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The Credit Cruncher was conceived to help you to keep up to date with credit crunch and recession developments, it provides some helpful credit crunch advice and it addresses personal debt. The Credit Cruncher also seeks to explain how the credit crunch started and shed some light on the worldwide recession. Recently, we have begun to look at how BREXIT will affect the UK economy. Please feel free to leave comments where relevant.

5 Mar 2009

Interest rates down to 0.5%

The Bank of England cut it's base rate to 0.5% today, leaving just 0.5% to play with and personally I don't see that this is going to make a load of difference. True, my tracker mortgage is already below £100 per month, but I won't be spending the difference - I will be over-paying my mortgage as long as the rates are low.
The danger of spending this welcome bonus is that when interest rates rise again (as they must), it will be harder to do without the extra money. I have already set up a standing order to overpay the mortgage, all I have to do is ring up my bank to adjust it if the rates start to rise.
Banks are now threatening to start charging for current accounts, trust the banks to find a way to squeeze the little guy to pay for it's own errors of judgment...
Meanwhile the Treasury is embarking on it's 'quantitive easing' plan which is more plainly known as printing money, £75bn over three months to be precise. This is uncharted territory and could easily be a disaster. I can see exchange rates taking a knock and the stock exchange, both of these markets will be sensitive to what is a radical step by any standards. We await the outcome, but I am not at all convinced that these measures are going to miraculously kick-start the economy overnight.

Related posts:
UK bank rate drops to 1%

Mortgage lenders in trouble
Gordon Brown rescue plan
Is this the new Great Depression?


Rachel said...

I hadn't heard that banks were thinking about charging for current accounts - that is not good news. I expect they will start charging for credit cards too. I am lucky that my business account is guaranteed to be free forever so that is one less thing to worry about.

jay said...

nice one, who is your business account with? I looked into one that offered 2 years free...
I guess they will be looking for any way in which they can start to claw some of the cash back now...