Interest rates going down tomorrow?

[Raiden]

Just been listening to radio 2 at work and ill be honest I don't get it?

So if the rate drops to 0.25% or 0% does that mean if you have a mortgage its all good?

I'm on a interest only and I am over paying slightly. But if I heard right if it goes to 0% then I basically pay no interest on the loan at???? If that's right i'm uping it again. Even if it does drop 0.25% then quids in?

But I take it,its bad for savers? I don't have a lot saved but I guess if its drops ill just get a premium bond.

Can someone explain?

 

[Terminator x]

The mortgages that are linked to BoE rates tend to be x% above the base rate so even if the base rate is zero there is still interest being charged. As you say great for those of us with debts, **** poor for the savers though.

TX.

Edit - that's why some people are buying cars etc as investments given bank rates are so low.

 

[RAF_S7]

In layman terms, the BoE interest rate announcements only apply to the Bank of England base lending rate to major institutions. i.e. Other banks and financial institutions who borrow money from the BoE.

Things like your mortgages, credit cards and loans etc. are not funded directly by the BoE, but by whatever institution you are borrowing from. They may borrow at the BoE rate, but they are under no obligation to lend to you at the same rate - thats why credit card rates are still astronomical - around the 28-30% interest rate and higher, and why you wont find a mortgage (generally) for anything less than 2-4% depending on who you are borrowing from.

The days of mortgages tied directly to the BoE base lending rate have long gone, unless your one of the lucky few who have a historical rate that is contractually tied directly to the base lending rate, i.e. (Base + 1%, or as some managed, Base - 0.5%!!) or such like. Most mortgages these days are not tied directly to the BoE rate (Mine is fixed at 3.8% for example, regardless of base rate)

Some lenders may pass a portion of any base rate reduction onto their customers, but they are under no obligation to do so. Some may pass it on in a months time etc.

I moved to Premium Bonds about 3 years ago, and so far the returns have been just ahead of interest paid on savings accounts.

 

[Raiden]

The mortgages that are linked to BoE rates tend to be x% above the base rate so even if the base rate is zero there is still interest being charged. As you say great for those of us with debts, **** poor for the savers though.

TX.

Edit - that's why some people are buying cars etc as investments given bank rates are so low.

Ill see if I could talk the wife into buying a Escort Cosworth then ;-)

 

[jojo]

Just been listening to radio 2 at work and ill be honest I don't get it?

So if the rate drops to 0.25% or 0% does that mean if you have a mortgage its all good?

I'm on a interest only and I am over paying slightly. But if I heard right if it goes to 0% then I basically pay no interest on the loan at???? If that's right i'm uping it again. Even if it does drop 0.25% then quids in?

But I take it,its bad for savers? I don't have a lot saved but I guess if its drops ill just get a premium bond.

Can someone explain?

You interest rate on your mortgage will only be effected if you are on a variable/tracker mortgage. If you have fixed your interest for X amount of years, then only the bank benefits, you will gain nothing at all.

 

[Bristle Hound]

BOE rate went down 0.25% with the prospect of a further cut in the near future
http://news.sky.com/story/bank-cuts-base-interest-rate-to-historic-low-10522403

 

[RAF_S7]

Interesting to read that of the millions of mortgages in play, less that 1.1 million are tied to the BoE base rate! My fixed rate is ending next month, good timing

 

[jojo]

Interesting to read that of the millions of mortgages in play, less that 1.1 million are tied to the BoE base rate! My fixed rate is ending next month, good timing

That's because it's just easier to have a fixed rate, the repayments are the same throughout the fixed period, so you know how much you need to pay each month. No one like the uncertainty of what's round the corner, and prior to the Brexit, the interest rate was suppose to go up!

 

[Raiden]

Well I spoke to the mortgage company and they say because I'm on a variable rate it's up to them if they follow the Bank of England so they will let customers know in the coming weeks. If it's to good to be true it usually is. Think I'll just get some more premium bonds and hope I get lucky.


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[jdp1962]

I'm a saver rather than a borrower and my bank has already emailed to say that following the 0.25% cut in the base rate, my savings rate is going down by 0.40%.

 

[jojo]

I'm a saver rather than a borrower and my bank has already emailed to say that following the 0.25% cut in the base rate, my savings rate is going down by 0.40%.

I've invested all my savings. There really is not much interest in savings anymore, even Cash ISAs are a joke.

 

[wolfie138]

RBS were saying they were going to start charging people to "save", some scare-talk about negative interest rates etc. ***, if it's going to cost you to have cash in a savings account you might as well take it out and put it under the floorboards.

 

[jdp1962]

RBS were saying they were going to start charging people to "save", some scare-talk about negative interest rates etc. ***, if it's going to cost you to have cash in a savings account you might as well take it out and put it under the floorboards.

That was suggested for business customers rather than personal consumers.

 

[jojo]

RBS were saying they were going to start charging people to "save", some scare-talk about negative interest rates etc. ***, if it's going to cost you to have cash in a savings account you might as well take it out and put it under the floorboards.

I've just had letters from both RBS and Natwest(same groups) on both my business accounts about reductions in banking fees! Lol. This was a week ago though, before the announcement of the interest rate drop! Haha

Be funny if I got another letter so soon after!

 

[Raiden]

Got a letter from the mortgage company today. Payments have dropped by £30 a month. Better then a poke in the eye with a sharp stick. That will cover half a tank of fuel a month


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