Cash, what to do with it come negative interest rates?

[cattleman123]

So long as debt is on variable rate then it should track the base rate.

Interestingly I believe the Bank of England is looking to adopt an ECB style two tiered interest rate whereby borrowing rates will go negative but savings in personal accounts will stay positive albeit very low.

Interesting...i wonder how it will or would affect fixed rates

 

[serf]

Ironic just as we leave we adopt something usefull out of Europe

 

[robs1]

Ironic just as we leave we adopt something usefull out of Europe

So if person A borrows at a negative rate and saver B gets a positive rate how in the real world does that work. Answer is it cant, the base rate might be negative but actual rate will always be positive.

 

[serf]

Pasty will explain, I not got clue about the job , they just get money out of thin air , nowt behind it ( gold standard)

 

[glasshouse]

So if person A borrows at a negative rate and saver B gets a positive rate how in the real world does that work. Answer is it cant, the base rate might be negative but actual rate will always be positive.

No person will get to borrow at negative rates
Only govt or the super rich will.

 

[ImLost]

So if person A borrows at a negative rate and saver B gets a positive rate how in the real world does that work. Answer is it cant, the base rate might be negative but actual rate will always be positive.

That would be nice, borrow a huge sum, put it in a couple of savings accounts and keep the, albeit tiny, interest.

What's the catch?

 

[robs1]

That would be nice, borrow a huge sum, put it in a couple of savings accounts and keep the, albeit tiny, interest.

What's the catch?

The banks margin.

 

[jackrussell101]

The banks margin.

Exactly that.

Bank margins are on the rise now.

New long term loans are in the 3-4% range now.

It will be pre-pandemic existing debt and mortgages that are sub 3% that will benefit most from negative interest rates.

 

[jackrussell101]

Speaking to a bank manager the other day and he did some of his first deals when he started lending money in the noughties at 0.75% margin plus base rate, so in effect these customers are very close to being paid to borrow, but I doubt they'll be many loans out there at those rates nowerdays.

 

[Highland Mule]

Speaking to a bank manager the other day and he did some of his first deals when he started lending money in the noughties at 0.75% margin plus base rate, so in effect these customers are very close to being paid to borrow, but I doubt they'll be many loans out there at those rates nowerdays.

I’ve got BoE + 0.17%, so getting close to it. Must dig out the papers but suspect it has a clause about not going negative. Has another 20+ years to run too, but sadly not a huge amount.