Mortgages: 'Fixed rates could reach 6pc within weeks'

chucky

Generali wrote: »

If someone is buying a house that is likely to be suitable for them for decades then frankly any losses they make are going to be realise over such a huge period that it really doesn't matter.

The trouble is, younger people in the UK often can't afford the house that'll be right for their family so they keep buying and selling and refinancing. That's where the risk lies as you may find house prices are low or high at an inconvenient time.

yes i agree - i look at it in a slightly different way where the current economic downturn will give many people an excellent opportunity to buy into the opportunity to buy into the property market and potentially skip a rung or to on that mythical housing ladder with potentially less finance than was needed before.

all of this is obviously dependant if you keep your income of course.

Thrugelmir

chucky wrote: »

yes i agree - i look at it in a slightly different way where the current economic downturn will give many people an excellent opportunity to buy into the opportunity to buy into the property market and potentially skip a rung or to on that mythical housing ladder with potentially less finance than was needed before.

all of this is obviously dependant if you keep your income of course.

What's happened in the past 10 years is that as house prices have peaked and troughed. Depending at what point you got on or off the property ladder, has determined your lifetime wealth. Whilst some have gained enormously others are now burdened with a life time of debt.

Some of the clever ones pocketed the cash and moved abroad. Though this hasn't turned out well for many.

lemonjelly

Generali wrote: »

Swap rates are falling rather than rising:

http://www.swap-rates.com/UKSwap_extended.html

Banks are increasing their margins at the borrowers expense then.

That implies that demand for borrowed funds is greater than their supply.

The biggest part of the impact of QE AIUI should be that the money supply is increased via the banks - the banks receive money in return for assets they hold and then lend that out. Fractional reserve banking then does its magic and the money supply increases. However, if banks don't lend out the money (either because they don't want to or borrowers don't want it) then those funds won't increase the money supply, they'll just sit on the bank's books.

As the money supply doesn't increase, that reduces the funds available to be lent. It's sort of a self-fulfilling thing.

Great point (highlighted in bold).

It may also be possible to argue at the expense of savers too? Interest rates for savings have fallen significantly over the past 6 months, and though a few bonds are being marketed paying slightly better rates, to me savers aren't getting a good deal at the moment.

With the LIBORs behaviour recently, it appears that the banks are proper cashing it in right now!

lemonjelly

Generali wrote: »

If someone is buying a house that is likely to be suitable for them for decades then frankly any losses they make are going to be realise over such a huge period that it really doesn't matter.

The trouble is, younger people in the UK often can't afford the house that'll be right for their family so they keep buying and selling and refinancing. That's where the risk lies as you may find house prices are low or high at an inconvenient time.

Fantastic point, eloquently put.

Completely highlights why so many just do not know what to do right now.

And sadly, also exemplifies that some will make a poor choice, possibly as a result of panic, or a lack of knowledge, or circumstances, or sheer bad luck meaning they could potentially lose out big time.

Thrugelmir

lemonjelly wrote: »

Great point (highlighted in bold).

It may also be possible to argue at the expense of savers too? Interest rates for savings have fallen significantly over the past 6 months, and though a few bonds are being marketed paying slightly better rates, to me savers aren't getting a good deal at the moment.

With the LIBORs behaviour recently, it appears that the banks are proper cashing it in right now!

A few current offerings.....

Birmingham Midshires - 2 year fix - 4.25%
West Brom BS - 2 year fix - 4.15%
Hinckley & Rugby - 3 Year fix 4.00%

Hardly falling rates.....

lemonjelly

Thrugelmir wrote: »

A few current offerings.....

Birmingham Midshires - 2 year fix - 4.25%
West Brom BS - 2 year fix - 4.15%
Hinckley & Rugby - 3 Year fix 4.00%

Hardly falling rates.....

I take your point about a minority of rates (see my original post & reference to bonds), howevermost savings accounts have had interest rates slashed in recent months. It is only the past month or so any reasonable savings rates have been appearing IMO.

Thrugelmir

lemonjelly wrote: »

I take your point about a minority of rates (see my original post & reference to bonds), howevermost savings accounts have had interest rates slashed in recent months. It is only the past month or so any reasonable savings rates have been appearing IMO.

Agree with your point. However banks were lending at very low rates of interest at that time, in many cases by default. As I doubt that they ever considered BOE going so low when conceiving the idea of tracker mortgages for example.

kennyboy66_2

I don't think we should be too surprised that the banks are being allowed to rebuild their balance sheets & profits at the expense of both borrowers and savers.

In different circumstance banks making "excess" profits were subject to a "windfall" tax (1981 under the Thatcher).

I doubt if the same will happen this time!

Thrugelmir

Looks like the thread is already out of date.....

Birmingham Midshires 5 years fixed rate to new borrowers is currently 7.39% with a £999 product fee.

A new era is on the horizon.....

cogito

Thrugelmir wrote: »

Majority are based on fixed term , fixed rate deposits.

Rates are rising as competition for depositors money is rising.

Not from where I'm sitting.