Banks have NO excuse for not cutting rates

Bernard_Coleslaw

econo wrote: »

Bernard, could you please tell me out of interest what is considered a saver in your quoted post on a 6:1 ratio? Is a 1 pound deposit considered being a saver for example?

Thanks

Econo

Econo

The generally accepted measure is actual number of people. So a normal lender that gets the majority of its mortgage funding from savers will typically have six individual savers for every borrower.

Some will be small amounts, some will be large amounts. But obviously they all want a return for what is essentially lending their own cash to the institution.

dopester

LandlordLee wrote: »

Yes they do have to make a profit which i understand, but they nearly folded. And what profit is reasonable? Do you call keeping rates high to maintain similar profits as previous years reasonable? Its not going to happen..

If they do not pass on rate cuts they will suffer more in the long run believe you me. They were given this information at the meeting with Mr Darling.

If the banks are going to make the Government's / taxpayers stake worth anything, they need to run their operations as a business, else they will need saving again and again, and money will just become worthless. Even now if they price to reflect risk, they still might need more capital.

So no - professional residential landlords, who don't really contribute anything to the economy, should really be punished with higher rates. Interest rates have been too low for way too long, with lending standards not good enough.

LandlordLee

Dopester that is the worst post i have ever seen on this site.

'professional residential landlords, who don't really contribute anything to the economy' - Are you having a laugh? How about stamp duty, tax on income (that the government would not get it out houses were normal residential homes) and providing a home for people who can not afford a house to buy. Get a grip mate.

Bernard your 6:1 ratio is a load of rubbish. Do you think the banks would be in this mess if 6 people saved against 1 borrower? They do not have enough deposits for the money they have lent to people that is the problem. They do not lend money from depositers, they get it from money markets cheap and sell as loans/mortgages at a higher rate. Only a handful of banks lend against deposits, and they are the ones who are in the better positions.

opinions4u

"They do not lend money from depositers, they get it from money markets cheap and sell as loans/mortgages at a higher rate. Only a handful of banks lend against deposits, and they are the ones who are in the better positions.".

What do they do with deposits then?

Stick them in the safe and wait for the interest fairy to appear once a year?

brit1234

Interest rates are far to low even without the extra 1.5% being passed on. Sorry I care little for the welfare of highly geared landlord wanting to make bigger profits at the expense of the value of sterling and savers.

This whole buy to let explosion has ramped up property prices and priced out first time buyers. Now they want to be bailed out at the expense of my ftb housing deposit savings.

I suggest you start paying off your landlord mortgages as prices plummet and LTVs are reduced to 65-70%.

brit1234

LandlordLee wrote: »

Bernard your 6:1 ratio is a load of rubbish. Do you think the banks would be in this mess if 6 people saved against 1 borrower? They do not have enough deposits for the money they have lent to people that is the problem. They do not lend money from depositers, they get it from money markets cheap and sell as loans/mortgages at a higher rate. Only a handful of banks lend against deposits, and they are the ones who are in the better positions.

:rotfl::rotfl::rotfl::rotfl::rotfl:

Sorry but what planet are you on. Traditionally all lending comes from savings, for every £1 banks have in savings they can lend £10 in loans.

It has only recently that they have used the money markets for extra funding which pushed up housing prices above traditional levels to create this now collapsing housing bubble. You may of heard that packaging mortgages up and selling them on as investment vehicles is over and banks have to revert back to their main source of income which is savings. Thats why they don't want interest rate cuts as it puts off savers.

Interest rates are far too low and need to be hiked. Let purge the system and addopt Austrian economic models.

Bernard_Coleslaw

LandlordLee wrote: »

Bernard your 6:1 ratio is a load of rubbish. Do you think the banks would be in this mess if 6 people saved against 1 borrower? They do not have enough deposits for the money they have lent to people that is the problem. They do not lend money from depositers, they get it from money markets cheap and sell as loans/mortgages at a higher rate. Only a handful of banks lend against deposits, and they are the ones who are in the better positions.

Bless. :rolleyes: There's so much wrong with this post I don't know where to start.

Deep breath. Here goes.

The 6:1 ratio thing: as explained earlier this is to do with actual customers, not amounts.

Funding from money markets? Which markets would those be then - the same ones that have been functionally stagnant for the last 15 months? If you can find a good supply of 'cheap money' in the money markets then there's a whole bunch of banks that would love to hear from you.

The lenders that fund mostly from retail deposits are in a better position. But they still have to attract savers. Difficult to do when (a) rates are being slashed and (b) savers are nervous about putting big lump sums in banks and building societies.

wymondham

econo wrote: »

That was all very well before most were bailed out from bankruptcy by the tax payer. Now the government has a say and we have a share I don't think they'll be many that share your view! They can msake a profit where sound ethics are part of the business plan. Remember that?

The Governemnt THINKS it has a say.... I don't fancy their chances enforcing decisions that go against a banks business plan ...:D

opinions4u

I would think any bank that has had the government buy in (note, HM Government does not, as yet, own any of these shares) would have a business plan designed to raise the money to get HM Government out as quickly as possible.

LandlordLee

Brit - i did not say all banks i said some banks lend from depositers. My post was a reference to the likes of Northern Rock. When i said what planet are you on i meant regarding the ratio plucked out on thin air of 6-1. How do you correctly identify a saver? Someone with a savings account? Does not mean they have no borrowing.

Interest rates too high? Where have you been for the last year? The country needs rate cuts to save jobs and boost the economy. Interest rates as confirmed today will be even lower so your economic theory is moronic to be honest. Rate hikes will cripple everyone including the banks and send us back decades in terms of development.

If interest rates go too high, due to the type of lending banks have done they will have many more defaults and savers will not even have any banks to deposit in and potentially lose savings.

Do people actually think all people save money in high interest savings accounts? The banks are not stupid.. Current accounts pay very little and this is the key to the profit. The higher interest paid on headline accounts is offset against low rates on the majority of accounts.

Bernard - Yes the money markets - You are right no money markets equals difficulty borrowing which is proving my point.