View more on these topics

Base rate cuts help few borrowers

It’s time for the Bank of England to stop cutting interest rates on a monthly basis and give us a period of stability so the effects of previous reductions can be assessed.

The latest cut will do nothing for savers and only help borrowers on deals that track the base rate.

Some may argue that it will help new borrowers but again, I believe it will only help a few.

Building societies have to raise at least 50% of their funds from savers and in practice, 70% of society funds are sourced this way.

If savers decide not to save or, as was put to me by Channel 4, buy premium bonds instead, this will do nothing to boost the availability of funding for new mortgages.

This problem is not only relevant to the mutual sector but given the turmoil in the wholesale funding markets in the past year, banks are also realising the importance of attracting deposits.

I might think differently about this subject if reductions in the base rate gave consumers a feeling of having more money in their pockets and the result was that they increased their spending on the high street.

But instead, many of those fortunate enough to be on tracker deals are simply maintaining their original payments and reducing their debt.

Let’s look on the bright side – we may see some of the lowest rates for new borrowers for many years, which should please brokers. But I expect many of these will only available to buyers with hefty deposits.


Base rate cut starts quest for advice

You’d think that after the number of Bank of England base rate changes we’ve seen in the past year borrowers would be complacent about them by now, but reaction to the most recent reduction proved this was not the case.

FSA warned HBOS of risks in 2002

The Financial Services Authority has revealed that it had concerns about HBOS as far back as 2002 and identified that it needed to ‘strengthen the control infrastructure within the group’.

Network fees could treble, warns AMI

Robert Sinclair, director of the Association of Mortgage Intermediaries has warned that some networks will see their Financial Services Authority fees treble and could be forced to hike member fees to meet the cost.

Sub-Saharan Africa Near-Term Outlook

By Paul Caruana-Galizia, Neptune Economist

Sub-Saharan Africa’s economic renaissance continues. After growing at an average rate of five per cent over the past decade, the IMF projects an acceleration to 5.5 per cent growth among Sub-Saharan economies in the next two years, as developed economies emerge from the crisis. We expect this growth to be sustainable for three broad reasons.


News and expert analysis straight to your inbox

Sign up