MSE News: Lenders cut mortgage rates

Former_MSE_Guy

This is the discussion thread for the following MSE News Story:

"Three major lenders have cut their mortgage rates this week in a boost for borrowers. Mortgage experts say these represent tentative signs of competition creeping back into the market ..."

Read the full story:
Lenders cut mortgage rates

cons

#edit#

dunno what happened, working now

LizEstelle

Excellent.

Do people think that competition is now returning and that the 'fixed rate rip-off' will finally slink away, if slowly?

Kavanne

Er, surely lenders are reducing tracker rates as they reckon the base rate is going up soon? No?

Treadmill

I think the use of 'slashed' in this article is overkill

opinions4u

LizEstelle wrote: »

Do people think that competition is now returning

A little, as more lenders manage to get hold of funds that they are actually able to lend.

and that the 'fixed rate rip-off' will finally slink away, if slowly?

Liz, as usual you post about this "rip-off". As usual I draw your attention to Swap Rates.

A couple of weeks ago these were higher than they were 12 months ago. Hey presto lenders had higher fixed rates as a result.

Now that swap rates have fallen a little it really is little shock that lenders have started to reduce the costs of borrowing at a fixed rate too. I told you it would happen if swap rates fell and it is beginning to.

Treadmill wrote: »

I think the use of 'slashed' in this article is overkill

Spot on. "Reduced slightly" would be more accurate. These "MSE NEWS" articles are getting really annoying with their sensationalist headlines. At least they appear to have edited this one.

LizEstelle

opinions4u wrote: »

A little, as more lenders manage to get hold of funds that they are actually able to lend.

Liz, as usual you post about this "rip-off". As usual I draw your attention to Swap Rates.

A couple of weeks ago these were higher than they were 12 months ago. Hey presto lenders had higher fixed rates as a result.

Now that swap rates have fallen a little it really is little shock that lenders have started to reduce the costs of borrowing at a fixed rate too. I told you it would happen if swap rates fell and it is beginning to.

Spot on. "Reduced slightly" would be more accurate. These "MSE NEWS" articles are getting really annoying with their sensationalist headlines. At least they appear to have edited this one.

You appear to regard the banking and lending world as some kind of mechanistic, non-human device which obeys a set of God-ordained, not-to-be-questioned, inscrutable laws with total, logical, free-from-human-interference inevitability. In short, you actually seem to think that economic pressures are at work here, rather than anything - how might one put this? - more mundane and less savoury.

It is as if you have slept through the last two years.

We now know that the system is in fact riven with all-too-human failings of greed, avarice and rapacious lack of consideration for anything which the average Joe/Jo would hold as being remotely 'fair', logical or reasonable. Put briefly, what they can get away with, they will.

Let's be clear about this - are you actually ruling out such possibilities as under-the-table agreements and illegal cartels? If you are, you are a brave man. I personally would credit the gentlefolk in charge of our financial 'system' with a nice, round figure as an honesty/propriety/decency score..... 0/100.

You can quote me 'swap rates' until you are blue in the face. It is people who are making these decisions... people with one eye on their end of year bonuses and the other looking with increasing contempt at our politicians' apparent incompetence at imposing regulation with teeth. No doubt you believed these same people only a short while ago when they were quoting LIBOR, when it suited them, as their reason for keeping lending rates high.

They are, literally, laughing all the way to the bank.

Mortgagehelper

Fixed rates ARE based on swap rates. That's exactly why you see Fixed Rates being pulled at short notice - the amount of money that lender has purchased on the money markets has then run out.

Then, the lender goes back to market, buys another pot of money, prices it, and sells it on to the general public at a profit. It's actually a lot like normal business - you may buy bananas, add your margin and sell on. It's no different.

There you go - no conspiracy.

Tracker mortgages are different - whilst in this market lenders have tweaked the deals in their favour (i.e now hardly any are penalty free) - you know at least that your rate will follow the BofEngland base rate.

