Not sure. The worry for most people, it seems, is not a lack of money but a fear about the security of their jobs. Those on many types of tracker mortgage are already paying nugatory amounts of interest - one example I read said the current reduction made some tracker mortages cost pennies (yes, pennies) per month interest repayments (capital excluded) on sums of £100K or so.
The current crop of car finance offers mostly seem to hover around the 6-12% range - what does the odd half percent cut do for these? Not much I'd say - if you're not buying at 6%, you'll probably not buy at 5.5% (I know retail 3rd party rates don't quite work linearly - but generally it's how it will work out).
The only 'cure' (and at that, only partial) is for people to feel more secure in their jobs & general outlook. They'll then start spending again. Also, don't forget, savers' rates
are now nugatory as well - as we have many more savers than credit bingers in this country - many purchases will be postponed from this group. (Bar the oldies who feel the need to buy a new car to spend it rather than get very low returns - as reported last week).
|
na lots of problems still ahead
house prices have a long way still to fall
more and more of our jobs being outsourced to india or indian staff here on visas, makes a few italians in the country look like small beer
banks dont trust each other
i wouldnt put a big deposit on anything these days for fear of the vendor going bust
jobs situation is dire, i earn more than most but it could easily all disappear overnight
official bank of england rates now have little to do with consumer rates
lots of shares still very low and going lower making anyone with savings in equity based savings suffer
only people doing well are the bankers on big bonuses with jobs guaranteed by HM treasury with out money, and of course the ever growing public sector workforce and their gold plated pensions
exchange rates changes will force price changes
very strange times I'm just kicking myself for not buying lots of US dollars when they were 2 to the pound
nice wastelands of housing association and council house dwellers on state handouts will be ok, as will the rich at the top, the worker bees in the middle will take most of the pain
and as for the government debt brown has taken on in the last few months we are in severe danager of the british state itself loosing its credit rating which isnt far off and that will have massive roll on effects for all of us and our children and grandchildren
dont think punters are going to be racing back to car showrooms anytime soon
|
|
On the flip side, if you are benefitting from lower mortgage rates and have spare cash, your job is not at risk and you don't owe credit cards and don't need a new 4 piece reclining sofa from Land of Leather, and you need a new car, it's possibly the perfect time.
|
|
|
Once people realise that they don't have to keep up with their neighbours and the neighbours don't have to outshine everyone else. Plus they realise a car lasts longer than a year.
Then sales of new cars will need something other than the ability to pay for them to get moving again. I could buy a new car tomorrow but would never dream of it. Such a waste of money in the first year.
|
|
|
|
|
I'm just waiting for the rate to become less than zero (i.e. negative) so they'll pay me for the privilege of borrowing their money!
;-)
Edited by L'escargot on 05/02/2009 at 14:31
|
I'm just waiting for the rate to become less than zero (i.e. negative) so they'll pay me for the privilege of borrowing their money.
And charge me for using mine!:-)
|
I'm on a fixed rate,like the vast majority of people I know, so it's doesn't change my payments.
What does have an impact s the heavy fall in savings rates.
|
75% of car sales involve some kind of finance
Loan rates are much higher now than 1 year ago, despite a very low base rate
I do not imagine the latest 1/2% will make te slightest difference to car sales.
MVP
|
|
|
It seems to have been forgotten that there are many more savers than borrowers - who are the ones really suffering at the moment.
Odd isn't it. You can be a banker and pay ducks and drakes with other people's money and the government - ie taxpayers - will bale you out.
Or you can sacrifice to pay your mortgage and never give the bank a moment's worry for 25 years, then you can find yourself getting sod all for the privilege of them using your hard-earned cash. And that's ok too. Apparently.
People losing their jobs in the motor industry and elsewhere will probably end up better off on the dole than the savers who are being punished for other people's misdemeanours.
|
|
our let's-find-a-solution-fast political leaders are deliberately wearing blinkers as far as the plight of millions of savers is concerned, but come the Budget (and bearing in mind a general election is not far ahead) there will be an announcement, probably to help older folk: e.g a generous rise in tax allowances.
|
|
|
It seems to have been forgotten that there are many more savers than borrowers -
who are the ones really suffering at the moment.>>
That's right, mike, the prudent (remember that word, Gordon?) are paying for the stupidity of the profligate. It's been the same ever since the wise and the foolish virgins roamed the earth!
