Banks not passing on rates.

beingjdc

Yes, we should have let them go to the wall, but that doesn't mean you should expect mortgages to cost the same as the Bank of England base rate.

The borrowing cost for banks is LIBOR, that's at about 4.2%. Add on 0.5% for administrative costs, 0.5% as a reasonable profit margin, and 1% for the number of people who are going to go bankrupt in the recession and not pay the mortgage back, and you have 6.2%.

Which is about the current average mortgage rate.

illgetthere

all i know is that if my business fails then i have no money, no safety net, no help.

Can i then be nationalised?, thats my only reason for feeling that they are very priveliged to have their business covered.

I do see the fuller picture but its hard to justify it when im working 90+ hrs a week just to provide the basics for our family, knowing that if i stop then we are in serious trouble..

scottburke

beingjdc wrote: »

Yes, we should have let them go to the wall, but that doesn't mean you should expect mortgages to cost the same as the Bank of England base rate.

The borrowing cost for banks is LIBOR, that's at about 4.2%. Add on 0.5% for administrative costs, 0.5% as a reasonable profit margin, and 1% for the number of people who are going to go bankrupt in the recession and not pay the mortgage back, and you have 6.2%.

Which is about the current average mortgage rate.

so why have the halifax set there rates for first time buyers fixed rate deal @ 7.14% and the RBS @ 6.69%??

there taking the p1ss

beecher

scottburke wrote: »

so why have the halifax set there rates for first time buyers fixed rate deal @ 7.14% and the RBS @ 6.69%??

there taking the p1ss

If you have a high LTV then the risk has to be factored in too. Aren't there better first time buyer deals out there for people with low LTVs?

beingjdc

scottburke wrote: »

so why have the halifax set there rates for first time buyers fixed rate deal @ 7.14% and the RBS @ 6.69%??

there taking the p1ss

Because First Time Buyers are riskier, pumping up the percentage to allow for defaults - hence my use of the word 'average'. In contrast, Lloyds TSB will give someone with a 25% deposit (probably not a FTB therefore) a rate of 5.3%.

That said, anyone who is a First Time Buyer right now needs their head read anyway, so I'm not going to have any kind of sympathy for the rate they pay - the difference between 6 and 7% on a £150k house is £125 a month, whereas they're currently losing £3000 a month in equity... I'd be more worried about that.

Jimbo65

beingjdc wrote: »

Yes, we should have let them go to the wall, but that doesn't mean you should expect mortgages to cost the same as the Bank of England base rate.

The borrowing cost for banks is LIBOR, that's at about 4.2%. Add on 0.5% for administrative costs, 0.5% as a reasonable profit margin, and 1% for the number of people who are going to go bankrupt in the recession and not pay the mortgage back, and you have 6.2%.

Which is about the current average mortgage rate.

:rotfl:

Can you please explain GE's reasons, logic, justification for increasing rates by 1.95% to 13.15% then please? And Egg persist in the 'waiting' argument without being able, let alone willing, to explain what it is exactly they are waiting for. 6.69% with no sign of movement downwards or explanation. It is completely unacceptable in the climate and will send thousands of BRITISH families over the edge, make no mistake.

And as for the argument about Zimbawbe and hyper inflation, are you really suggesting that a failed incompetent bank is going to put us into the realms of African racketering? Because that is just a nonsense.

Re the Butcher, if he gets his business wrong he goes to the wall, he does not get a hand out to prop up his failed business. Yes, Hbos should go to the wall, they have no incentive to run the business properly or succesfully and that's assuming they have the competence to do so which they have clearly demonstrated they do not.

The arguments against nationalisation are as defunct as the conservatists that persist in promoting them. The Railways are great aren't they? And the water companies have invested in infrastructure with such consistency that they never have to dig up the victorian sewers now because, diligently, they have not been creaming off profits as bonuses, share options and pensions have they? As for Gas they've made a marvellous job of freezing the elderly to death over the past decdae and a half, saves a fortune in pension payouts from the exchequer.

You will never see a bank run properly in this country again until the dross have gone to the wall. There is sufficient professionalism within the system to survive and rebuild. So why carry the passengers of Hbos who have not got a clue? Should have stayed a Builsing Society, because they are clowns at banking. And it is already costing us and it is not pretty.