A quarter of home owners live on 'financial precipice'

chucky

Pobby wrote: »

I may have got this wrong Chucky but am I right in saying that the banks are recapitalising pretty swiftly now as say they are charging 4.5% apr, they are making good profits without giving much to savers. Other lenders, e.g. credit card providers charging a good deal more.

Now suppose IRs go up a few per cent to say 4% BOE base rate, the interest charged on the existing mortgage would not have to go as high as say 8% as the lenders would, by then, be in a healthier position.

Not sure I have explained this too well, lol.

my view on this is that there are some banks that are in a good state others that are probably not - this would indicate that they still have holes in their balance sheets.

so for now some banks are making a decent profit margin on the difference between their rates - others like Thruglmeir mentioned have that margin eaten away by other issues and bad debts.

so my conclusion is that if rates move higher - there will be banks that cannot absorb the new rates and have very little margin left but to increase rates. the downside for them is that they become less competitive and probably be a good target for a takeover.

the customer downside is that they will pay more for their lending which will mean that they will switch lender to a more competitive rate - if they can of course

i assume that credit card rates are so high is because of the high number of defaults and also because lenders can also put whatever rate they like on their cards. i don't believe it is as regulated as the mortgage business.

StevieJ

Surely a YouGov poll is likely to have a higher proportion of people on the edge than the normal population due to the fact that they pay you to do it don't they?

Once you have joined YouGov as a panel member you will be sent survey invitations to your email address. The invitation email will contain a link that will take you directly into the survey. Once in the survey, you will be informed of the amount you will be credited for the survey, usually ranging between 50p and £1, the subject of the survey and also an estimation of how long the survey will take to complete.

StevieJ

chucky wrote: »

she's assuming that everyone is on SVR's or Trackers and nobody is on fixed rates

If BR was 3% my tiny mortgage would still be below 4%, I am not alone.

Pobby

Thanks for that chucky. It`s pretty clear we have various forces playing out here. This surely must operate the other way around that at some point the banks will be offering more generous rates to savers or is that not the case as they don`t need to attract individual savings due to QE?

Emy1501

StevieJ wrote: »

If BR was 3% my tiny mortgage would still be below 4%, I am not alone.

Do you think you type of mortgage is the norm? I doubt mine at 2.25 at present is the norm and its alot higher than yours.

Also its about whether any extra rise will cause people to suffer not what rate they will be on.

I know at least 2 people on SVR's of 2.5% who would fir into the OP post mainly due to them taking on extra debt rather than paying their current debt down.

I suspect time will tell but 2008 tells us that people were stuggling paying rates of 5-6% etc

chucky

Pobby wrote: »

Thanks for that chucky. It`s pretty clear we have various forces playing out here. This surely must operate the other way around that at some point the banks will be offering more generous rates to savers or is that not the case as they don`t need to attract individual savings due to QE?

none of us really know Pobby - the way i see it is as that where do banks make their money, through savings or lending?

the answer is pretty obvious so i guess that savings rates will improve but won't be close to what they were in the past for a long while - Really2 alluded to this in a previous post.

chucky

StevieJ wrote: »

If BR was 3% my tiny mortgage would still be below 4%, I am not alone.

somewhere between 40% and 50% of people are on fixed rates - they could afford it then, so they'd be quids in when they come off them and go onto SVR's.

Pobby

Yes, I guess being quite a bit older than many of the posters here, it is difficult for me to get a grip on it all. All through my life IRs have been, on average, 8% so I guess I have something of a mind set.

It was less than 20 years ago when the interest part on my £58k mortgage was over £600. That would be enough to find even today but then it was murder for many people.

Really2

Pobby wrote: »

Yes, I guess being quite a bit older than many of the posters here, it is difficult for me to get a grip on it all. All through my life IRs have been, on average, 8% so I guess I have something of a mind set.

I think the difference this time is we are not expecting to zoom back up and start really good growth again.

The last 50 years has seen the UK develop (and evolve) very quickly, that is now going to turn in to slow growth (and will be the same for most western countries)
The countries likely to see the rates, wage inflation and development we have seen in the past are ones similar to us 40-50 years ago. So the emerging nations china, etc.

StevieJ

Really2 wrote: »

I think the difference this time is we are not expecting to zoom back up and start really good growth again.

The last 50 years has seen the UK develop (and evolve) very quickly, that is now going to turn in to slow growth (and will be the same for most western countries)
The countries likely to see the rates, wage inflation and development we have seen in the past are ones similar to us 40-50 years ago. So the emerging nations china, etc.

Maybe those anti-globalisation protesters were right all along :eek: