Inflation - Interest Rates

Really2

Thrugelmir wrote: »

and they are currently committed to exising borrowers on life time trackers. Which has to funded by higher rates on new borrowers. Its going to take some years for the position to unwind. As at the moment the BS will be receiving minimal capital repaqyments if any. As a lot of borrowers will be on interest only.

Can't agree with the last bit as it is well document borrowers are overpaying by I think £8bn per month (or is that a 1/4 I can't remember)

Dan:_4

Thrugelmir wrote: »

You mortgage advisor at the Halifax is probably driven by a sales target and commission.

Banks aren't greedy. Like any business they are in existance to make a profit. Some financial institutions have raised rates as they don't want high volumes of new business.

If the Bank of China commit £10 billion to new mortgage lending in the coming year. At say an average loan of £125k thats only 8,000 new mortgages. Though more likely they will pick up remortgage business.

If you live in hope that the "Good old days" of lending will return. Then I fear not.

What do you mean "Banks aren't greedy"? It was their greediness that got us into this mess.

I have never once mentioned the "good old days" of lending, and highly suspect it will not return to that scale of lending.

My point was that when base rates increase, the current fixed mortgage products may not increase in line, as they are already set well above the base rate. In time banks will want to start lending - this means competition to get business - this means reasonable fixed rate products.

ess0two

ad9898 wrote: »

After thinking, I deleted my first response to this sarcastic flippant comment, just !!!!!! is your problem ?, you either believe it or you don't, if you don't move along. Jesus this forum is becoming so full of sh*t lately, what with the !!!!!! from yesterday.

You called people !!!!!! yesterday who did'nt buy your LR figures being fiddled.
You spat the dummy, then were shown your error by Carol,but failed to apologise to those you insulted.
You need a break from here theres more to life than money and tracking previously sold houses on LR.

Conrad

Thrugelmir wrote: »

As at the moment the BS will be receiving minimal capital repaqyments if any.

How on Earth could you possibly know this?:rolleyes:
Furthermore, Bank reps I meet every week tell me the opposite, that borrowers are using this window of uber low rates to pay down capital.

Really2

Really2 wrote: »

Can't agree with the last bit as it is well document borrowers are overpaying by I think £8bn per month (or is that a 1/4 I can't remember)

Conrad wrote: »

How on Earth could you possibly know this?:rolleyes:
Furthermore, Bank reps I meet every week tell me the opposite, that borrowers are using this window of uber low rates to pay down capital.

http://www.google.com/hostednews/ukpress/article/ALeqM5jQ9GI_ia_46qSp6DKorba4wyMibg

Britons reduced their mortgage debt by a record £8.14 billion during the first quarter of the year, figures have shown.
Falling house prices and the economic downturn have put people off taking money out of their property, leading to equity withdrawal being negative for the fourth quarter in a row.

78mjt

Despite all this posturing we have to face the fact that no-one knows what will happen with interest rates. I saw my IFA 18 months ago and they 'strongly' advised me to fix my 2 mortgages. I did on my buy-to-let but was considering moving and so didn't with my home mortgage. I'm saving around £700 a month on my variable rate mortgage and would have saved a further £400 on my buy-to-let had I not followed their advise. But I'm not bitter, as you just never know what's going to happen. Best guess, interest rates stay low until next year when they start to rise. Within 18 months they will probably settle at a reasonable 5%.

inspector_monkfish

78mjt wrote: »

Within 18 months they will probably settle at a reasonable 5%.

personally, i very much doubt they will get that high so soon

Thrugelmir

Really2 wrote: »

Can't agree with the last bit as it is well document borrowers are overpaying by I think £8bn per month (or is that a 1/4 I can't remember)

Current total mortgage at the end of March stood at around £1,227 billion. So even assuming you figure of £8 billion is correct. (I don't know the actual figure). Its a tiny figure in view of the total debt outstanding.

Thrugelmir

Conrad wrote: »

How on Earth could you possibly know this?:rolleyes:
Furthermore, Bank reps I meet every week tell me the opposite, that borrowers are using this window of uber low rates to pay down capital.

How much capital is repaid in the first 10 years of a 25 year repayment mortgage as a % of the total debt?

Between 2003 and 2007 around 25% of all mortgages were made on an interest only basis.

So doesn't take much to see that for sizable amounts of capital to become for available relending that it will take time for the money to recirculate.

Rather than listen to bank reps. Watch Merv King in front of the Treasury Committee a few weeks ago. Very enlightening.

Really2

Thrugelmir wrote: »

Current total mortgage at the end of March stood at around £1,227 billion. So even assuming you figure of £8 billion is correct. (I don't know the actual figure). Its a tiny figure in view of the total debt outstanding.

But it still means loans are being over paid, so the point of most being on IO and not repaying is simply not true.