We've got a nice 3-series BMW parked in the Anglo-Irish bank at the moment on a 2-year fixed rate at 7%. Do I take it out now and convert it into a real car ....... or do I leave it in and hope (!) that it turns into a 5 series ...... or gets 'twoced' by the thievin' bankers and it's never seen again???
|
|
Psst Waino - I guess you know from your comment that investments in Anglo Irish are no longer guaranteed by UK govt, you are depending on Irish govt which apparently isn't quit so creditworthy...
Edited by smokie on 05/02/2009 at 16:53
|
|
|
|
|
|
|
|
GREAT ! Car loans at around 3%. Think I'll treat myself to a new £24,000 motor. Just point me in the direction of those 3% loans please.
|
|
|
|
If the knee-jerk single-strategy experts on the MPC haven't worked out yet that another ½% drop in Bank Rate won't make much difference, they should get out there and try to sell cars instead ..? I think most of the populace have decided that they don't really need to change their consumer durables for newer ones every 2 years - maybe 3 or 4 will do. The only thing that might work is a totally new trendy product which can trigger a 'me-first' response.
|
Hate to say it, but I think Andrew is absolutely right. People are just going to hang on to their cars for much longer. If independent garages can work out how to fix them without having to refer drivers to main dealers for software diagnosis checks, there should be lots more trade heading their way...
In a few years time, I reckon there will be less depreciation on 58 and 09 plate cars since there will be far fewer of them around.
|
It's an utterly pointless and desparate move by authorities who have totally lost the plot.
The crisis is now one of massive loss of confidence, in banks, the government, and in the whole concept of a debt-financed consumer society. Every panic move now merely reinforces that lack of confidence.
No one in his right mind would today be tempted to borrow money for anything, at any rate of interest, unless utterly desparate and he saw it as the only way of keeping his home or his business.
Edited by Honestjohn on 06/02/2009 at 08:49
|
No one in his right mind would today be tempted to borrow money for anything, at any rate of interest, unless utterly desparate
Totally agree and the whole position is made worse by the fact that those with some savings have effectivley lost any income from interest and and are consequently feeling a lot worse off and no longer spending.
|
|
|
|
|
It will free up money for those with a mortgage but those who use interest from savings are in a much worse position. I guess with the ratio of savers to mortgage being high there will be less money to splash around on average.
|
We're missing the point here. This rate cut is not aimed at consumers, it's aimed at reducing the bank rate.
"Bank rate is not the price at which banks lend. It?s the price at which they can borrow from the Bank of England.
"A low Bank rate therefore cuts the cost of funds to banks - especially because it drags down overnight Libor - which increases the profitability of lending.
"You can complain about government demands that banks pass on the cut in full - as this won't restore their profits - but you cant's complain about the cut in Bank rate in itself." Stumbling & Mumbling, 5th Feb 08.
|
>This rate cut is not aimed at consumers ...
Not so. It may not be aimed directly at consumers, but the whole purpose is to stimulate more consumption - in other words to get back to doing what we were doing when it all went off the rails. SOME day, people have to realise that it has to stop because a real limit has been reached. But of course that will be next year, not today.
|
It may not be aimed directly at consumers but the whole purpose is to stimulate more consumption .........
I can't ever remember our household's consumption being influenced by statements about the bank rate. If we can afford something we buy it, and if we can't afford it we don't buy it. It's the price of goods in relation to our income which determines our spending.
|
I can't ever remember our household's consumption being influenced by statements about the bank rate. If we can afford something we buy it and if we can't afford it we don't buy it. It's the price of goods in relation to our income which determines our spending.
Erm, its not the bank rate statement that influences consumption, its the more money left over each month cos the mortgage has gone down that influences. Or at least thats the aim rightly or wrongly.
|
|
|
|
"A low Bank rate therefore cuts the cost of funds to banks - especially because it drags down overnight Libor - which increases the profitability of lending.
Indeed. From a Property Developer's point of view, my reaction to the latest cut is "so what". Until the banks have sorted out exactly what rubbish they're carrying (and not all of them know yet their full exposure - scary), and their capital is freed up to lend, cutting the bank rate to 1% alienates savers and delivers little to the mortgage market because the lenders have retreated from the market.
