So today got a letter saying the intrest rate on my savings account is now 0.10% so so 1 pound on every 100 invested, which is almost worthless as a savings investment.

So rang BS and asked about better rates 1.10 appears to be the best.

They also sent me a leaflet about what happens if the bank collapses, it appears Boris Bank, eg the government will refund all the money lost, but doesnt explain where the monies coming from,what happens if the saving rate goes down even more can we expect a run on the banks before christmas then,

Also a lot of mortgage offers have been withdrawn or the deposit increased by quite a bit, not god for home buyers.

Discuss.

Also a lot of mortgage offers have been withdrawn or the deposit increased by quite a bit, not god for home buyers.

Well that was the headline ….but did you read the story before adding your bit to the end…

90-95% mortgages have been withdrawn as they want to protect buyers (and largely them selves ) from negative equity noose.

It’s removal of the risky products in a very volatile market.

0.10% so so 1 pound on every 100 invested

I hate to tall you this, but its 1 pound on every 1000 invested, per year, or 1 pound on ever 12 grand per month 😀

to be fair, that’s tracking the BOE interest rate, normally retail savings are somewhere below that

They also sent me a leaflet about what happens if the bank collapses, it appears Boris Bank, eg the government will refund all the money lost, but doesnt explain where the monies coming from,what happens if the saving rate goes down even more can we expect a run on the banks before christmas then,

banks are very unlikely to run out of ‘assets’ – but they could (in a run) run out of assets they can liquidise quickly enough to pay out their depositors. in this case, the government would (probably) take them over, either bail them out (likely) or use the FCS scheme to pay out the depositors, then sell all the assets the bank does have (like mortgage and loan liabilities) to cover as much of the cost as possible. In the grand scheme of things, there wouldn’t be a huge amount of cost for the taxpayer to pick up (we could even end up in profit).

The whole point of the scheme is so that punters have confidence not to do a run on the bank. Its mostly successful in doing that, northern rock being a slight anomaly in the last 20 years or so. There’s unlikely to be a run just because interest rates are low

90-95% mortgages have been withdrawn as they want to protect buyers (and largely them selves ) from negative equity noose.

Not at all god for house builders and all the trades that work on houses, eg me.

Still doesn’t make 90-95% mortgages a good idea.

The removal of the 90-95% mortgages are a product of the market not the cause.

Max out premium bonds at c 1.25%, but may be more or less. Or ns + i income bonds at c 1.3% I think, but may decrease, unlimited protection.

Been a mini boom in property prices post lockdown but wait for the real economy to appear in 6 months. As a ftb the entry level pricing is critical. I was a ftb in 1989 and was in negative equity first 5 years, I was really stuck as couldn’t move. Also felt really peed off that I could have bought same property for 30% less 2 years later.

I’m thinking a wave of redundancies and imploding businesses this autumn.
Foreword.
Followed by Brexshit.
So a likely imploding of house prices this winter and next spring.

I’m in the fortunate position of waiting for two offers on our BTL this week….Fingers crossed.

From your mention of Bank Crashes you’re probably thinking of one of the banks doing a Northern Rock?

We’re in a totally different scenario to the 2008 crisis as in the banks know where the risk lies (people with high LTV mortgages) where in 2008 the whole thing came crashing down due to no-one really knowing what risk they were ultimately carrying. This is reflected in the withdrawal of 90-95% LTV mortgages.

The banks can now see what is on the horizon and plan accordingly to reduce their exposure to any downturn, again the withdrawal of high LTV mortgages is part of this. As long as they have customers with mortgages that are a good deal smaller than the house value they are in a good position. A repossession won’t make them money but it won’t lose them any either, when lots of people are in negative equity it then starts to get twitchy bum time.

The initial shock is over for the banks so they can now plan accordingly and manage their route through. Rates on savings are going to be absolutely dire for the foreseeable and mortgages are going to be tough to get hold of for FTB and people with high LTV ratios but everything is reasonably stable right now. The banks will look at rationalising their branch and ATM networks again as a way of reducing costs though. Cash use is dropping faster now than it was last year so that’s a cost base they can strip out. The looming redundancy situation can be managed with CVA’s and debt deferrals, exactly as it normally is but on a larger scale so their balance sheets for investors will look awful but nowhere bad enough to cause them long-term problems.

Where the issues lie is with customer confidence in their money being safe. If people en masse pull their money out then any bank will have problems. The FSCS guarantee is there to stop that happening so if you’re in the fortunate position to have more than the limit to put into savings then spread it round the different banking houses. For people with a mortgage or other debt then just keep paying it off, if you hit trouble talk to them immediately and we’ll all get through this.

As long as there is demand for property, with them selling for more than any debt secured on them, and the international money markets keep flowing, even if it’s only slowly, then there’s nothing to be overly worried about. Get your personal finances in good shape and any bumps encountered can be negotiated.

The maths fail has been covered. The money is protected up to £75k, and if your bank fails it’s paid for by the government.

If you have more than that, split over different banks, as covered above.

And if you have a mortgage pay it off (or buildup an overpayment reserve even better) as said above. Outside shares you’ll struggle to do better in making interest than you’ll do in avoiding interest.

