Negative interest rates
I suppose this would bring about a quantum change if it it happens
Will it ? When and how's it going to work |
So you lose money if you save it?? :wonder:
I presume you are referring to: http://www.bbc.co.uk/news/business-21600946 |
But great if you can get a credit card at -20% pa :thumb:
The theory is that the negative rates apply to banks to encourage them to loan out their money to boost the economy rather than sitting on it. A similar effect will be achieved in the High Street by charging for current accounts. |
Its already sort of true, as inflation is already outstriping "most" savings interest!!
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Originally Posted by speedking
(Post 11006630)
But great if you can get a credit card at -20% pa :thumb:
The theory is that the negative rates apply to banks to encourage them to loan out their money to boost the economy rather than sitting on it. A similar effect will be achieved in the High Street by charging for current accounts. |
It's to encourage people to spend instead of 'save' lol. ,people got cash in the bank
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From articles I've seen, negative rates have already been used in Scandinavia and Switzerland, though no figures to show the results of doing so.
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Could write an essay on this, but won't.
Negative interest rates have been part and parcel of banking for years now, but probably a new concept for most people. Essentially yes it means you have to pay to keep your money on account. In the Sterling market at present, you can place money with the Bank of England at +0.50% if you have a reserve account (ie big banks only). There have been reports that the Bank of England have discussed (and to clarify for the hard of thinking from previous experience that does NOT mean they are considering it) negative interest rates, although the first step would probably be 0%. That's in line with the European Central Bank where rates are effectively zero, even though the "official" rate is 0.75% But until rates go negative, as they have in Switzerland, Denmark etc, people do not change their behaviour, and even then, it's marginal. The cost of transferring capital is too high. Negative rates will not in themselves ensure higher lending, just as Quantitative Easing hasn't. But it's an option, and it's been discussed. Europe is likely to see negative interest rates before the UK, but there's resistance due to the perceived desperation of crowbarring people into lending money rather than relying on the strength of the economy to achieve the same result. For the man in the street, that will mean most banks will charge for current accounts. |
So if they lower rates to -1%, does that mean my str mortgage goes down by the same rate?
If supposed to be tracked at 3.75% above base. |
I think, and Tel will correct me if I'm wrong, that this is really more to do with large financial institutions hanging onto money. If it costs them to keep it on deposit they will have to find something else to do with it ... like lend it out thereby stimulating the economy.
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Originally Posted by Gear Head
(Post 11006688)
So if they lower rates to -1%, does that mean my str mortgage goes down by the same rate?
If supposed to be tracked at 3.75% above base. |
Originally Posted by f1_fan
(Post 11006709)
I think, and Tel will correct me if I'm wrong, that this is really more to do with large financial institutions hanging onto money. If it costs them to keep it on deposit they will have to find something else to do with it ... like lend it out thereby stimulating the economy.
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Originally Posted by TelBoy
(Post 11006717)
Absolutely. And if you're lucky enough to have a mortgage linked at less than 1% over the base rate, your lender will be obliged to pay YOU.
There is nothing to stop them putting it up to 10% above base due to 'increases in the cost of lending'. :rolleyes: |
My mortgage is .99% above base for life.
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For life? :Suspiciou You have an open ended loan?
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For life of the mortgage. Its how it is referred to.
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Originally Posted by EddScott
(Post 11006760)
My mortgage is .99% above base for life.
He has been advised to never fully pay it off (only has a few thousand left on it) as he can also borrow money against his house at the same rate. Lucky bugger. |
Mines 2% above base which I think is pretty excellent considering its only a 5 year old mortgage. They changed their policy soon after we got ours!! Don't think I'll be changing it any time soon!! lol
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Originally Posted by Gear Head
(Post 11006886)
One of our directors has this sort of deal.
He has been advised to never fully pay it off (only has a few thousand left on it) as he can also borrow money against his house at the same rate. Lucky bugger. We are however part of the interest-only time bomb that will probably start going off in about 15 years time. :) |
I wish I still had a mortgage, instead I had mine when Thatcher had the interest rates at 15.9%.... ah those were the days ;)
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Originally Posted by f1_fan
(Post 11006709)
I think, and Tel will correct me if I'm wrong, that this is really more to do with large financial institutions hanging onto money. If it costs them to keep it on deposit they will have to find something else to do with it ... like lend it out thereby stimulating the economy.
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If they do, it's time to emigrate. Sick of reckless twunts bring rewarded for being financially retarded.
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Originally Posted by EddScott
(Post 11006818)
For life of the mortgage. Its how it is referred to.
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Originally Posted by Gear Head
(Post 11006688)
So if they lower rates to -1%, does that mean my str mortgage goes down by the same rate?
If supposed to be tracked at 3.75% above base. |
Originally Posted by TelBoy
(Post 11007145)
Only within the industry perhaps. You could not sell financial products stating "for life" if you really mean "for the life of the product". Hence nobody does. :)
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Originally Posted by TelBoy
(Post 11006717)
Absolutely. And if you're lucky enough to have a mortgage linked at less than 1% over the base rate, your lender will be obliged to pay YOU.
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If the banks decide to charge us for having a current account, would we still be affected similarly if we put the cash into a building society.
If everyone did that I would expect the banks to be pretty seriously affected themselves. Les |
Originally Posted by EddScott
(Post 11008126)
You and I have wasted time in the past arguing over petty semantics - referred to above I believe. Lets not start now theres a good chap.
All well and good apart from the patronising bollocks at the end. Why the need? |
Chill out Tel, I don't think it was meant that way.
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Originally Posted by f1_fan
(Post 11006997)
I wish I still had a mortgage, instead I had mine when Thatcher had the interest rates at 15.9%.... ah those were the days ;)
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