LizEstelle

Mortgagehelper wrote: »

Fixed rates ARE based on swap rates. That's exactly why you see Fixed Rates being pulled at short notice - the amount of money that lender has purchased on the money markets has then run out.

Then, the lender goes back to market, buys another pot of money, prices it, and sells it on to the general public at a profit. It's actually a lot like normal business - you may buy bananas, add your margin and sell on. It's no different.

There you go - no conspiracy.

Tracker mortgages are different - whilst in this market lenders have tweaked the deals in their favour (i.e now hardly any are penalty free) - you know at least that your rate will follow the BofEngland base rate.

You can just see hear the glasses being clinked at those London clubs in response to wise words such as the above, can't you...?

There will always be people ready, willing and frothing at the mouth to act as apologists for the inexcusable...

opinions4u

LizEstelle wrote: »

You appear to regard the banking and lending world as some kind of mechanistic, non-human device which obeys a set of God-ordained, not-to-be-questioned, inscrutable laws with total, logical, free-from-human-interference inevitability. In short, you actually seem to think that economic pressures are at work here, rather than anything - how might one put this? - more mundane and less savoury.

Actually, when the banks have moved away from their typical "mechanistic" lending policies, perhaps driven by the poor judgement of their chief executives, this has actually led to the self-destruction of those organisations.

My mortgage underwriting training basically said "don't lend to people with a poor payment history, don't lend to somebody who is going to let the property out and make sure they've got their own deposit". Bradford & Bingley used to be like that. Then they changed. Ah yes, the taxpayer now owns their turgid mortgage book.

Economics drove mortgage pricing before it all went tits up. Economics continues to drive prices now.

The supply and demand curves are probably working in perfect unison.

It is as if you have slept through the last two years.

Well I was asleep as the fall in banking share prices wipes tens of thousands of pounds off my personal 'wealth'. But it was my own fault for not having diversified my portfolio sooner.

We now know that the system is in fact riven with all-too-human failings of greed, avarice and rapacious lack of consideration for anything which the average Joe/Jo would hold as being remotely 'fair', logical or reasonable.

If that's your interpretation of the word "economics" then so be it.

Put briefly, what they can get away with, they will.

The business of business is to make as much money as possible. Do M&S trade to make losses on their Per Una range? Do Kwik Fit change your exhaust for a tenner? Would a solicitor charge less per hour than it costs to run his office?

Why are they any different to banks?

Let's be clear about this - are you actually ruling out such possibilities as under-the-table agreements and illegal cartels?

Actually, yes.

Let's take a look at five year fixed rate mortgages from the major lenders for customers with a 25% deposit moving home:

Halifax 5.75% £995 fee
Abbey 5.49% £799 fee
Nationwide 5.88% £896 fee
HSBC 4.95% £599 fee

If there was a cartel the prices would be the same. On a £150k mortgage there's a price difference there of over £7,000 over the 5 years.

You can quote me 'swap rates' until you are blue in the face.

I have done. It's the truth. But it doesn't suit your agenda. Sorry. (by the way, the reason Halifax rates are higher than HSBC is because the wholesale funders charge HBOS more for money than they charge HSBC).

It is people who are making these decisions... people with one eye on their end of year bonuses and the other looking with increasing contempt at our politicians' apparent incompetence at imposing regulation with teeth. No doubt you believed these same people only a short while ago when they were quoting LIBOR, when it suited them, as their reason for keeping lending rates high.

Actually they were quoting LIBOR rates as an indicator of liquidity in the market as a whole, not specifically for fixed rate funds.

There will always be people ready, willing and frothing at the mouth to act as apologists for the inexcusable...

The inexcusable has been excessive and reckless lending. When common sense comes back to the market the banks still get a slating.

Mortgagehelper

LizEstelle wrote: »

You can just see hear the glasses being clinked at those London clubs in response to wise words such as the above, can't you...?

There will always be people ready, willing and frothing at the mouth to act as apologists for the inexcusable...

What was the line in that film again?

Some people can't handle the truth.