Any prospect of rates coming down? WHAT is going on?

Charlton_King

I saw an interesting feature on the News at 10 last night which highlighted the mint currently being made by lenders at borrowers' expense with the difference between LIBOR and mortgage rates. Re-capitalising, my sainted backside... this is outright and unacceptable profiteering, mostly being led by the banks which taxpayers have just saved.

I have seen Martin suggest that fixed rates (why just them?) may start to ease soon but so far nothing seems to be happening.

Shouldn't we all be on to our MPs asking them to kick up a fuss?

ILW

The banks are trying to start paying the taxpayers back.
Where do you suggest they get the money from?
I think 5% for a mortgage is pretty good.

Charlton_King

ILW wrote: »

The banks are trying to start paying the taxpayers back.
Where do you suggest they get the money from?
I think 5% for a mortgage is pretty good.

Er ... from well planned, long term investment and a cautious business model, possibly..?

You know, not the spivvery and sledgehammer, hooray henry, get-rich-quick model which we had to bail out last time round.

They just won't learn. They only seem to know one way of acting which is, removing the thinnest of thin, little veils, rip-off tactics which hurt the economy in general and mortgage payers in particular.

What I am asking is: where are our elected representatives when we need them? Probably still tramping to the fees office to collect their mortgage expense reclaim forms...

Oh and by the way, 5% for a mortgage from a company which is paying less than 1% for its funds is 'pretty good' only in the eyes of someone who has got them firmly closed...

ILW

I have some savings and it is nice to see the rates going up a bit. Can get nearly 4% now.
Charlton, you should have got a tracker mortgage.

diable

Where are they paying 1% for their funds? As if this is the case we a royally being ripped off.

_Andy_

Why is making a profit a 'rip off'?
What next, Tesco aren't allowed to go over a certain profit of margin for their groceries?

Cannon_Fodder

This is an Money Saving website, so I don't see the problem with at least questioning the situation, rather than rolling over so easily...

_Andy_

No problems with money-saving, it's the assumption that making profit is immoral that is ridiculous.

ChuiMartinez

would you prefer them to operate at a loss and for the government to sweep up the rest of the share of rbs/lloyds which they don't yet own...aybe even go bust and there is zero chance of the taxpayer being repaid!

they add spreads to make money. people see libor falling and expect banks to move rates in tandem. they don't run a week by week strategy. if they changed rates every week there would be uproar for that too.

also it only looks bad becuase the public have had it too good over the last few years...easy credit wasn't always the case. i doubt current spreads are extreme compared to over 10/15 years ago

opinions4u

Charlton_King wrote: »

I saw an interesting feature on the News at 10 last night which highlighted the mint currently being made by lenders at borrowers' expense with the difference between LIBOR and mortgage rates. Re-capitalising, my sainted backside... this is outright and unacceptable profiteering, mostly being led by the banks which taxpayers have just saved.

Well it makes for a good news story, that at least is true.

But the really low LIBOR rates are for 3 month terms. Would many mortgage customers buy a 3 month fix? I don't think so. If you look at savings rates (as a simple guide) most providers are paying 4%+ on 2 year terms and some are now offering 5 year terms at 5%+ to savers. These numbers are more in line with longer term bank swap rates.

Traditionally, mortgages have needed a 2% mark up to provide "fair profitability" to a lender. In distressed times, where borrowers are more likely to default leaving lenders with losses, it makes sense that this margin of 2% should perhaps be widened a little further.

In other words a 2 year fix should cost 6%+ and a 5 year fix 7%+. Many lenders are more competitive than this, so there is an argument that mortgage borrowers are actually getting a good deal.

I have seen Martin suggest that fixed rates (why just them?) may start to ease soon but so far nothing seems to be happening.

Quite a few lenders have nudged a fraction of a per cent off their fixed rates recently, including Nationwide, one of the bigger lenders.

Shouldn't we all be on to our MPs asking them to kick up a fuss?

No. They'll charge "fuss" back to their expenses at £195 an hour plus VAT and then flip it over to another "fuss" and claim it over again.

There is still a lack of funds in the swap markets to provide banks with the money they need to lend for mortgages. When I learned basic economics low supply lead to higher prices. At least with banking, savers benefit too.

Charlton_King

Fine.

So kindly explain to me why the lenders were themselves saying, only 6 months ago or so, that their rates were a reflection of LIBOR and not the BoE base rate (when there was a clamour about them not following BoE down).

Let's face it, they just pick the nearest convenient fig leaf available at any given time to cover an ongoing naked greed. They are leopards who are not even trying to change their spots.