretty worrying, I think. It means that the BOE have seen some really, really nasty figures coming our way re unemployment, etc.

Will do diddly squat to help house prices.

but i thought the government was pumping all that money in to encourage banks to lend to eachother....

We've just bought a new house and or mortgage payments have now gone down by £600 a month before we've even made the first payment
Thank God we went for a tracker and not a fixed rate.

That means you have a mortgage of 600k! That's quite a lot!

*mini hijack..can someone please remind me why this is bad for savers?...i know that i do sort of know...just cant remember...so punchy bullet points sholud do it ...thanks

No, not that much. We're on interest only so the reduction is bigger.

poxy fixed rate mortgage
maybe it'll improve the economy and Dh can have his job back.

beansontoast, it's because savers will receive lower rates of interest.

This is bad for savers because you'll earn less interest on your savings!

I am SO glad we went for a tracker at the beginning of the year, was the best financial decision we've made I think. No early repayment charges either so we can switch to a fixed rate if rates start to creep up again.

because banks can lower their saving rates.

for eg, NR were charging variable 7.49 on mortgages, and also savings. As they lower mortgages, they can also lower savings rates iirc

Agree Jimmy, there are forcasts out there that over 100,000 jobs to be cut in the City next year. A recession like this can not pass us by with no one noticing though, so agree, we are in for a rough old time.
And this is just the financial sector.

of course! thanks.[at self]

Savings interest rates are often cut much faster (and in full) following base rate cuts than mortgage interest rates. Savers are more likely to end up getting interest at below rate of inflation, as well.

I have savings but I still owe more on the mortgage - just hope that I do get this cut passed on. stillenduringsurrey, do you have a one account mortgage with RBS (I do, I don't think Virgin are involved any more).

TBH, I think it matters little what the BoE does with the interest rate. Unless the US manages to drag itself out of the current horrible downturn the whole world is looking at a long and nasty recession.

This will have a positive effect on some mortgage costs like tracker ones but Banks are raising arrangement fees etc. The effect won't hit the real economy for 9-12 months. Halifax price index shocker this morning signals that house prices are going to fall much further. And, Banks are still cutting back lending to companies.