Fed, ECB and Bank of England cut rates

The_Conductor

Just got an e-mail to say that the Federal Reserve, ECB and Bank of England have taken unprecedented join action and cut rates together about 5 minutes ago. Anyone have any info?

The_Conductor

Yup- its just popped up on the BBC:

Central Banks in shock rate cuts

Six central banks - including the Bank of England - have cut their interest rates by 50 basis points.

The UK rate move - which had not been expected until Thursday - puts interest rates at 4.5% from 5%.

The US Federal Reserve has cut rates from 2% to 1.5% and the European Central Bank trimmed its rate from 4.25% to 3.75%.

The central banks of Canada, Sweden and Switzerland all took similar action.

bill_ashmount

Holy Fu*k :eek:

That's some serious cuts across the board.

DonJose

Jesus what a week, Iceland on the verge of bankruptcy, ISEQ at 11 year lows despite all the intervention by the government, huge injections of money into the banking system. The landscape is changing by the minute.

tHE vAGGABOND

Thats deadly news! God bless tracker mortgages

Paulw

Wow, that's a big cut. It'll have a nice effect on the pocket though.

PoolDude

How much is .5% per 100k per month?

Ginny

According to RTE €40 I think, may have heard wrong though.

bop1977

around E20 per 100k

ZYX

PoolDude wrote: »

How much is .5% per 100k per month?

€500 per year per €100,000 or about €40 per month but only to those on trackers. Those on fixed rates get nothing and those on variable rate will have to wait and see.

jetski

unless like me whos about to draw down a fixed mortgage

Fatloss08

€42 per month based on a €100,000

so €126 a month if you borrowed €300,000

sweet , bout time the did something

Trampas

jetski wrote: »

unless like me whos about to draw down a fixed mortgage

You signed up for fixed?

Well doesn't mean fix will come down by .5%.

Only trackers are defo coming down.

kenco

Yep only those on trackers will definately come down. There is nothing to oblige the lender to change the variable rate just because it is cheaper for them to borrow!!

After the bail out however I would think there will be real strong political pressure on them to pass this cut fully on

Bass Cadet

For those on trackers, will this change be reflected in the next monthly payment? ie the €42 per 100k will be shaved off the monthly repayment to take effect immediately?

The_Conductor

kenco wrote: »

After the bail out however I would think there will be real strong political pressure on them to pass this cut fully on

Thats the ECB overnight rate though- which is not the facility banks use to raise capital for retail mortgage lending. It suited them to use it as a tracker because for years, it tended to be higher than alternate funding mechanisms. Variable rates reflect actual business costs, trackers- well track whatever (ECB baserate in this case) and fixed rates are as advised. Its not really a meaningful reduction in their business costs at all, but politically it will be sold this way to the people on the street.......

Fatloss08

yeah i think its with immediate affect , so ur next months repayments should drop

kenco

Yes in theory it will kick in at the next repayment (i.e. end of this month)

jetski

i havent drawn or agreed on anything. about 2 weeks time i will.

kenco

smccarrick wrote: »

Thats the ECB overnight rate though- which is not the facility banks use to raise capital for retail mortgage lending. It suited them to use it as a tracker because for years, it tended to be higher than alternate funding mechanisms. Variable rates reflect actual business costs, trackers- well track whatever (ECB baserate in this case) and fixed rates are as advised. Its not really a meaningful reduction in their business costs at all, but politically it will be sold this way to the people on the street.......

Yep you are right but it is still going to be easier (though not always cheaper) today for them to borrow on the wholesale than it was yesterday. How they handle it will be fascinating as if it is not passed on to variable rate payers. I can see the government getting very heavy indeed on the likes of AIB and BOI given all that they did for them last week

barrymac20

I was delighted to hear about interest drops the same as anyone else so i went onto the IIB website to see if there was any mention of it. The only thing i noticed was that they had put their own rates up by 0.2% from 01/10/08. Are they not supposed to inform customers of increases? Seems to me that they increased their rates so that a decrease in ECB rates will not only mean lower repayments by them but that repayments to them will be virtually unchanged! Disgrace. Did anyone else notice this?

BendiBus

At least it will help cushion the blows from next weeks budget.

mick.fr

Cool inflation going up now :-)

The_Conductor

mick.fr wrote: »

Cool inflation going up now :-)

Well, we're already expecting another 20% ESB rise in January and 15-18% rise in gas prices....... so yes.......

uberwolf

Halifax have apparently confirmed that variable mortgages will drop.

Not sure whether that includes Bank of Scotland (Ireland) mortgages.

GeturGun

tHE vAGGABOND wrote: »

Thats deadly news! God bless tracker mortgages

+1
Better in my pocket than theirs, especially coming up to my hols!!!!!

konline

Does any one know about PermanentTSB variable rate drop?

BendiBus

mick.fr wrote: »

Cool inflation going up now :-)

Inflation forecast is at 2% for next year. Of course 5 minutes is a long time in economics these days so who knows?

The_Conductor

konline wrote: »

Does any one know about PermanentTSB variable rate drop?

Nothing announced. They'll probably not drop it unless their competitors do, at which stage they'll reaccess the situation. Keep in mind- they are not pushing new lending, and most of their current customers are stuck with them...... The usual ploy is a cheap introductory rate for switchover mortgages- but exclude current clients from the preferable rates

Bass Cadet

BOI and HBOS won't pass on the rate cut until November 1st?? :mad: Is that normal? I thought it was meant to take effect 'immediately'??

Fatloss08

my boss said apparently the banks dont have to even pass them

i said there'd be uproar

people wont pay the mortgage if thats the case , worse secenario altogether

jetski

Spoke to the EBS today - they said they wont be announcing anything untill the 21st of october.

Fatloss08

if they dont introduce it , there would be worse problems as people will say , when the rates go up we pay the diff and when they go down the back wont reduce , f this i aint paying my mortgage

just proves they can cut rates if they want to

jetski

Ebs mentioned they will be look at the swap rates when i was asking about the cuts.... ive a feeling there will be some clause

Bass Cadet

Am I missing something here? How can banks not introduce this rate cut before November 1st?? Correct me if I'm wrong, please but even though I'm on a tracker with HBOS, with the ECB rate cut by 0.5% (as of yesterday), when I pay my monthly mortgage repayment on October 27th, it'll still be the same as it was BEFORE the rate cut Why aren't people kicking up holy sh!t about this?

ZYX

Bass Cadet wrote: »

Am I missing something here? How can banks not introduce this rate cut before November 1st?? Correct me if I'm wrong, please but even though I'm on a tracker with HBOS, with the ECB rate cut by 0.5% (as of yesterday), when I pay my monthly mortgage repayment on October 27th, it'll still be the same as it was BEFORE the rate cut Why aren't people kicking up holy sh!t about this?

Trackers get rate cut automatically. The rate cut becomes effective from next Wednesday. The question is what will the variable rate be and what rate will new customers get?