House prices bottomed ?

Graham_Devon

chucky wrote: »

the bank charges case is a very small amount of loss for banks to deal with - it's more of a political time bomb than anything else. the banks will just re-charge on accounts to increase revenues.

As Mr Thrugelmir says until there is wholesale funds and liquidity in the markets (not QE) we're not in normal times. Once this takes place we won't be seeing any cheap lending; it will be expensive due to high fees or through their interest rates. currently i'm thinking they have about a 3% pread on fixed rates from comparing them to swap rates on 5 to 7 year deals. that's pretty good profit.

i don't think they'll allow BOE rates to go up until we're in a decent period of growth (many people don't believe we'll be getting any growth) but just my view.

Me neither in all honesty.

But I do feel outside pressures may exhert, giving the BOE not much choice.

StevieJ

Graham_Devon wrote: »

Well feel free to give your opinion and reasons as to why not.

Fixed rates are currently 5.5% above BOE base.

If BOE base is 5.5%, why can mortgages not be 9-11%?

It's the same difference between the numbers. If you feel I'm wrong, please, do discuss and like I have done, give us your reasons why. It helps much more than a simple one liner.

Why would someone pay a fixed rate of 11% when the SVR would be around 7 -7.5%. There has been a disconect in BR and mortgage rates, this will not be the case when mortgages revert to more normal levels. BTW extrapolating the present to forecast the future is a recipe for disaster.

Graham_Devon

StevieJ wrote: »

Why would someone pay a fixed rate of 11% when the SVR would be around 7 -7.5%. There has been a disconect in BR and mortgage rates, this will not be the case when mortgages revert to more normal levels. BTW extrapolating the present to forecast the future is a recipe for disaster.

Notice the lack of the word "fixed" when I said 9-11%?

The lack of the word meant that I wasn't talking solely about fixed.

StevieJ

Graham_Devon wrote: »

Notice the lack of the word "fixed" when I said 9-11%?

The lack of the word meant that I wasn't talking solely about fixed.

You certainly inferred it .

Fixed rates are currently 5.5% above BOE base.

If BOE base is 5.5%, why can mortgages not be 9-11%?

What do the others think he meant

mewbie_2

StevieJ wrote: »

What do the others think he meant

You may have a valid point. Or maybe not. Let's spend fifteen pages arguing it.

1echidna

StevieJ wrote: »

You certainly inferred it .

Fixed rates are currently 5.5% above BOE base.

If BOE base is 5.5%, why can mortgages not be 9-11%?

What do the others think he meant

I think his brain is sometimes out of gear with what he writes (but then who am I to talk) He mostly has a point there somewhere in the background and often an interesting one. I like him but then I am used to be rude to.

Graham_Devon

mewbie wrote: »

You may have a valid point. Or maybe not. Let's spend fifteen pages arguing it.

This place is slowly driving me up the wall. We'll probably need a graph thats not actually a graph if it don't have a special axis for the lifetime of a walrus to figure out whether I actually inferred something or not.

You spend time creating a post. Only to be told as someone disagrees with your post you didnt actually type what you typed, but actually, you said x y and z but not b and c, even though you never typed it.

Threads simply seem to be devoid of any common sense but a load of posts telling each other they are wrong, they were actually thinking about hens toenails not house prices.

kennyboy66_2

Graham_Devon wrote: »

Well feel free to give your opinion and reasons as to why not.

Fixed rates are currently 5.5% above BOE base.

If BOE base is 5.5%, why can mortgages not be 9-11%?

It's the same difference between the numbers. If you feel I'm wrong, please, do discuss and like I have done, give us your reasons why. It helps much more than a simple one liner.

As you said yourself only this morning in response to someone you disagreed with....



Practice what you preach?

Difficult to know whether you are really talking about fixed rates, but lifetime trackers from HSBC are currently priced at either 2.24% or 2.45% above base rate.
If base rates were 5.5%, I doubt that similar trackers would be more than 8%.
In fact, if base rates at 5.5% were closer to the real cost of money (as opposed to now), I would expect trackers to be a little more competetive than that, perhaps 2% above base rate.
Being a little sad, I checked my mortgage statement from 2004 when I was last on a SVR with the Nationwide, and the difference between base and SVR was 1.79%.

Why you think the differential would jump to between 3.5% and 5.5% is difficult to imagine.

StevieJ

mewbie wrote: »

You may have a valid point. Or maybe not. Let's spend fifteen pages arguing it.

To be honest, I am starting to believe that is exactly what he is looking to do :eek: it would not surprise me if he drove the DT mob to distraction before he chanced upon this board

Thrugelmir

StevieJ wrote: »

Why would someone pay a fixed rate of 11% when the SVR would be around 7 -7.5%. There has been a disconect in BR and mortgage rates, this will not be the case when mortgages revert to more normal levels. BTW extrapolating the present to forecast the future is a recipe for disaster.

"Mortgages returning to normal levels" is that the past 10 years or a bygone era in the past. The lending of the past 15 years is past.

Regulation on the banks in the USA, Europe and UK is all heading in the same direction.... no off balance sheet lending ( Lehmans style securitisation), higher capital reserves and more assets held in cash.

I wouldn't use the word rationing. But banks and building societies will revert back to lending mutiples for mortgage advances with interest rates that reflect equity (deposits). This has nothing to do with affordability, more lack of available funding.

SVR's historically have been 2% above base. Factor in another 1/4% to 1/2% to recover higher FSA levies plus at least 1/2% for increased bad debt that is yet to come ( for some lenders). A rate of 3% to 4% above base for a period of time may well occur.

With base at 6% that'll equate to an average SVR of around 10%. Thats providing funding to lend can be borrowed at 4%. International investors may find Gilts more attractive. As that's where our mortgage money is coming from.

Pure speculation I know. But there's no precedent to follow.