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

lemonjelly

Thrugelmir wrote: »

Looks like the thread is already out of date.....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

:eek::eek::eek:

So do we expect a mini housing purchase surge, or will this trend in fees & rates adversely affect house purchases?

Thrugelmir

cogito wrote: »

Not from where I'm sitting.

Where are you sitting?

Generali

kennyboy66 wrote: »

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!

Absolutely right.

The 'windfall tax' under Howe/Thatcher was an attempt (successful as it turned out although there was doubt at the time) to shore up Government finances by a clearly one-off tax on just about the only part of the economy that was reliably making a profit.

The banks are making profits but holding onto the cash they generate as a result right now to cover potential and actual losses.

Just a late thought: presumably QE is pushing down Gilt yields. That will reduce the returns available to people buying annuities. They'l be paying some of the bill for that policy in actual £ notes.

mbga9pgf

Thing I dont understand is this,

Why are banks doing this now when the housing market is at its most fragile? Surely a recovery in the UK housing market would help them?

So why the desperate scamble for cash? I know they need to restore balance sheets, but this could in my mind be only for one (or both) of the following reasons...

They are aware of Turner's regulation of the mortgage market requiring more capital reserves which will probably introduce lending limits (a la tories will anyway, as published today in the telegraph)

Or... They are aware of further heavy writedowns on the horizon and are trying desperately to get the cash together to protect themselves from running out when this happens.

Either scenario is bad for house prices, but the banks thinking may be along the lines of that a further correction is still due, so hike rates whilst the going is good.

Really2

mbga9pgf wrote: »

Thing I dont understand is this,

Why are banks doing this now when the housing market is at its most fragile? Surely a recovery in the UK housing market would help them?

So why the desperate scamble for cash? I know they need to restore balance sheets, but this could in my mind be only for one (or both) of the following reasons...

They are aware of Turner's regulation of the mortgage market requiring more capital reserves which will probably introduce lending limits (a la tories will anyway, as published today in the telegraph)

Or... They are aware of further heavy writedowns on the horizon and are trying desperately to get the cash together to protect themselves from running out when this happens.

Either scenario is bad for house prices, but the banks thinking may be along the lines of that a further correction is still due, so hike rates whilst the going is good.

It's a self fulfilling prophecy of they don't lend prices slip further, they then hoard more cash.

I think from the outside it all looks fairly obvious but it would require all lenders to lend.

But lets not get carried away there are still 3.49% fixed rates out there.

it is just some lenders.

I presume the stronger banks have the lowest rates at the moment. Creaming the best customers

Thrugelmir

Really2 wrote: »

I presume the stronger banks have the lowest rates at the moment. Creaming the best customers

Lloyds HBOS has around 30% of the new mortage lending market now.

Lloyds SVR 2.50% - HBOS SVR 3.50%

Same group different rates....... Switch lender if you've got the equity and a sizable mortgage.

Best fixed rate from Lloyds is 4.89% rising to over 7% ( 7 seven fix) plus fees.

The market is changing rapidly.

Time to get your surf board out as the waves are starting to crash in.

Thrugelmir

mbga9pgf wrote: »

Thing I dont understand is this,

Why are banks doing this now when the housing market is at its most fragile? Surely a recovery in the UK housing market would help them?

So why the desperate scamble for cash? I know they need to restore balance sheets, but this could in my mind be only for one (or both) of the following reasons...

They are aware of Turner's regulation of the mortgage market requiring more capital reserves which will probably introduce lending limits (a la tories will anyway, as published today in the telegraph)

Or... They are aware of further heavy writedowns on the horizon and are trying desperately to get the cash together to protect themselves from running out when this happens.

Either scenario is bad for house prices, but the banks thinking may be along the lines of that a further correction is still due, so hike rates whilst the going is good.

By 2008 UK banks lent 4 times their core capital and reserves in the form of mortgage lending. In addition around 40% of this total lending was packaged up and securitised, and sold on. The banks then relent this money.

RBS and HBOS plus the banks/building societies that have also ceased to trade in their own right were dependent on the wholesale money markets to support their lending books.

So the banks need to improve their liquidilty. Mortgages are a long term debt. The banks aren't overly interested in the fluctuating value of the underlying security in the current climate more the ability of the borrower to repay the debt.

With another million or so to be made unemployed. With companies still going bust. (British Airways has severe problems could put yet it into administration).

The pressure is on to shrink their lending. An increase in mortgage rates will encourage those that can to repay debt quicker.

Our banks are international players so the problems aren't purely UK. UK banks have around £3 billion in property loans outstanding for investment in Dubai. Another place thats currently suffering a property downturn.

Really2

Thrugelmir wrote: »

Time to get your surf board out as the waves are starting to crash in.

No need changed in October. Lifetime tracker:)

tara747

lemonjelly wrote: »

:eek::eek::eek:

So do we expect a mini housing purchase surge, or will this trend in fees & rates adversely affect house purchases?

The latter.

Hello 70% club.

tara747

To answer your question properly, it will completely !!!! the housing market. As rates go up, the amount people can afford to borrow goes down, as they can only afford to pay a certain amount each month. So house prices will most certainly go down even further from here.

Which is a good thing.