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Interest Rates
Just in case you haven’t heard yet…
Interest rates cut by 1.5%
(hot) :jump: (-music) :dance1: :2thumbs: :drink4:
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14 Replies
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Now we just need inflation to do the same.
Petrol’s coming down a bit too…Asda 92.9p…still nearly 3x as much as they pay in the US…but at least now it doesn’t cost me £96 to fill up the car!…woo hoo £25 in the pocket.
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They went further than the predicted 1% BUT don’t get too excited a financial guru type bloke reckons we won’t see the benefit of it or at least not all of it. The government lower borrowing to the banks so they can pay back the money that they have been given by the government. We will just have to see if it is passed on but a lot of banks have a ceiling in the small print that doesn’t allow them to go below a certain figure. One thing is for certain though and that is that the tax payer will have to foot the bill for all this mess.
Steve
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Our reserve bank here has dropped similar %’s in the last few months but our banks are not passing on the full reduction, more like 80% of the drop, so they are skimming a bit off the top.
They are arguing that they have to protect themselves from the financial crisis…. bit hard to swallow when the top four banks here still posted records profits recently, in the billions.
Still, any drop is welcome I guess. The banks here are taking us for bunny’s though, and there is not a damn thing we can do about it. 👿
Thing is, if I make a bad business decision, the bank can deem me as being a risk, and refuse me a loan, but the banks have shown by this crisis that they can make bad decisions too, and we still have to pay…
Our petrol is not falling in price too far, because our $A dollar is also plummeting, so any oil price drop is being lost in the lower value of our dollar.
All my suppliers of sign materials have advised price rises effective immediately of between 6 and 11%, with more rises to follow pending the stability of our dollar.
Only price not to rise is 3M materials, because they buy in $A and not $US here….
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Lowering interest rates is stupid.
Money is in very short supply, even the banks don’t want to lend to each other, much less the likes of us, so why on earth should the cost of borrowing be cheaper? Surely it should be more expensive?
The reality is, of course, that it is just an attempt by government to be seen to be doing something. They have no idea what to do themselves, so they are just pandering to the whines of big business. Yes, those very folks that got us into this mess in the first place.
What should be happening is that those who have expanded their businesses cautiously, and within their means, and who have managed to amass a shilling or two in the bank, should be able to reap some reward for their thrift by the higher interest rates that the cash shortage would bring if it wasn’t being artificially manipulated.
And don’t be under the misapprehension that lowing base rate will make borrowing any cheaper for small business. The banks will just take the opportunity to repair their own balance sheets while we struggle on with whatever crumbs they choose to throw to us.
I think I’m going to call my bank manager and tell him that if he wishes to continue to have my spare cash deposited in his bank then I will want his house as security. Well, why not? That’s what they do to us.
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You’re just miffed because you’re gonna get less interest on all those billions you’ve got stashed away in various accounts John :lol1:
But all that will happen is the banks will now be offering loans at 5% above base rate instead of 2% above base – and charging higher set up fees. 🙄
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quote Phill:You’re just miffed because you’re gonna get less interest on all those billions you’ve got stashed away in various accounts John :lol1:The interest hasnt been cut in Switzerland so John should be ok!
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quote Phill:You’re just miffed because you’re gonna get less interest on all those billions you’ve got stashed away in various accounts John :lol1:
Yeah! 👿
The thing is that I have some cash because I’ve been prudent, never expanding until I could afford it, and making sure that any new equipment purchase would pay for itself in a realistic timeframe. Isn’t that what the banks should have been doing? In my world any asset is only valued in terms of the income it can bring, and for many years real interest rates, the difference between interest and inflation, has been negligible.
Now should be my time but, because of the Bank of England trying to artificially manipulate the economy, I’m not being allowed to reap the rewards.
5% over base? You must be joking. A friend of mine went to his bank, the one he has been dealing with for over twenty years, and asked for a loan to buy another business. No problem he was told, he could have as much as he liked at 19.8%! He told them to stick it, partly because that rate would make it uneconomic, and partly because he could borrow money more cheaply on his credit card!
That attitude from the banks will do nothing to expand the economy. They will just pay me less interest, but continue to lend it out at the same extortionate rates. B@stards. 👿
I’d be interested to know what sort of rates others have been asked for, just to see whether my experience is the norm.
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Mostly under 10% for a commercial loan here John, but credit cards are anywhere from 12% for a bank card upto 26% for a non bank card (GE Money) 👿
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quote :The thing is that I have some cash because I’ve been prudent, never expanding until I could afford it, and making sure that any new equipment purchase would pay for itself in a realistic timeframe. Isn’t that what the banks should have been doing? In my world any asset is only valued in terms of the income it can bring, and for many years real interest rates, the difference between interest and inflation, has been negligible.Now should be my time but, because of the Bank of England trying to artificially manipulate the economy, I’m not being allowed to reap the rewards.
That attitude from the banks will do nothing to expand the economy. They will just pay me less interest, but continue to lend it out at the same extortionate rates. B@stards. :e
Could it now be time to spend some? lets face it its earning nothing sat in the bank and there are some cracking deals to be taking advantage of out there. I have very recently taken delivery of a new cx500 and saved best part of a grand on what I would have expected to pay six months back. I am absolutly sure that the increased capacity will return more than the bank interest rate in a matter of a few months. Why let the banks be the only ones to profit from your hard earned.
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I think now is the time to spend money carefully as the troubles we face have only just started to kick in, start of next year we will be officially in a recession and things will get a lot worse. The government are going to put the country in debt like it’s never been before to try and spend our way out of the recession and they are hinting at tax cuts, can only mean one thing, General election soon before things get really bad.
Steve
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Bloody hell Ray. Joined March 2005, and only post number three! Good to have your input though. 😀
You’re not wrong, recession IS the time to expand, but rather as it’s coming to an end, than just beginning. Otherwise we have to carry the cost of the acquisitions until times improve.
I have recently bought a JV33, and expanded into the next door premises. I don’t think the timing was right but both purchases were forced on me to a certain extent and I hope that I can afford the additional overheads.
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Just applied for a loan, 21.9% interest rate. Needless to say I won’t be having it.
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I think I’m going to get all my money out of the banks and stick it under my mattress.
If the banks won’t pay me any worthwhile interest why should I let them have the use of it?
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quote John Childs:I think I’m going to get all my money out of the banks and stick it under my mattress.
If the banks won’t pay me any worthwhile interest why should I let them have the use of it?
I agree John. If I had any, I’d do the same thing!
😀
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