HSBC fails to pass rate cut on to customers

Despite the Bank of England cutting 1.5% off the base rate two weeks ago, HSBC has finally announced today that its standard variable rate (SVP) will be cut by just 0.81% bringing it down from 6.25% to 5.44%. First Direct, which is owned by HSBC, will also cut their SVP 0.81% bringing it from 6.5% down to 4.69%.

HSBC is the ONLY major bank not to pass on the full rate cut to their customers.

Andrew Montlake of Cobalt Capital said: “It is disappointing that HSBC has only decided to pass on just over half of the latest base rate cut, and taken an age to come to this decision as well. HSBC has some attractive deals at the moment, but this half-hearted move suggests that it is unlikely they will pass on future cuts.”

Shortly after the Bank of England announced its decision to cut the rate of borrowing, Halifax, Lloyds TSB and Royal Bank of Scotland confirmed they would pass the full cut on to their customers. All three are part of the Government’s £37 billion bail-out of the banking system.

Rates are rising, this time its Credit Cards

If you have a credit card, chances are you have seen your interest rate rise recently. The average interest rates for purchases have risen over the last two years from 14.9% to 16.4%.

Borrowing on a credit card has always been considered an expensive way to borrow and as the banks try desperately to claw back the money they leant out, many hard up families will feel the burden of these rate hikes. Of course, the banks will always tell you borrowing on a credit card should be considered for the short term only and if you pay your balance each and every month you won’t notice any difference. This is all well and good but this is the real world and we cant all do that. The banks are not the only ones who are feeling the pinch of our recent economic downturn. Instead of reaching out a hand to fellow sufferers they just want more of your money. Once again it will be those that are already struggling that will be hit the worst, if you can only just afford to make the minimum payment, your debt is growing.

On top of that, the interest rates for cash advances have rocketed in this period from 18.1% to a massive 24.3%. And if that wasn’t enough the fee for taking a cash advance will most likely have increased too. Previously the majority charged a 2% fee with a minimum of £2, nowadays however the majority charge 3%, with a minimum of £3.

Monetary Policy Committee have a lot to discuss

The Bank of England’s Monetary Policy Committee (MPC) is currently undergoing 2 days of talks over interest rates, falling house prices and our ever weaker economy. The MPC is made up of nine members, four of which are external members appointed by the Chancellor.

A cut in Interest Rates?

As it stands the MPC is split, with three members calling for a quarter point drop, one for a half point reduction and five calling for no change. It is a difficult choice to make, what is worse; increasing inflation or an economic slowdown? With five members voting to hold and an unliklihood of anyone changing their mind, Interest Rates look set to hold. Still no good news for homeowners.

One of the members who voted to hold said: “The MPC has to remember its mandate which is to control inflation, not to spare the real economy or the financial system from necessary adjustments”.

Annual House Price fall for first time in 12 years

The average house price in the UK has made it’s first year on year drop since March 1996. After 12 years of inflating house prices, the average house is now 1% cheaper than it was a year ago standing at £178,555.

Could this just be the start?

David Blanchflower, a member of the Bank’s Monetary Policy Committee, said recently that house prices could fall by up to 30% over the next few years if interest rates were not cut to keep control.

Reports: BBC, Times Online, Business Week