Base Rate Cut not passed on by three quarters of lenders.

inca_2

Rubbish !! Just yesterday Lloyds have announced that every employee will get their regular bonus as "they have worked fantastically over last year and that there is no reason not to give it".

http://blogs.news.com.au/news/splat/..._deserves_a_b/

That's not strictly true, it isn't every employee, I know someone at Lloyds and it's basically saying that those who had performed well enough to hit bonus that quarter will still be getting paid it as promised originally, not saying whether I agree or disagree just what the facts actually are. They are also one of the banks who have dropped SVR by 0.5%

hearts

Why shouldn't it be passed on to existing borrowers? The money has already been leant. The government gave them the money, and I thought told them they were to help house owners/buyers.
Fair enough when they lend now the money might cost more but the existing borrowers don't cost anything. Or have I missed something ;-)

koexelek

hearts wrote: »

Why shouldn't it be passed on to existing borrowers? The money has already been leant. The government gave them the money, and I thought told them they were to help house owners/buyers.
Fair enough when they lend now the money might cost more but the existing borrowers don't cost anything. Or have I missed something ;-)

The rate cut so far has only benifited existing borrowers on trackers.

Most lenders have not dropped their standard variable rate much ( if at all) and the products available to new borrowers have, on the whole, got worse since the 0.5% cut

inca_2

Existing borrowers do cost banks money, and the higher the LTV the more they cost the banks and the higher the capital ratio they need to have. With house prices dropping and existing customer's LTV generally rising they are costing more money and meaning that banks need to increase their capital ratios, the government have also insisted on the banks having higher capital ratios than previously and rightly so in my opinion.

hearts

inca wrote: »

Existing borrowers do cost banks money, and the higher the LTV the more they cost the banks and the higher the capital ratio they need to have. With house prices dropping and existing customer's LTV generally rising they are costing more money and meaning that banks need to increase their capital ratios, the government have also insisted on the banks having higher capital ratios than previously and rightly so in my opinion.

eh? Surely it would only cost the banks if they defaulted and couldn't repay the original loan.
If the bank lent you 100k "x" years ago and you are repaying, then it's not costing the banks any more. If they continue to "punish" existing borrowers then surely there is more chance of them defaulting. Better for them to get 5% on the loan amount for the next 10 years than to up rates and force defaults then to repossess and get 90% (or whatever) of original loan.

olly300

hearts wrote: »

eh? Surely it would only cost the banks if they defaulted and couldn't repay the original loan.
If the bank lent you 100k "x" years ago and you are repaying, then it's not costing the banks any more. If they continue to "punish" existing borrowers then surely there is more chance of them defaulting. Better for them to get 5% on the loan amount for the next 10 years than to up rates and force defaults then to repossess and get 90% (or whatever) of original loan.

I think it's time for you to email the chancellor courtesy of Which -
http://www.which.co.uk/campaigns/banking-crisis/about-the-banking-and-credit-campaign/banking-crisis/index.jsp

Gorgeous_George

You borrow from the bank.

The bank borrows from the MARKETS - not necessarily at Bank of England base rate but at LIBOR (London Inter Bank Offer Rate).

Therefore, mortgages are more likely to follow LIBOR than BofE Base Rates.

GG

Madjock

My rate with MPLC has gone down 0.5% as of 1st November. \o/

unite79

Hearts well done - You have spotted the problem - Bank buys money same as you or I walk into Tesco's for a tin of bins.

So the tin is 10p or 5% - you then sell the tin for 20P its a 100% profit in anyones book and well worth the deal. - but in mortgages its a fluctuating sale price ie Mr Smith will pay base +1.5% so in 5 years Bank could be lookin at a massive loss - Problem - Mortgages have become more more complicated to deal with demand - the banks loved the demand - now it seems they dont like the risk.....My opinion - the end of trackers is near, these were born about 6 years ago....and will die like Self Cert and 100%.

Just an opinion, think I am entitled to it!

Gorgeous_George

You may be right unite79 (great year). My tracker is a lifetime offset tracker -

GG