Rates cut to 2%

[Admiral Huddy]

http://news.bbc.co.uk/1/hi/business/7764741.stm

Hopefully this will be passed on.

Great news for my flexible mortgage since overpaying and rate cuts will shorten the term :)

[loki]

Hopefully.

Its all the big C word at the moment though isn't it. The banks don't want to give credit out people dont want to spend money. Is the finance system as we know it broke beyond repair ?

[Tak]

Fixed rate; interest drop means nothing to me except my pitiful savings will get less interest.

[Admiral Huddy]

Hopefully.

Its all the big C word at the moment though isn't it. The banks don't want to give credit out people dont want to spend money. Is the finance system as we know it broke beyond repair ?


No I don't think so. They'll bounce back. It's happened before.

Personally, if you are in work then things have never been so good, it's just confidence that's gone. This will come back as soon as all the doom and gloom has passed and people do realise they have never been so better off. The press don't help either. Once confidence is restored, then things will start moving again. Unfortunately, we are also affected by what goes on across the pond.

[Zirax]

I didn't think they would cut this much in one go. Essentially now they have a dangerous precident. The last time that rates were 2% was the 1600's or something. Now they have little breathing room, can you imagine the headlines:-

"Economy in worst state since 1600"
"Britain back to the middle ages"
etc

This certainly won't help public spending in any way and it will be further fuelled by the news. There is the case of the pound being further reduced in value if they keep making aggressive cuts.

edit:-

I stand corrected, apparently its 1950 the rates were at 2%. I could have sworn they were saying 2% and 1600's on radio 4. I'll have a hunt. Either way the papers are going to have another field day and it isn't going to inspire confidence.

[Will]

My pitiful savings will be even more pitiful... I doubt it'll affect the credit card interests at all... now's the time to buy a house I gues.. shame I haven't got enough for a deposit.

[Tak]

Seems to me that it's only helping those who were able to get a variable/non-fixed mortgage in the first place - which tends to be those who were better off financially (or at least had better incomes).

Of everyone I work with, this is beneficial for 1 of them. The other 50-odd, including myself, were offered fixed rate or nothing because I guess the banks saw this drop coming.

We got out fixed rate because at the time the interest rates were going upwards.
At the time the bank guy said that the majority of people were doing exactly the same thing, so going by that there are a lot of people who these rate changes mean nothing to, who still won't have "extra" disposable income, who still won't be spending, who still are worried about the future.

The only way this drop could help me is if my credit card interest went down but as they haven't passed on any of the other drops yet, I can't see that happening.

[Desmo]

Doesn't really help us much either. Only way we benefit is that the mortgage on Piggypad in Swansea has decreased when the last drop came. Whether this one gets passed on or not is something we'll just have to wait and see.

The last drop meant we actually started to see a profit instead of the place costing us a little each month :)


Our current mortgage on Pigmopad is fixed until early-middle of next year so we can only hope the rates stay low in time for our remortgage.

[Mark]

Same situation as Kitten. I may investigate whether my current provider has any better rates and see what the exit clauses on my current deal are. If the benefits outweigh the costs then I'll consider it in January (they're predicting another 0.5% cut in January with the possibility of the rate hitting 1% or even 0% at a later date).

[Pumpkinstew]

Fixed rate; interest drop means nothing to me except my pitiful savings will get less interest.

Same. 2 and a half years left on a five year fixed. :(
Might have a look around at houses in our area though and see if we can re-negotiate the mortgage and get an extra bedroom for similar levels of repayment.

[Admiral Huddy]

It's a good time to pay off some of that capital since rates are so low. Keep the re-payments as they were when they were around 6.5% and long term it could save you a few years off your mortgage.

[TinkerBell]

Haven't got a mortgage so it is just cutting what I gain from saving really. But if it helps out my family and friends then I don't mind :)

[Wryel]

No savings, all my loans are fixed, nothing doing nothing. Let's hope they're sky high in two years time when I can start saving.

[Nutcase]

Fixed rate at 5.15 % but can comfortably afford the payments, and the getout fees are astronomical, so not overly worried.

However, I really want to take out an unsecured loan, but can't find anywhere willing to loan at a decent rate, despite having a very good credit rating :angry:

[A Place of Light]

I'm looking at property now, but I think the perfect time to buy will be between Jan 1 and Easter 2009. The need for a 25% deposit is a pain though.

[Tak]

I'm looking at property now, but I think the perfect time to buy will be between Jan 1 and Easter 2009. The need for a 75% deposit is a pain though.

75%?!?

[A Place of Light]

75%?!?

If you want a decent mortgage, yeah :(

^^^
Just realised that should've read 25%, lolz.

[Mark]

but I think the perfect time to buy will be between Jan 1 and Easter 2009.
Not sure about that. Most commentators seem to think there is room for another 10% drop in prices, with a few on the margins suggesting that could be nearer 30%.

From a purely traditional standpoint, you're right in that that should be the quietest time in the market, but does anything traditional besides hoarding cash like it was going out of fashion apply at the moment?

[A Place of Light]

Not sure about that. Most commentators seem to think there is room for another 10% drop in prices, with a few on the margins suggesting that could be nearer 30%.

From a purely traditional standpoint, you're right in that that should be the quietest time in the market, but does anything traditional besides hoarding cash like it was going out of fashion apply at the moment?

Well, prices are dropping in the region of 2%/month at the moment, so waiting until easter would give you the 10% drop you mention. Nobody can time this to perfection, just like nobody sells shares at the perfect time.

You also need to remember that the main property companies will only discount existing completed homes, as they're the ones that the company has money tied up in. Those in partial construction will simply be mothballed until the market picks up again. Once they've been snapped up, the market will slowly start to regain lost ground. Remember, supply and demand has a part to play in all of this.

[Mark]

Remember, supply and demand has a part to play in all of this.
Oh, I'll not forget that (A-level Economics student). If only it were that simple - there's plenty of housing supply, and up until recently there was reasonable housing demand, but that all means squat if there's no supply of loans to make it happen.

Right now if you have cash in hand you're in a bloody good place to snap up a bargain. Some prices have come down by around 7% in the last week alone.

[A Place of Light]

Oh, I'll not forget that (A-level Economics student). If only it were that simple - there's plenty of housing supply, and up until recently there was reasonable housing demand, but that all means squat if there's no supply of loans to make it happen.

Right now if you have cash in hand you're in a bloody good place to snap up a bargain. Some prices have come down by around 7% in the last week alone.
I think it depends what price bracket you look at, as to how much prices will go down.
A 90k flat isn't going to drop by 30k (circa 30%), but I've seen 400k houses recently have 100k slashed from their sale price.
Sadly, once again it's the prudent who are carrying the can for the reckless.