Quite why Mark Carney and his fellow criminals (they are stealing from savers!) have decided to reduce interest rates is a mystery to me. So IF, and it is a big if, the banks and building societies actually pass on this cut to borrowers it will save the average UK mortgage borrower just £22 a month. This isn’t going to stimulate demand or increase consumer spending. All it means is banks can borrow at ridiculously low interest rates and make even more money.
You can bet the 0.25% will be immediately shaved off the already low interest rates paid to savers, assuming they are paying more than 0.25% interest.
There must be a lot of people in the UK who paid mortgage interest rates as high as 17%. Yes 17%!
Like now, many could not afford to buy a home, not due to high house prices, but because paying a mortgage then took 60-70% of their take home pay. Imagine that struggle. Many of these people nevertheless struggled on, bought a house, went without holidays, new cars etc and managed, even squirreling away some modest savings to tide them over unforeseen emergencies. What did they get? A ludicrous monetary return for their their prudence.
Cutting interest rate to 0.25% isn't going to make any difference to industry either. A business plan not viable at 0.5% will not suddenly be worthwhile now. It is lack of demand for credit that is the trouble, not the cost. The only borrowers are sovereign governments! The recent 0.25% BoE interest rate cut will save the UK Treasury £1 billion a year in interest payments on the country's national debt.
With cheap money straight from the Bank of England, banks will not want ordinary savers’ money, so where might that go? Even with a 3% stamp duty surcharge, buy to let property will look attractive again, no doubt forcing up house prices further. So this pointless cut does nothing for businesses, savers or first-time buyers.
Does everyone remember the Remain claims that the pound would fall and mortgage cost would rise because interest rates would be need to be raised to protect the pound? Well the pound fell, but it fell even more after the interest rate was cut. It would have been a better idea to raise interest rates to show a degree of confidence after Brexit. Any current economic slowdown perceived or real, is a direct result of Remain's "Project Fear".
Not content with the 0.25% cut in the BoE interest rate, this economics of the madhouse gets even worse with clown Carney also announcing the likelihood (inevitability) of a further rate cut and that there will be more QE to the tune of £60bn. That'll help! The pound will fall even further, making imported goods even more expensive and lighting the touch-paper for inflation.
No wonder savers are concerned, no interest paid and a political devaluation of the real value of their savings!