Bank base rate now 4.5%

And the majority of people in a BBC poll reckon that by this time next year rates will be at 6%. Still 1.5% lower than they were shortly after when Labout came to power in 97 and much lower than they were on average during the Conservative governments of Thatcher and Major. I hate to say it but Brown must be doing something right.

Bitstring , from the wonderful person D.A.L. said

He did =one= thing right - he gave the rate-setting duty to the Bank of England, and got out of the loop.

In message , D.A.L. writes

By giving up his control of base rate and giving to the BoE to decide? I think your right!

Now let's see how many banks and building societies pass on the full amount in their savings account interest rates.

Brian

Yeah, I see a few of them passed the hike on immediately. Now.... did they do that when the rates we're cut? NO! Most of them did not pass the full cut on, if at all.

The banks are tw*ts when it comes to this. It's all about maximum profit and screw the customer.

Will savings rates go up by the full 0.25%? Do pigs fly?

Simon

If you measure success on how low the interest rate is, the Eurozone, USA and Japan are all much more successful than us at present.

In message , Simon Ough writes

Why should they?

No, it's about maximum profits and maximal shareholder return. Banks ARE businesses after all.

Yes - tracker savings accounts will go up by 0.25% immediately.

Marcus

how much extra per month on a mortgage of 200,000 if interest rates go up 1.5 % ? (my sister wants to know)

If it's a repayment then it'll vary according to how much of the term is left, but it'll probably be around 175 if she's got 25 years left.

"Andy Pandy" wrote in message news:20eyc.13556$ snipped-for-privacy@stones.force.net...

An increase from 6% to 7.5% p.a. with 25 years remaining is about 189 per month (from 1288 to 1477) according to my Excel spreadsheet and Loan Calculator. :)

Now the next step is for the BoE to give rate-setting back to the markets. The markets can set the price of money much better than a committee that meets once a month.

Roland.

"Roland Watson" wrote

How would "base rate trackers" work then?

Typical! Blame somebody else and abdicate all responsibility for your own incompetence of being able to handle money. It's a good job they don't have IQ tests as part of the credit scoring system.

I worked it out for a 4% to 5.5% increase.

Surprisingly it varies a lot depending on what the original rate was, and even more surprising, the lower the original rate the less impact any rate rise has.

Eg a rise from 0% to 1.5% would only result in a 137 increase, a rise from 15% to 16.5% would result in a 233 increase.

I tried coming up with a nice neat formula but couldn't really to any better than simply using the standard repayment formula LI/(1-(1+I)^-N)) for the 2 different values of I.

"Andy Pandy" wrote in message news:xcmyc.14007$ snipped-for-privacy@stones.force.net...

Yes, I too noticed a difference when crunching the numbers.

Because with very low rates, much of your repayment is capital. The interest element is relatively small, so percentages increases in that element don't look anything like the same percentage of the total repayment. When rates go very high, almost all of your repayment is interest so the effect on the total repayment is just about linear.

Strictly speaking, it's confusing to say that it depends on how far into a repayment loan one is. If you are 10 years into a 25-year 100K loan, you don't *owe* 100K any more, and the repayments are not worked out on 100K. You are essentially just starting a 15-year loan on maybe 80K - all depending on what interest rates did during the first 10 years.