4.2 million base rate tracker mortgage holders will be rejoicing in the Bank of England base rate cut today not everyone will be as happy, over fifty percent of homeowners are locked into a fixed mortgage deal and will not benefit from the cuts at all.

Anyone that took a fixed rate mortgage deal out around August 2008 would probably be kicking themselves due to being fixed into rate of around 6.4 percent.

However not all lenders passed on the Bank of England base rate cut in December in-fact almost three quarters of lender failed to pass on the full rate cut, and it is unlikely that many lenders will pass on the full cut this time, although Lloyds TSB, HSBC and Nationwide have all vowed today to pass on the full interest rate cut to mortgage borrowers linked to their Standard Variable Rate (SVR) products.

An average payment on a tracker loan of £150,000 is about £375 a month lower than October 2008, and from the first of January they had another £62.50 wiped off their monthly mortgage payments, the tracker mortgage holders are the real winners in the rate cuts.

Although Nationwide will pass on the full rate cut to its Standard Variable rate, the building society has refused to cut the interest rate on its tracker mortgage products.

If you are waiting to get a good footing on the property ladder this is not necessary a golden opportunity, unless you have around 40 percent deposit to play with, you will see better mortgage rates but they will only be available if you fit the lenders criteria exactly.

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The Bank of England has cut the base interest rate for the forth consecutive time taking the base interest rate now down to 1.5 percent the lowest level in over 300 years, but what does this mean to you?

If you are a homeowner on a variable or tracker mortgage this is fantastic news, however if you are a saver relying on your interest and didn’t fix your interest then this is extremely bad news.

If you are a saver that did not lock into a interest deal, your no stranger to the awful effects the series of Bank of England rate cuts since October has had on your interest payments. Banks and building Societies were offering 7 percent interest on savings of £5,000 now more than a third of saving accounts are offering 1 percent interest or less.

Here is a short run down of which banks are offering the best interest rates, Close Brothers are offering interest of 5 percent if you fix for two years, Anglo Irish are offering 4.6 percent and Indian ICICI are offering 4.65 percent if you fix for one year, however you will need to deposit at £10,000 with them to guarantee the rate, and you need to move fast as applications for the saving accounts need to be in by Tuesday 13 January.

Source: timesonline

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The Bank of England have just cut the base interest rate by .50 percent taking the UK interest rate to 1.5 percent the lowest level since 1695 when the Bank of England was founded.

Many analysts wanted the rate to be cut by a full 1 percent, although it’s widely anticipated that the rate will be cut again in February.

Although the base interest rate cut will ease the strain for a lot of businesses and borrowers, the government has warned that many with mortgage loans will not benefit from this cut, with many banks not passing on the full cut if at all. More news to follow, we would like to hear your option on the interest rate cut.

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Gordon Brown the UK Prime Minister urged banks to pass on the full one percent cut the Bank of England made yesterday in a bid to help homeowners survive the recession.

The Bank of England yesterday cut the base interest rate to the lowest level since 195. The now has the task of insuring that the banks pass on the interest rate cut to its customers.

The Prime Minister also said that he will be taking steps to reduce the Libor rate (Interbank Offered Rate) this is the rate that banks use to lend to each other.

.In an interview with GMTV he stated “We are taking action to try and get that (Libor) down. Banks really should pass on the interest rate cuts”.

He then talked about the last cut and how it took the government to intervene and talk with the banks before they passed on the full rate, he then said they would be talking to them again.

The Central bank cut its interest rate by 1 percent yesterday.

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Despite the Bank of England cutting its base rate by 1.5 percent the lowest level since 1955 and the European Central Bank cutting key lending rate by 0.5 percent, stocks across Europe tumbled, with London’s FTSE 100 losing 5.63 percent to close at 4275.72.

Frankfurt and Paris saw a sell-off with the DAX down 6.97 percent and the Cac 40 down 5.92 percent despite the eurozone reduction.

Following the BOE rate cut a statement was read out saying that there had been a “marked deterioration” in economic conditions.

With the US Presidential Election causing Euphoria around the world, sadly the global economic crisis is still here and the world’s economy is still struggling.

Economists predict that the interest rate cut from the Bank of England could be too much too late, and warn that we may have further cuts some even say taking the interest rate to zero.

Source: moneyhighstreet

The Bank of England Monetary Policy Committee announced moments ago that they will cut the base interest rate by 1.5 percent which means it is now at 3 percent. But the question on everyone’s lips, will the big banks like HSBC, Barclays, Lloyds TSB and Royal Bank of Scotland pass on the rate to their customers.

