The Bank of England cut its base rate by o.25% to 5% on Thursday to stop the economy’s slide towards recession. However, relief for home owners was instantly undermined by a new wave of mortgage rate increases from Britain’s biggest lenders. Many lenders are yet to pass on the recent base rate reductions - instead they are busy increasing rates, demanding larger deposits, tightening lending criteria and, in some cases, withdrawing deals from the market altogether. Most of the big lenders, including Halifax, Nationwide, the Woolwich, Cheltenham & Gloucester and First Direct also said within minutes of the Bank’s announcement that they will be cutting their standard variable mortgage rates by the full 0.25%. Both Nationwide and Alliance & Leicester are believed to have been overwhelmed by applications from borrowers coming off cheap fixed deals and want to choke off the demand with yet another big increase of upto 0.35% in less than two weeks. The increases followed similar moves from Woolwich, Halifax and Abbey.
Archive for the ‘Rate reduced’ Category
Lenders raise rates despite cut by the Bank
Saturday, April 12th, 2008Has the Bank of England lost control?
Thursday, April 10th, 2008Some are questioning whether the financial turmoil has rendered the Bank of England powerless to direct how much the biggest financial names on the High Street charge for credit and pay customers for their deposits. For many, today’s predicted cut in base rate will be meaningless. While banks and building societies have been cutting savings rates, they have also been raising mortgage rates for new borrowers. The only people to benefit would be existing mortgage customers on the track rates which follows the movement of the base rate. The current market turmoil could however be providing banks and building societies with the opportunity to rebuild their profit margins after being hit (at various levels) by the subprime market. Once again, the consumers are paying for the cost of the financial industries’ imprudence.
Feds slash rates to 2.25%
Tuesday, March 18th, 2008Today, the US Federal Reserve slashed interest rates by 0.75% to 2.25% in a desperate attempt to prevent meltdown in the financial markets. The decision followed the weekend bailout of Bear Stearns, which was saved by rival JPMorgan Chase with the help of Fed cash. The shocking demise of Bear Stearns has prompted fears on Wall Street and in the City that the credit crunch could claim yet another high profile victim as lending between banks dries up. The Fed had previously cut rates by 1.25% to 3% this year alone and pumped billions of dollars into the markets. Although this has so far done little to restore confidence or calm. There are great concerns that the Fed and other central banks are powerless to solve the crisis. Pressure is now growing on the Bank of England and European Central Bank to cut rates, although both are concerned about rising inflation. Official figures released showed that inflation in Britain rose sharply in February from 2.1% to 2.5%, leaving the City split on the Bank of England’s next rate call.
Egg slashes savings rate by 0.5%
Wednesday, February 13th, 2008Following last week’s rate cut by the Bank of England, Egg has slashed the rate on its internet savings account by 0.5% - double the cut in the base rate. Until the end of last year Egg’s Internet Account came with a promise that its before-tax rate would at least match base rate – 5.25% from last week. But now that the guarantee has run out, the bank has taken a heavy hand to the account. Its loyal savers now earn 4% after savings tax (5% before tax) down from 4.4% (5.5%). Customers looking for a higher rate may want to switch to newcomer Kaupthing Edge which has said it will not be reducing the 6.50% it pays to online savers, despite the change to the base rate.
