Are savers being short changed?

pqrdef

rdtrdt wrote: »

If rates were being set solely by market forces, or at levels commensurate with the BoE's inflation target, they would be a great deal higher than currently. Unfortunately, this would probably ensure that property prices would correct very sharply indeed, resulting in much of our banking sector becoming insolvent - pretty much a collapse to make Oct 2008 look like a tea-party. That's a scenario in which savers don't do well at all

So basically we have a housing finance market in which the borrowers take all the profits and the lenders ultimately take the risks, while not understanding this. In fact many of them still believe property would be the safest thing for their bank to have their money in.

So we need a reform of the housing finance market. If we can't afford to let banks get up to their necks in high-risk investments, then conventional mortgages secured on the property will have to be restricted to 50% LTV.

If people need more finance than that, there will be options:

(1) put up part of their savings and pension pots as additional security

(2) unsecured borrowing at appropriate rates (with controls on the exposure of the "too big to fail" banks)

(3) shared-equity schemes financed by risk capital, e.g. property funds.

This would take the house-price poison out of the cash deposit market, which could then go back to its proper function of lending to diverse low-risk borrowers.

It would also have the excellent effect of discouraging house buyers from paying silly prices, helping to prevent bubbles.

blinko

i think it should also be noted it is not the banks respsonsibility to provbide you with a return.

they provide products

at the end of the day they are providing 6x base rate on savings 3% this is un heard of !!

smeagold

http://www.youtube.com/watch?v=YmiFB9hJxus

Time you woke up. Take your head out your !!!! and wake up.