50 bps off interest rates - is it fluck!

[Slaav]

Quote from Abbey this afternoon!

Further to yesterday’s Bank of England base rate announcement, we are relaunching all our tracker and flexible offset products.
We are maintaining our current headline rates on these products by increasing the differential to base rate by 0.50%.

Enjoy...

[mackie1]

They are perfectly within their rights to do so. Those on tracker deals at the moment will see the benefit though.

[Vesuvius 996]

Perfectly within their rights. They don't have to pass it on unless it's a Tracker.

Bad luck.

[scotal]

Slaav said:

Quote from Abbey this afternoon!

Further to yesterday’s Bank of England base rate announcement, we are relaunching all our tracker and flexible offset products.
We are maintaining our current headline rates on these products by increasing the differential to base rate by 0.50%.

Enjoy...

Did you get the email yesterday from Barclays comparing mortgage rates not to those in Oct 2007? That was funny.

[Slaav]

There are many funny emails flying around now aren't there...

And my point was not the one that appears to have been picked up on above; I was questioning whether this behaviour was what the BoE intended with Rates or are Abbey just being absolute pr1cks and effectively profiteering?

Personally (and it is only my opinion) I think their behaviour is disgusting and should be highlighted. I imagine people will vote with their feet. (new borrowers that is as they will obviously honour existing deals etc)

[honest_delboy]

Abbey isn't part of bailout though ? Owned by Santander, spanish bank.

[esselte]

honest_delboy said:

Abbey isn't part of bailout though ? Owned by Santander, spanish bank.

But won't they benefit from the BoE rate cut anyway?

[goco]

They won't benefit as most of their borrowings will be linked to libor or fixed rate. So cutting non tracker rates eats into margins....still a bit cheeky though, others have cut their rates

[andy355]

to put things into context libor* rates actually went up today in usd, gbp and fell a tiny fraction in eur (for 3 months). So the wholesale cost of money has not decreased despite the rate cut. Banks are now able to borrow money from the bank of england 0.5% cheaper than yesterday but that is collateralised borrowing (versus the banks pledging gilts) so the real answer is its a mix between cheaper borrowing on one hand for them on the portion they borrow from the bank of england and unchanged rates from the market. Bear in mind that 3 month gbp libor is 6.28% so no where near base rates, and in all currencies has shot up lately in this crisis. Even more extreme is usd 3mth libor which is 4.75% vs their new target rate of 1.5%. Genuine base rate tracker mortgages will be costing banks money now (i wish i had one!).
Clearly the intent of the governments was to reduce the cost of borrowing to homeowners and businesses but until a solution is found to the reluctance of banks to lend to each other we are all stuck. Rumours around today that in the upcoming G8 summit there will be some announcement on guarantees of bank loans to each other - its this kind of move that will make a real difference if they do indeed have a plan up their sleave.
sorry for the dry post but its a pretty dry subject.

• libor is a daily fixing where bank supply data to ascertain an average of where they would lend cash to another bank for various lengths of time. Its a bit theoretical at the moment as it goes up to 12 months and really if there is any lending going on its for much shorter dates than that.