On a motoring note, i've tried to raise a loan to consolidate the HP on the Grandis and the unsecured loan on the Impreza, thinking that with the drop in rates since 2007 should yield a small, but worthwhile saving.
Fat chance. Grandis deal was 5.9% secured on the vehicle, Impreza was 6.5% unsecured personal loan. Cheapest personal rate was 7.7% from the AA before the latest cut. No savings at all.
|
|
|
|
... I guess with the ratio of savers to mortgage being high there will be less money to splash around on average. ... >>
It is the small amount the large number of savers have saved against the large amount the smaller number of borrowers have borrowed that matters. i.e. the net personal debt per capita.
according to www.moneybasics.co.uk/resources/money-information....l
"In 2001, UK bank customer lending was comparable to customer deposits. But by 2008 H1, the surplus of lending over deposits ? the customer funding gap ? was £700 billion.
Average household debt in the UK is ~ £9,633 (excluding mortgages). This figure increases to £21,875 if the average is based on the number of households who actually have some form of unsecured loan.
Average household debt in the UK is ~ £59,670 (including mortgages).
Average owed by every UK adult is ~ £30,420 (including mortgages). "
|
Too many years of over taxing and under paying the average low level british worker has now turned circle and is biting those who made (excess) profits off their backs.
Until this working man feels secure in his job and is allowed some spare money to spend, the economy (bulk spending) isnt going anywhere.
Not enough profit made here (no manufacturing) so no quick fix. The man who needs to borrow to purchase cant get credit because of lack of job security. So those at the top are going to lose out too!
Country needs a good clear out of chiefs and some more indians (to coin a phrase!) that actually make something to make some profit out of!
We are not going anywhere yet! We will have the Euro as our coinage before we do too!
|
Or better advertising. Best builders van I have ever seen had the following on the side:
"Patel and Patel. Builders. You've tried the cowboys, now try the Indians".
Simply brilliant.
|
|
|
It's like cheating in Monopoly. Firstly you break the rules by letting players borrow from the Bank. Then when the bank runs out of money you go off the Waddington standard and just write IOUs. But as a child I never realised that the game needn't stop there - you can just bundle up these sub-prime IOUs and sell them on to some other children.
But I do remember it always ended in tears.
|
I said a while back that the car industry is doomed. It's not an essential purchase and the free 'n' easy credit of recent years as masked a more serious problem - massive over capacity in the world's car producers.
The plight of the savers never receives the same publicity as skint Davy and his reckless over-borrowing to buy some grotty modern house-box. Taken overall, a cut in interest rates is at best neutral, for every borrower who saves a Pound, there will be a saver who loses one.
Part of our retirement income is comprised of interest on savings. As a result of the interest rate cuts, we have already made significant cutbacks, including canceling a bathroom renewal and a new car for the missus - to the detriment of those making and selling the things.
As is often the case, the careful are bailing out the reckless.
|
"As is often the case, the careful are bailing out the reckless"
Except in this case, the reckles are the bankers, who have made countless millions over the years and seem to have lost it all overnight?
Recklesss skint davey has been skint for a long time because of his poor wages and over taxation, thus no real money being pumped into the false economy we have built around rapidly inflating houses. There is nothing else to base our economy on !
Until real money gets into the pockets of those down the bottom the whole chain is doomed !
|
|
I don't think you can single out any one group, there have been many all enjoying the party. Yes the Bankers have a lot to answer for but borrowers can't evade some responsibility either. And of course the Govt. for enjoying the party and allowing it to continue. Remember the rubbish being spouted about two years ago about a 'soft landing'? The only soft landing that's going to occur is into the crap.
|
|
|
Except in this case, the reckles are the bankers, who have made countless millions over the years and seem to have lost it all overnight? >>
They did not hide their cash under their beds, did they?
So where did all the cash go?
Did it not trickle down to the lowest common man in the street [perhaps in China? and was that not the same common man in China who saved his miserly pennies in a Chinese bank who then collected all the pennies of the billions of the Chinese to lend it to us in the West? So that we could go and buy more Chinese goods/parts - to build our cars and to furnish our inflated-priced homes bought on credit?}
|
|
|
|
|
|
|
|
