End to Interest Only Mortgages????

chucky

silvercar wrote: »

Lenders also look to their current lending book where some have loads of money lent on trackers at or near base rate.

that's why i only mentioned fixed rate.

their current lending book would probably be linked to Libor

treliac

chucky wrote: »

their current lending book would probably be linked to Libor

It's funny.... As base rate dropped and many lenders failed to pass on the drops, I kept reading, 'Ah, but mortgage rates are more likely to relate to Libor than base rate'....

Makes me wonder what the reason is now. :rolleyes:

Thrugelmir

julieq wrote: »

Some people will still manage to be surprised by the unsurprising, sadly that's a fact of life. But there's no reason why the rest of us shouldn't be allowed to run our finances as we wish, is there?

Unfortunately its the lenders that require regulation not the borrowers. Some of the problems that have arisen are the result of unsuitable product sales in the market place.

Thrugelmir

treliac wrote: »

It's funny.... As base rate dropped and many lenders failed to pass on the drops, I kept reading, 'Ah, but mortgage rates are more likely to relate to Libor than base rate'....

Makes me wonder what the reason is now. :rolleyes:

Maybe its because banks don't borrow all the money they require from other banks at LIBOR to fund their mortgage ( or total loan) book.

michaels

Think about all the funding that banks had from current account balances - before they used to pay 0.1% when base rates were 5.5%, now they pay 0% - thus funding from this source is now relatively much more expensive and their are similar effects with most other savings products - even the bog standard poor performing instant access accounts probably previously paid about 3%, now they tend to pay at least 0.5% - again relatively much more expensive for the banks. THis would make borrowing on the money markets appear to be the best source of funding but banks can no longer assume that such funding can be rolled over after what happened to Northern Corock hence there isn't (for al banks) the opportunity to make money by expanding their mortgage lending that there appears to be - HSBC may be an exception but I am sure they would rather price close to everyone else and make huge profits than just push for market share.

chucky

treliac wrote: »

It's funny.... As base rate dropped and many lenders failed to pass on the drops, I kept reading, 'Ah, but mortgage rates are more likely to relate to Libor than base rate'....

Makes me wonder what the reason is now. :rolleyes:

it's pretty obvious really. it's Libor and this will depend on the amount of money they have on deposit.

if they don't have available funds on deposit from savers they have to go onto the money markets and use Libor - like Northern Rock did.

if they have money held on deposit they won;t need to go onto the money markets and will use whatever rate they believe they believe they can sell their mortgage products are, probably like HSBC.

mbga9pgf

Chucky,

Shame Basel 2 capital requirements mean whatever happens, they still need to balance assets with liabilities.

chucky

mbga9pgf wrote: »

Chucky,

Shame Basel 2 capital requirements mean whatever happens, they still need to balance assets with liabilities.

but that's the point that people make the stupid comments about comparing mortgage rates to base rates don't understand.

those banks with holes all over their balance sheets are going to struggle to meet these requirements in the medium term. whilst they struggle the 'stronger' banks will be taking their market share.

the basel 2 capital requirements will be watered down - they will be more regulated but not as much as is planned.

mbga9pgf

the basel 2 capital requirements will be watered down - they will be more regulated but not as much as is planned.

Ha ha ha! You really think after the nightmare we have been through, as a result of excessively loose fiscal and monetary policy, they will REDUCE capital requirements?

Far more likely, the struggling banks (State owned) will be wound up, their assets sold and there will be less competition for the remaining stronger banks.

Its called capitalism dude.

chucky

mbga9pgf wrote: »

Ha ha ha! You really think after the nightmare we have been through, as a result of excessively loose fiscal and monetary policy, they will REDUCE capital requirements?

Far more likely, the struggling banks (State owned) will be wound up, their assets sold and there will be less competition for the remaining stronger banks.

Its called capitalism dude.

no you misunderstood my post - i was agreeing with you.

what i tried to say was that they want to implent 100% of the capital requirements; in the end they will implement 50% of the changes for example.