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Don’t hold your breath for loan rate cuts
The Bank of England has cut the base interest rate from 1.5% to 1% and a further rate cut in March is likely, possibly to 0.5%. A rate of 0% at some point in 2009 remains a realistic possibility. This is the lowest ever interest rate and it takes us into unchartered territory. But if you are a borrower, what does it mean to you?
A cut to 1% should increase pressure on personal loan and credit card providers alike to follow suit and offer better deals to new and existing customers. But don’t hold your breath.
Variable rate loans work in much the same way as tracker mortgages but don’t tend to follow the base rate as strictly. Not all variable rate loan providers though will be obliged to pass on the rate cut so it’s important to check how your own loan will be affected.
A more important issue is that the rates applied by loan providers are more directly influenced by the rates at which banks lend to each other, the LIBOR. This, in contrast to the base rate, has remained fairly constant in recent months, and this, coupled with nerves from credit card providers has meant rates on cards have stayed high, or even gone up!
February 12, 2009 at 11:01 am | Loans General Info | No comment
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Bye, bye PPI
SOME of the country’s biggest high-street banks have withdrawn from the market for single premium payment protection insurance (PPI), in advance of an expected curb on its sale by the Competition Commission.
Although the loss of profits from sales of these policies could result in more expensive personal loans, the Commission is expected to outlaw the sale of single premium policies when it announces its final proposals to clean up PPI sales in the next couple of weeks.
PPI policies cover debt repayments if a borrower cannot work because of accident, sickness or unemployment, but it is alleged they have been widely mis-sold. The cost of the PPI is usually added to the loan and interest charged on this amount, significantly increasing the cost.
February 8, 2009 at 7:49 pm | Loans General Info, personal loan | No comment
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Objectors Trumped
When it’s built the fees at Donald Trump’s new Scottish golf resort may have many of us applying for a personal loan if we wish to enjoy the facilities at this north-east coastal pleasure park – but the delay he has suffered at the hands of planning objectors has done him no harm whatsoever.
All the time Trump’s plans were being delayed by strong and furious local opposition, the dollar was growing in strength against sterling and now the expected cost of £1billion has fallen by $600 million. This more than makes up for the cost of delay. Well done you objectors.
February 7, 2009 at 8:59 pm | Loans General Info | No comment
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Unexpected house price rise
The Halifax has reported a 1.9% rise in house prices during January, ending 10 consecutive months of price falls. Figures from the Bank of England showed that the number of mortgages approved for house purchase rose by 15% in December, although they are still running at less than half of the level they were at a year earlier.
Economists were quick to warn people not to read too much into a single month’s data, as monthly house price changes tend to be volatile. And lots of other authoritative sources rush forward to warn us not to see this as any kind of continuing improvement. Of course, they’d know. They saw all this coming so clearly. If only we’d listened to them…
February 5, 2009 at 8:23 pm | Loans General Info | No comment
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The taxman unfair? Surely not.
Here’s a funny story. H.M. Revenue and Customs has decided to stop paying any interest on money it owes to taxpayers (yes, there really are people who overpay the taxman). The justification is that interest rates are at an all-time low and also that people should not use the Revenue as a savings bank by overpaying in the first place.
Those of you who think this is fair enough might change your mind when you find you have miscalculated your self assessment and not paid the Revenue enough. Because, in that case, the Revenue will charge you interest at 3%. I suppose you could argue that it’s a competitive personal loan rate but then, as the Revenue would probably tell you, they’re not to be used as a lending organisation.
Remember tax evasion is wrong, but so is this kind of unfair treatment. Did I say this was a funny story? Bloody hilarious eh?
February 2, 2009 at 12:04 pm | Loans General Info | No comment
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