Banks up interest rates
Oct 6th, 2008 by ctoop
News Week; 6th October 2008
Personal loan interest rates are increasing rapidly in the current climate; Lloyds TSB has seen some of its loans increase by up to 37%, a huge mark-up for the consumer, especially in this dire financial situation.
However banks will be trying to increase their capital and earn money where they can to keep themselves afloat and to gain more money that can then be moved around, as it would have been before the credit crunch.
New car sales have slowed even more this week with registrations in September ’08 falling 21% from the year before.
It is evident that people are buying fewer luxuries and making do with what they have.
This news is, however, particularly bad for car manufacturers as the September total is usually 17% of the annual total. With news like this the manufacturers must be in some panic as to their financial state.
Last week British Airways were losing business with fewer people choosing to fly with them and over summer two low cost airlines folded - XL Airways and Zoom Airlines.
Yet the current financial crisis seems to be good news for Ryan Air who have hopes to create a sister airline which will be able to offer transatlantic flights form as little as £10. However, passengers may have to pay more for additional services such as in-flight meals.
The company believes that this will be possible within two and a half years and is only possible because of the financial strain other airlines are currently facing.
The government has unleashed a plan this week to rescue banks by using £500 billion to bail out the British banks and to protect some investors from the poverty which would surely arise. This money from the taxpayer will be used to create capital, get rid of some of the toxic debt and also it will get money moving between the banks again, as they will be less fearful of losing money.
As well as this cash injection for the banks, the tax payer has had some good news. Worldwide, there has been a drop in the base lending rate of 0.5%. This means that loans will be cheaper to pay back with less interest accumulating.
Icelandic’s failed banks are currently refusing to pay back billons to the British investors who had put their money and faith into the banks. Individuals, police authorities, companies, town halls and charities have seen up to £20billion frozen after Iceland nationalised its three top banks.
The private savers should have their loss compensated due to legislation however the other parties may not be so lucky. The tax payer will predominantly again be the loser in this situation as the police, town hall finances will have benefited local communities.
Despite all of the financial problems nationally and that the tax payer’s money is being used to salvage the nation’s banks, there is still enough cash flow to secure a pay off and pension for Peter Mandelson (Secretary of State for Business, Enterprise and Regulatory Reform).
At a time when tax payers fear the worst for their own jobs and pensions, it is crude that the government is flaunting such a large sum in the public’s faces.
By Charlotte Toop
