LEA Financial Services Blogs

Archive for the ‘insurances’ Category

Interest Rates; Does it make sense to cut them any more?

Monday, January 19th, 2009

Although the Bank of England has suggested it is prepared to cut its headline rate even further to stimulate the economy, many analysts are questioning the value of this policy. It looks more and more as though the Bank of England has run out of ideas because, despite the deep and rapid cuts, banks have not increased their lending nor have they reduced their lending rates by anything like the Bank of England’s reductions.

What is needed is for the vast sums of money injected into the banks to be made available to businesses and home-owners. That was the Government’s stated purpose and the justification for the Government taking a stake in many banks. The Government told the banks that it wanted them to start lending ‘at the 2007′ levels but, because it also told them to increase their reserves AND to pay back the loans from the Government at high interest rate, this has not proven possible.

It seems evident that new solutions are needed before confidence returns and the economy recovers. Nevertheless, having been through downturns before, we remain confident that the situation WILL improve.

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Interest Rate, Job Losses and Government Support

Monday, January 12th, 2009

On Thursday, The Bank of England announced that interest rates are to be cut by 0.5%, from 2% to 1.5%. This represents the lowest base rate since the Bank of England was founded in 1694. However the Council of Mortgage Lenders warned that borrowers with standard variable rate mortgages should not expect a cut in Bank rate to be matched by an equivalent reduction in their mortgage rate, as Lenders’ borrowing costs are not determined by the Bank rate alone.

The British Chambers of Commerce has suggested that unemployment figures could rise to ten per cent (3.1 million people) during 2009. For these unfortunates there may be some hope as, on 5^th January, new legislation came into force to help struggling mortgage holders who have lost their jobs. They will receive extra support from new measures outlined by the government last year, which it is hoped will stem the rising number of repossessions in the property market. Waiting periods for the means-tested benefits reduced from 39 to 13 weeks and changes to the terms and conditions of the additional help will mean more people qualify for assistance.