And shares, it turns out, can go down as well as up. So if you owe money probably best to pay it off before investing*.

As for housing and mortgages, too soon to tell. But we have half our mortgage fixed for five years and half fixed for ten years as a hedge against Brexit. It’ll do as a Covid hedge too it turns out.

*Pensions are different, but mostly only because it’s tax free, which is a policy decision by the government, which can be changed at any time.

The money is protected up to £75k, and if your bank fails it’s paid for by the government.

It’s now 85k. But it’s per banking group. So (noting that this is quite a rare scenario!) be careful if you have more than 85k because some ‘banks’ are just trading fronts for a bigger group that only protects 85k across all its brands.

Yup, my dad had a friend that was caught out by this, had deposits within the protected amount at 2 banks which then merged, and he hadn’t realised the impact that had.

Have a look here for the banks that are linked

https://www.money.co.uk/guides/which-banks-count-as-one-under-the-financial-services-compensation-scheme-fscs.htm

The £85k is per person.
I’m very much in agreement with matt above re the impending economic crisis and have posted on another thread about how I see this playing out.
Furlough is, effectively, deferred redundancy for many; harsh economic reality is dawning on some and will hit many more before year-end; the initial mini surge in spending since
non-essential shops re-opened won’t last.
The property market – both commercial and residential – will be caned with knock-on effects on investment returns inc private pensions.
Could be some property bargains as furlough ends and unemployment rises.
Latest update on interest rates from MSE – https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/
Use your savings to buy premium bonds – no interest but a chance to win upto a million.

Paying down debts is often more beneficial than saving. If you think your job is at risk it is worth having a decent liquidity to keep you going. It isn’t great to be forced to sell share at the wrong time and a 3 year fixed term ISA isn’t that helpful if you need the money now.

Just checked the Gold price! Quite high isn’t it.

It’s now 85k

The £85k is per person.

Quite right. I mistyped!

£200 billion in quantitative easing so far this year.

Use NS&I.   No limit on the protection, 0.9% on the ISA and 1.16% on the Income bonds savings account.

doesnt explain where the monies coming from

Furlough is, effectively, deferred redundancy for many; harsh economic reality is dawning on some and will hit many more before year-end; the initial mini surge in spending since
non-essential shops re-opened won’t last.

This is one point well worth remembering. An awful lot of the country still don’t realise that their job may well disappear when the furlough scheme ends so are spending as if they’re just on a really long period of holiday. When businesses emerge out of the furlough support and back into the cold, hard light of reality there is going to be constant stories of redundancy announcements, restructuring projects, businesses looking for buyers and investment to keep the doors open and a few mergers with their usual redundancy and restructuring phases. If we avoid a big second wave then all of this will start to show itself around November/December time, by then the accountants will have had time to fully assess the impact of everything and have a good picture of what is sustainable for 2021 and beyond.

Some really interesting responces as i thought.

Going to be tough for a lot of us

Will be interesting to hear what johnson says in Tuesday’s ‘…doubling down on levelling up’ speech which would appear to be focussed on construction and infrastructure.
Shovel-ready projects? Really?
UK construction doesn’t have capacity to deliver multiple schemes with early starts.
Has any of this been properly thought through?
Wrong focus, I think; would be better if green energy and manufacturing strategy were the key elements.
Enhance the rail network to remove freight from roads.
The likely transition away from office based to WFH will reduce demand for commercial property.
Retail sector is undergoing massive structural change.
Resi demand will be directly influenced by unemployment and job security concerns. If there was a concerted effort to build tens of ‘000s of council houses that would be a real positive but that won’t happen.
How much will be new, how much re-packaged previously announced schemes? All to be funded by a colossal increase in borrowing.
We know from past experience that johnson likes big – but, ultimately undeliverable – schemes.
If he’s truly serious, ‘northern powerhouse’ inc rail electrification must be at/near the top.
Mega schemes take too long to design, work through the planning system, are delivered late and bring hefty cost over-runs; current examples are HS2 and Crossrail.
There will be a new task force to oversee this; is it only me or do others also get apprehensive when a gov announces it’s setting up a task force.
What will happen to the current planning system? Will it be ‘relaxed’ to facilitate johnson’s objective?

The money is protected up to £75k, and if your bank fails it’s paid for by the government.

You had me worried for a moment there.

Interest rates are all but zero because the BOE set rates at 0.1%

The FSCS scheme letter goes out periodically. To everyone with a bank account.

No one really knows how this will pan out… there’s no prescient for voluntarily turning off the economy so when people who are in the business of ‘selling’ headlines talk about massive reductions in GDP they’re using a measure that doesn’t apply to this.

Lots of people are expecting a huge disaster to unfold at some point, but economically the disaster is happening now, economic news comes after the fact, not before.

We’re in a recession, but it’s a self imposed one. Recovery, like all recoveries are based on consumer confidence, on one hand the press are saying we’re all doomed, but on the other the likes of TUI can’t shift package holidays quick enough the day after its announced quarantine is going to be lifted.

Some people will lose their jobs, that is a fact, but with most industries coming back online now, abet in a reduced capacity it doesn’t mean the end of capitalism, however much some people want it to be.