Downturn points to cut in rates

Realy

http://news.bbc.co.uk/1/hi/business/7709253.stm

"Nationwide said there was a 40% chance that interest rates would be cut by half a point to 4%, and a 55% chance that they would be cut to 3.75%." (good maths where is the other 5%?:))

As predicted a .5% - 1% cut looks the most likely.

This makes a £150,000 mortgage £592 per month IO on a .99 tracker.

We are getting to as cheap as renting teritory, Just 25% deposits needed.:eek:

purch

where is the other 5%?

The HPC crowd, who want a rise to 15% !!!

Jonbvn

Relevant article in the Torygraph about this.
http://www.telegraph.co.uk/finance/economics/3380060/Mortgage-firms-feel-pinch-as-funds-dry-up.html

Generali

Realy wrote: »

http://news.bbc.co.uk/1/hi/business/7709253.stm

"Nationwide said there was a 40% chance that interest rates would be cut by half a point to 4%, and a 55% chance that they would be cut to 3.75%." (good maths where is the other 5%?:))

As predicted a .5% - 1% cut looks the most likely.

This makes a £150,000 mortgage £592 per month IO on a .99 tracker.

We are getting to as cheap as renting teritory, Just 25% deposits needed.:eek:

I think that the other 5% is any other outcome.

That 25% deposit is getting easier to find as time goes on! I think that there are FTB mortgages available still where you only need a 5% deposit. If there aren't now, I suspect there'll have to be some introduced for political reasons even if in reality, the conditions for getting one are so tough that very few will be sold.

The politicisation of banking is going to cause an awful lot of problems over the next few years.

chucky

Generali wrote: »

I think that the other 5% is any other outcome.

That 25% deposit is getting easier to find as time goes on! I think that there are FTB mortgages available still where you only need a 5% deposit. If there aren't now, I suspect there'll have to be some introduced for political reasons even if in reality, the conditions for getting one are so tough that very few will be sold.

you are right about people finding it easier to find the deposit.
those that would only need the 5% deposit are those people who would have a good credit record and has never really been a problem to get finance. however, they will have to now jump through a few more hoops to get approved now.

Generali wrote: »

The politicisation of banking is going to cause an awful lot of problems over the next few years.

you're right again about the politicisation of banking but would like to add that the current economic climate could be much worse if it had not been dealt with this way.

MissMoneypenny

chucky wrote: »

you are right about people finding it easier to find the deposit.
those that would only need the 5% deposit are those people who would have a good credit record and has never really been a problem to get finance. however, they will have to now jump through a few more hoops to get approved now.

That's how it used to be when I got my first mortgage. It was madness lending to people with poor credit records or those that couldn't prove their income.

Lenders are now refusing some people if they have too many searches on their credit record too according to the singingpig site.

When the market has bottomed out, I think we will see a return to 100% mortgages for those with a good credit record and proof of income.

chucky

MissMoneypenny wrote: »

That's how it used to be when I got my first mortgage. It was madness lending to people with poor credit records or those that couldn't prove their income.

Lenders are now refusing some people if they have too many searches on their credit record too.

When the market has bottomed out, I think we will see a return to 100% mortgages to those with a good credit record and proof of income.

i agree that they will start to be offered again - many people have a problem with the 100% and 100% plus mortgages, i personally don't.

the concept behind them was that they were for a particular type of 'younger' person who was starting in a good career that would see them progress in that career and gradually be earning more through their working lives and be able to pay the debt.

it allowed them to get onto the property ladder (if this is a good thing or a bad thing is a different discussion) and own their own home.

when these mortgages are sold outside of these specifics there are obviously problems.

kennyboy66_2

A couple of thoughts

1) If you are a potential FTB and had a 5% deposit 6 months ago, surely it won't be too difficult to get that nearer to 10% in the next 12 months, bearing in mind that prices seem likely to fall by about 30% from peak to trough (maybe more, don't start shouting).

2) the author says that MBS securities mature each month and can't currently be rolled over. Surely these must roughly match the captal repayments from the exitsing lending book.

3) I doubt if the 3 month Libor spread will get to 0.16% for a long time, however it is going down little by little.

The only certainty is that all these problems will just take time to work there way through the system.

Realy

Bit more on the demand for trackers here up 12% in one month.

http://ftadviser.com/FTAdviser/Mortgages/Products/FirstTimeBuyers/News/article/20081105/1fce99ac-ab28-11dd-8c7b-00144f2af8e8/FTA-Trackers-200-DW.jsp

StevieJ

kennyboy66 wrote: »

A couple of thoughts

1) If you are a potential FTB and had a 5% deposit 6 months ago, surely it won't be too difficult to get that nearer to 10% in the next 12 months, bearing in mind that prices seem likely to fall by about 30% from peak to trough (maybe more, don't start shouting).

2) the author says that MBS securities mature each month and can't currently be rolled over. Surely these must roughly match the captal repayments from the exitsing lending book.

3) I doubt if the 3 month Libor spread will get to 0.16% for a long time, however it is going down little by little.

The only certainty is that all these problems will just take time to work there way through the system.

If you listen to some on here the 5% deposit will be a 15% deposit without even adding to it.

alared

It`s a bit ironic that the BoE looks like doing exactly what has got us into this mess in the first place LOW interest rates.(cheap money,hence debt)