Bank eyes rate cut and £50bn cash injection to boost economy Bank eyes rate cut and £50bn cash injection to boost economy
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  1. #1

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    Default Bank eyes rate cut and £50bn cash injection to boost economy

    Morning chaps

    Hope you all had a good bank holiday. The potential rate cut will be good news if your mortgage is on a tracker at the moment as long as your product doesn't have a collar.

    The Bank of England is preparing to inject £50bn into the economy to provide a growth boost, and is also contemplating cutting interest rates, amid fears of a global slump.

    inShare.1According to a report in the Sunday Times, economists are now pricing in £50bn of quantitative easing this week, while there is mounting speculation that the record low interest rate of 0.5% could be cut to 0.25%.

    The clamour for a rate cut has been growing in some quarters after the latest wave of bad news from Europe and the US, where data is declining sharply.

    The US unemployment rate unexpectedly climbed last week, rising to 8.2%, while in Europe the eurozone crisis is far from resolved, with German bond yields tumbling to new record lows last week as Spain's hit record highs.

    In the UK, where the economy is already officially back in recession, the picture is also bleak.

    On Friday, the latest PMI survey for the manufacturing sector - an area the government had hoped would lead the country out of recession - showed one of the largest falls in activity for 20 years, hitting a three-year low.

    While a rate cut has been backed in some quarters, other economists have questioned how effective it would be, warning it will impact banks' balance sheets further at a time when they are still weak.

  2. #2

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    This thread needs girls

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    The problems in the Euro zone have kept money in Sterling, so there had been no real side effect of the quantitative easing.

    When China opens its currency for trading, Sterling could crash, big time.

    I'm out!
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    Seriously though, even though without the collar what difference would another 0.25% cut make to mortgage payments after all the previous cuts?
    “Live a good life. If there are gods and they are just, then they will not care how devout you have been, but will welcome you based on the virtues you have lived by. If there are gods, but unjust, then you should not want to worship them. If there are no gods, then you will be gone, but will have lived a noble life that will live on in the memories of your loved ones.”

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    I guess it helps keep the Housing market afloat, which is what is driving this. Housing crash and we're Spain, but without the sunshine and sangria.

    If house prices 'normalised', we'd have a whole world of bankrupticies at the front door, as I can't see how we could survive a 50% devaluation, a la Spain, a la Ireland.

    It's the Elephant in the corner. In France, prices haven't crashed, per se, but have slowly fell, and I think there's more to come.

    I think this white water ride hasn't actually started yet.

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    Quote Originally Posted by Old Hack View Post
    I guess it helps keep the Housing market afloat, which is what is driving this. Housing crash and we're Spain, but without the sunshine and sangria.

    If house prices 'normalised', we'd have a whole world of bankrupticies at the front door, as I can't see how we could survive a 50% devaluation, a la Spain, a la Ireland.

    It's the Elephant in the corner. In France, prices haven't crashed, per se, but have slowly fell, and I think there's more to come.

    I think this white water ride hasn't actually started yet.
    +1
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    Didn't house prices in Sydney drop 50% after the Olympics?

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    Quote Originally Posted by SimonMac View Post
    Seriously though, even though without the collar what difference would another 0.25% cut make to mortgage payments after all the previous cuts?
    It depends if banks decide to reduce the margins on tracker rates to help new borrowers to stimulate the housing market. For existing borrowers, it provides the opportunity to pay their existing mortgage down more quickly by making overpayments above and beyond their normal payment.

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    Quote Originally Posted by Martin@AS Financial View Post
    It depends if banks decide to reduce the margins on tracker rates to help new borrowers to stimulate the housing market. For existing borrowers, it provides the opportunity to pay their existing mortgage down more quickly by making overpayments above and beyond their normal payment.
    If only the banks had not given so many interest only loans
    Fiscal nomad it's legal.

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    Quote Originally Posted by Mich the Tester View Post
    This thread needs girls

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