One Account rates cut

malocao

russ295 wrote: »

if you borrow £100k on a mortgage the bank doesnt borrow £100k to cover it. do you think a bank would lend you £100k just to earn the difference between libor and their interest rate!

Russ,

That's exactly what banks do -- they borrow money cheap (relatively) and lend it expensive (relatively). As the old gag says:
The secret of success in banking is "3-6-3"
* Borrow at 3%
* Lend at 6%
* Play golf at 3pm

Of course, in addition to the borrow/lend margin, they charge fees for this that and everything.

If the bank didn't borrow your £100k, the only other place they could get it is from shareholders, and share capital is more expensive than borrowing.

Regards

malocao

Vancat wrote: »

I've just taken out all of my (50% of mortgage) savings which I had offset, and stuck it in a fixed rate account at 6.3%. I'm marginally worse off after tax....but I'm blowed if I'm keeping it in OA!

VC,

With all due respect, what you've done will help OA's profits, not hurt them.

Now you're paying OA (I guess) 5.2% on 100% of the original mortgage, and they're paying (I guess) 3.9% to borrow the same money from other banks. Result, 1.3% x 100% is their margin.

When you had 50% offset, OA was only making 1.3% x 50% margin -- half as much in £ terms. The other half stayed with you.

If your aim was to hit OA in the pocket, the best way would be to put every available spare £ INTO the offset mortgage. As you've spotted, that way is most likely better for you too, because of tax on savings / no tax on offset.

Regards

russ295

malocao wrote: »

Russ,

That's exactly what banks do -- they borrow money cheap (relatively) and lend it expensive (relatively). As the old gag says:
The secret of success in banking is "3-6-3"
* Borrow at 3%
* Lend at 6%
* Play golf at 3pm

Of course, in addition to the borrow/lend margin, they charge fees for this that and everything.

If the bank didn't borrow your £100k, the only other place they could get it is from shareholders, and share capital is more expensive than borrowing.

Regards

have a look at this very interesting film
http://video.google.com/videoplay?docid=-9050474362583451279
its about 40min long but is worth watching!

russ

Digsy00

Does anyone think that the Oneaccount will follow any future rate drops by the bank?

http://www.telegraph.co.uk/finance/economics/interestrates/3542051/Interest-rate-cut-Willem-Buiter-says-fears-of-run-on-pound-will-hold-back-MPC.html

Vancat

malocao wrote: »

VC,

With all due respect, what you've done will help OA's profits, not hurt them.

Now you're paying OA (I guess) 5.2% on 100% of the original mortgage, and they're paying (I guess) 3.9% to borrow the same money from other banks. Result, 1.3% x 100% is their margin.

When you had 50% offset, OA was only making 1.3% x 50% margin -- half as much in £ terms. The other half stayed with you.

If your aim was to hit OA in the pocket, the best way would be to put every available spare £ INTO the offset mortgage. As you've spotted, that way is most likely better for you too, because of tax on savings / no tax on offset.

Regards

No, am only paying 5.1%..... 60K mortgage but 30K offset with savings, and facility of 100K. Difference is minimal, in a fixed 6.3% savings account, paying tax at 20% on the interest.
Plus, I want to be able to get to my savings if necessary, and I don't trust RBS any longer; they might just decide to start reducing peoples' facilities, a bit like our friends the CC companies did to some people (not me, but you never know!).......? As it stands at the moment, we could still go out and spend up to £40k if a real emergency cropped up!
VC

bearders22

Hello all. THis is my 1st post on this site. I have a one account and have always been very pleased with customer services and I think they are great. I am however sorry for them as they take the brunt of our frustrations. I have someone one the inside (friend of friend) who tells me that One Account are planning to entice people away from the product with a tempting offer of a 2 year fixed rate at 4.39% (no fees at all). This is because the reserve accounts are using valuable capital they could lend to others. It is unlikely that they will move their rates even if there is another rate cut. New applications are no more. We are therefore a dying breed. I work in banking myself and I have seen today that libor is down to 3.8% ie the gap is just 0.8%. Before the 1.5% drop the gap was as high as 1.4%. The market is therefore pedicting a drop. I don't think that any banks will drop any of their rates until the new year as they are protecting their capital in time for their year ends at 31/12/08

woodam1963

bearders22 wrote: »

Hello all. THis is my 1st post on this site. I have a one account and have always been very pleased with customer services and I think they are great. I am however sorry for them as they take the brunt of our frustrations. I have someone one the inside (friend of friend) who tells me that One Account are planning to entice people away from the product with a tempting offer of a 2 year fixed rate at 4.39% (no fees at all). This is because the reserve accounts are using valuable capital they could lend to others. It is unlikely that they will move their rates even if there is another rate cut. New applications are no more. We are therefore a dying breed. I work in banking myself and I have seen today that libor is down to 3.8% ie the gap is just 0.8%. Before the 1.5% drop the gap was as high as 1.4%. The market is therefore pedicting a drop. I don't think that any banks will drop any of their rates until the new year as they are protecting their capital in time for their year ends at 31/12/08

Hi Bearders 22

a lot of what you say there is (horribly) plausible though I have to say I'm a lot less sanguine that you are at the prospect of RBS maintaining the rate on the One Account artificially high in order to effectively force us to give up a radical banking concept that many of us value so highly, especially after they've spent years trying to convince us what a brilliant idea it is. What better example could there be of customers picking up the tab for the strategic ineptitude of a Bank's senior management (ABN AMRO anyone?)... And what about the poor people who won;t be able to get underwritten for a new mortgage and are going to be stuck in a One Account Ghetto under that scenario?

Even for those who have got the choice to swap over, how in the world could OA possibly expect customers who feel totally ripped off by the interest rates in one type of mortgage to then smile sweetly and accept a seemingly enticing fixed rate carrot to move to another...one can only imagine what the go-to rate on that will be once the two years is up (welcome to the fire Mr Customer, I do hope you enjoyed your recent experience in the frying pan...). On the other hand such breathtaking arrogance is precisely what you would expect of this lot based on the last few weeks, which is why I reckon there's a decent chance that what you say could be spot on.

malocao

Thanks to Bearders for the latest gloomy prospect

Every new post I read, it just increases my determination to get away from this product ASAP.

Fortunately, my OA will soon have served its purpose (like someone else wrote recently). I shall then be delighted to renounce RBS and all its works, without limit of time.

Stephen Hester, are you listening?

Yorkshire_Bred

Gordon Brown makes fairness the theme of Queen's Speech

Banks, lap-dancers and benefits cheats will be made to play fair



Banks join benefit cheats, lap-dancing clubs and binge drinkers at the top of a list of targets for legislative action to be unveiled today. Gordon Brown has made fairness the theme of the second Queen’s Speech of his premiership, promising extra support for those who “play by the rules”.
Laws to stop banks calling in loans or changing conditions without proper notice are being prepared. Ministers will confirm that the banks’ voluntary code will be made statutory.
A decision on whether to legislate through the Banking Bill or hand the policing of the code to the Financial Services Authority has not yet been made. In either case banks would face fines if found to have broken the code: at present they face only the sanction of being “named and shamed”.

http://www.timesonline.co.uk/tol/news/politics/article5276114.ece


RBS, fairness? who's going to be first on the list then..........

searlech

I am also a OneAccount holder and am very disappointed about the rate drop not being fully past on. I have written to my local MP and RBS are not delivering on their public statement to pass on the rate cut to customers.

I would encourage everyone to raise this with their MP. The site http://www.writetothem.com/ will let you find and send a message to your MP.