Thursday 9 October 2008

"Lenders pull plug on top mortgage deals"

Commonsense dictates that cutting central bank base rates and/or giving the banks loads of easy money will not* reduce market interest rates paid by mortgage borrowers and businesses.

Clear evidence of this is in today's Times, h/t Titanic Captain.

Rather bizarrely, the sub-heading to the article is "Millions to benefit from variable rate cuts".

* It's like pushing a piece of string; the reverse operation - raising base rates and/or reducing money supply does increase (nominal) interest rates. That's pulling a piece of string.

1 comments:

Snafu said...

I like the analogy!

PS How does a cut in interest rates encourage savers to keep their money in bank accounts!?!