With many savers going Fixed rate will it cost Building Societies!

nilrem_2

With many of us jumping into Fixed rates as quick as we can and at the highest possible rate not put a strain on Building society finances? How does it work? Many of us have fixed over the last few weeks at rates above 5% which they are committed to pay over the next year or years and the BOE rate plummeting very quickly and the rates they charge for mortgages will this not in itself put a strain on Building societies?

MiserlyMartin

Well, it will. The media, Brown and his puppet chancellor Darling are all forgetting that Banks and Building Societies are having to pay out on these fixed rate bonds which are in some cases higher than the LIBOR rate. They are making a loss on these or not much margin at all. They are then having to honour tracker mortgages without a 'collar', which are also not helping. All this while the banks are trying to recapitalise.

But all Brown and co and their mouthpieces at the BBC seem to do is bleat on about how the rate cuts 'must be passed on'. The lenders can't afford to, to pass it all on would be irresponsible to the prudent running of the bank as HBOS have stated. But Brown doesn't know much about responsibility does he...

Lokolo

But thats the risk they take with fixed rates. Thats why they only tend to give them to x number of customers. If you look at ones offered by Egg, Halifax etc, they stopped them after a while because of demand. Also they have risk strategies! (I say that, clearly they don't with all these failing banks lol)

jack_spratt_2

They need the stability of there funding !! by offering a fixed rate they can at least plan ahead for the next year !!
Also do not forget for every saver earning a 5 % interest rate on a fixed product there is mortgagee on a fixed rate mortgage paying more than the base rate

bristolleedsfan

MiserlyMartin wrote: »

The lenders can't afford to, to pass it all on would be irresponsible to the prudent running of the bank as HBOS have stated. quote]


Lets not get too taken in by HBOS apparent sob stories.

http://www.halifax.co.uk/creditcards/home.asp

http://www.halifax.co.uk/loans/personalloanshome.asp

Nick_C

Fixed at 5%? And the rest! I'm getting 12% on my Halifax RS till June next year. I've got a fixed rate ISA with Nationwide at 6.15 till April 2010. Its been apparent for at least 6 months now that the BoE has no control over interest rates in a free market. If Gordon wants to control all interest rates, he will need to nationalise all the banks. And who knows, he just might.

cos69

There is only going to be a big problem if the government forces banks to lend at unsustainable rates.

If we start to get loans available at 2% to 3% fixed for 3 or 4 years then I can see a lot of us getting these to reinvest elsewhere at higher rates in Euro accounts

MiserlyMartin

bristolleedsfan wrote: »

MiserlyMartin wrote: »

The lenders can't afford to, to pass it all on would be irresponsible to the prudent running of the bank as HBOS have stated. quote]


Lets not get too taken in by HBOS apparent sob stories.

http://www.halifax.co.uk/creditcards/home.asp

http://www.halifax.co.uk/loans/personalloanshome.asp

I don't see your point. Those products will be mainly making them money. Even stoozers won't bother with these due to their 3% fees. Besides the government are irresponsibly hell bent on ensuring the banks, 'must keep lending to 2007 levels' with our prop up tax money.

MiserlyMartin

cos69 wrote: »

There is only going to be a big problem if the government forces banks to lend at unsustainable rates.

If we start to get loans available at 2% to 3% fixed for 3 or 4 years then I can see a lot of us getting these to reinvest elsewhere at higher rates in Euro accounts

Now theres an idea!

cos69

MiserlyMartin wrote: »

bristolleedsfan wrote: »

..... Besides the government are irresponsibly hell bent on ensuring the banks, 'must keep lending to 2007 levels' with our prop up tax money.

Yes but its only a temporary thing, just upto the election whenever that is

diveleader

On a sort of similar note, as a saver I have virtually all of my cash in fixed rate accounts now. As a result, I have the feeling of 'less' free money to spend. So I wont be contributing to the 'spend our way out of the current dowturn' that the Government would like.