Leaders of Business urged for an interest cut of at least 1 percent to avoid Britain’s economy getting any worse by slipping into recession. But with the figures out today showing that UK house prices have tumbled by 15 percent last year making it more prominent that Britain was heading for a prolonged recession. The Bank of England slashed the interest rate by 1.5 percent which was a bigger cut than most expected.

The British Government have demanded that the banks pass on the interest rate cut in full to small businesses after they bailed the banks out with £37 billion of tax payers money. However, mortgage lenders have said that they are unlikely to pass the full rate cut to borrowers due to the Libor rate which is the rate the banks lend to each other remaining persistently high.

Source: Skynews

Iceland’s central banks have increased its key interest rate from 12 percent to 18 percent as it tries to save the country from a total financial collapse. This Icelandic rate jump comes less than two weeks after they cut the rates from 15.5 percent.

Iceland’s Prime Minister said in a meeting with other Nordic countries that the Iceland needed a further $4 billion (£2.6 billion) in loans. Shortly after news broke that he was raising the key interest rate to 18 percent.

The Icelandic government has been fighting off a collapse ever since it was forced to take control of three of its largest banks, Kaupthing, Landsbanki and Glitni Kaupthing after they had been hit with the credit crunch.

It wasn’t said how much extra money was needed from other Nordic countries such as Denmark, Norway, Finland and Sweden, the Prime Minister added that he didn’t want to put pressure on the countries.

Iceland has agreed already to a loan from the International Monetary Fund (IMF) for $2 billion. The Central Bank in Iceland will give reason for its decision in a statement that should be announced about 11am GMT today.

Source: BBC

Gordon Brown is expected to defend his plans to increase government borrowing in order to tackle the economic downturn in a speech later.

Prime Minister Gordon Brown is set today to tell business leaders they need to heighten the demand for government spending in a bid to challenge the economic crisis. Economists and opposition parties have attacked the government saying that the UK is not prepares for recession and that they need to make appropriate tax cuts.

The UK’s quarterly public debt figure stands at £37.6 billion when last recorded which is higher than the whole of the previous year. Gordon Browns wants to use the fiscal policy to kick start the economy and said this is the correct strategy to increase borrowing although many economists disagree.

Brown is expected to say in his speech that they have already targeted through the tax system things like freeze on fuel duty, the increase in the stamp duty threshold temporary and the £120 tax rebate for basic-taxpayers. Mr Brown also hinted that we could see another interest rate cut.

Mr Brown told the BBC “Now inflation is actually coming down over the next few months and that will mean that it gives scope to all the monetary authorities, including the Bank of England, round the world to make a decision about interest rates”.

Source: BBC

The Federal government hold the U.S. interest rate at 2 percent, it was an unanimous decision to leave the interest rate at 2 percent, the decision surprised several people in the financial markets who expected the U.S. government to show more worries on growth, although the government commented “Downside risks to growth and the upside risks to inflation are both of significant concern.”

In one of the worse weeks of onslaught in the financial market, where Lehman Brothers Holdings Inc filed for Chapter 11 bankruptcy, Bank of America brought Merrill Lynch and AIG were rescued by the federal government, investors thought that the central bank would lower the rates.

Ratings agency The Standard & Poor’s 500 index, posted its biggest one day percentage loss since re-opening after the September 11 disaster in 2001.

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As Mervyn King explains the 4.7 percent rise in inflation, all hopes of an early interest rate cut disappears. This comes as Chancellor Alistair Darling opened a letter from Mervyn King which explains why inflation is running at double the banks normal 2 percent target. It also stated in the letter from Mr King that the position has got worse since his previous letter in June.

As leaping food and utility prices overshadowed the decrease in oil prices, sending the inflation to rise to 4.7 percent in the year to August. However, the monetary policy committee who set the banks interest rate is expecting inflation to peak soon at around 5 percent, significantly higher than they first thought in June.

The governor wrote if they allow an increase in inflation to become embedded in expectations then a prolonged period of depressed activity and high unemployment is ultimately required to get inflation back down,” “And because the peak in [consumer price] inflation is expected to be higher than three months ago, the risk that it may have an effect on other prices and costs is now greater.

“For that reason, the committee has become firmer in its belief that a period of muted economic growth is necessary to dampen pressures on prices and wages and return inflation to the target.”
Pleas for him to relax the Bank’s target were rejected by the Chancellor in his reply.

Read the full article in the Birminghampost