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'Mortgage Lenders sadly absorbing the rate cuts' blog discussion
in Martin's blogs & appearances & MoneySavingExpert in the news
9 replies 2.4K views
Former_MSE_Lawrence Former MSE
This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.
Read Martin's 'Mortgage Lenders sadly absorbing the rate cuts...' Blog.
Click reply to discuss below.
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I expect we will see more base cuts and eventually retail cuts will be made but far below total base rate cuts.
Until now, though, the banks have generally (with notable exceptions) followed the Bank of England's lead. Up until now, that is. Looks like we might be going back to the situation of the banks deciding for themselves what rates they want.
(expecting to be shot down in flames!!!)
That was my understanding, too. Still, best not let it get in the way of a good story, eh? :rolleyes:
I believe I need another beer.
Bank funding costs are *increasing*, the base rate has nothing to do with it.
Besides which, banks are going out of business, they are hardly in a position to be cutting rates/profits.
-o I am humble -o You are attention seeking -o She is Nadine Dorries
they are all reporting profits but with large 'provisions' which if recognised as losses would push them overall into loss (few possible exceptions e.g. HSBC(ex-UK), Co-op)
losses are fine so long as it doesn't affect solvency
but most banks are so highly leveraged
so the best answer is recapitalisation
but you won't get investors (other than perhaps HMG) to support a recapitalisation if you continue writing unprofitable business
recapitalisation gives you cash (so do deposits, you have some great savings offers at the moment - 2.3% above base rate for a year from one of the building societies)
in short - great rates for savers for the foreseeable future but any bank which is offering great savings rates and good mortgage deals is writing unprofitable business (maybe in the hope the taxpayer will pick up the difference)