Mortgage Rates next Year

Generali

My belief is that base rates aren't going to come down as far and as quickly as many are predicting. I have always said that the only thing that will stop the BoE slashing rates is the £ collapsing. Well the £ is collapsing at the moment and that is going to constrain the BoE quite seriously.

LIBOR should continue to fall. Remember, it's 3 month LIBOR that is the important rate for bank funding and thus variable mortgage rates. Interest rate swap rates are important for fixed rate mortgages.

GDB2222

Banks are going to want to widen the margins they make between borrowing and lending, to pay for the defaults they will be seeing. So, whilst I expect that BOE repo rate will drop at least another 1%, I don't expect much of this to be passed on to borrowers.

confused31_2

GDB2222 wrote: »

Banks are going to want to widen the margins they make between borrowing and lending, to pay for the defaults they will be seeing. So, whilst I expect that BOE repo rate will drop at least another 1%, I don't expect much of this to be passed on to borrowers.

Thats why i think the banks will only lend to people who are more likely to be able to pay them back, i think they have learnt by there mistakes now, the reason they have all been using about the Libor rate not coming down is correct, but now the libor rates dropping, if the BOE rate comes down and the Libor rate comes down, im sure the banks will follow.

The reason the banks have had to be bailed out is because of all the lax lending, thats where all our tax payers money as gone to pay for the defaulters, now the banks need to start making money from customers and the only way they will get them back is make their rates more attractive.

The banks need customers and the only way they will get them is make their rates attractive to people who want to buy, if they dont the banks will crumble.

confused

GDB2222

Confused, I think you are confused. The banks don't need new customers. They need to fund the losses on their existing mortgage books, which are going to increase in the future as more and more of their existing customers default whilst in negative equity. The only way they can do that is to charge their non-defaulting customers a lot more than they are paying for deposits.

StevieJ

GDB2222 wrote: »

Confused, I think you are confused. The banks don't need new customers. They need to fund the losses on their existing mortgage books, which are going to increase in the future as more and more of their existing customers default whilst in negative equity. The only way they can do that is to charge their non-defaulting customers a lot more than they are paying for deposits.

Lower interest rates = Lower defaults, an interesting equation.

confused31_2

GDB2222 wrote: »

Confused, I think you are confused. The banks don't need new customers. They need to fund the losses on their existing mortgage books, which are going to increase in the future as more and more of their existing customers default whilst in negative equity. The only way they can do that is to charge their non-defaulting customers a lot more than they are paying for deposits.

So all the people who default, who where supposed to pay back the banks will loose there houses.???

You say the banks will make money back on current customers most of the people i know are on lifetime tracker products or long term fixed deals.

Dont you watch the news people are going bankrupt everywhere, theres no way the bank will make the money back of current mortgages, they may try and make people go on to a high SVR to make money from them as they have no equity, but they will soon default and the banks will end up with even more houses.

Your idea is short term and if te banks do that it will be financial suicide, you cant get blood out of a stone.

The banks will need to sell the houses they have reposessed??? if they are going to recoup any of the money they have lost, or are we going to have a load of empty houses?? i doubt it

Then you will get the people who can now afford to buy houses because theyve saved large deposits, but they arent going to pay top interest rates.

These are the people the bank will need, low risk customers who the bank know they wont loose money on.

So if the banks dont lower their rates the simple thing will happen, the banks will have a load of houses to sell at low prices, but no one will buy them as the banks are pricing them out with high interest rates and large fees on mortgages.

You have your opinion and i have mine, my name might be confused but i still have a opinion and sometimes i think its other people who should be using my name.

All we have to do is wait and see, but if anyones confused i would say it was you.

You havent by any chance just took out a fixed mortgage in the last few months with a large fee have you?????

confused

ManAtHome

Lowes rates + dodgy currency = fewer people prepared to lend to the UK...

casper_uk

I can see rates staying the same or going up, we are heading into a recession and banks get very nasty in recessions. Add in that they are desperate for cash and will be for the next few years, remember they have to pay back what they have borrowed from the BoE plus interest. This means they are going to want to maximize profits so i don't think they will pass interest rate cuts on what so ever.

confused31_2

ManAtHome wrote: »

Lowes rates + dodgy currency = fewer people prepared to lend to the UK...

we can self fund with tax payers money:eek:

confused

GDB2222

confused31 wrote: »

You havent by any chance just took out a fixed mortgage in the last few months with a large fee have you?????

confused

Nope.

I just don't see how the banks are going to make much money selling new mortgages at interest rates barely higher than they are paying on deposits? The strategy I have outlined is what the banks have done in the past.