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Debate House Prices


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Halifax Hpi November 2010 -0.1%

145791012

Comments

  • Graham_Devon
    Graham_Devon Posts: 58,560 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    Generali wrote: »

    In that case, banks will look to cut their margins in order to attract business. My guess would be that an increase in base rates to 5% would increase mortgage rates by perhaps 4-4.5%.

    What's your thoughts on collared SVR's like I'm on?

    Mines collared at 3.5%, even though I can find no reference to this in any of my reams of paperwork, and indeed, neither could anyone else on the same mortgage, based on a thread on the mortgage forum when rates fell past 1.5%.

    I'm thinking that a rise to 1-1.5% would make no difference to people with my mortgage, as it's still 2% above base, which is what it always was?

    Whats your thoughts on what lenders will do? They are getting 3% above base out of us at the moment, instead of the 2% above bas ethey always did get.
  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    What's your thoughts on collared SVR's like I'm on?

    Mines collared at 3.5%, even though I can find no reference to this in any of my reams of paperwork, and indeed, neither could anyone else on the same mortgage, based on a thread on the mortgage forum when rates fell past 1.5%.

    I'm thinking that a rise to 1-1.5% would make no difference to people with my mortgage, as it's still 2% above base, which is what it always was?

    Whats your thoughts on what lenders will do? They are getting 3% above base out of us at the moment, instead of the 2% above bas ethey always did get.

    Remind me what a collared SVR is, I've never worked in retail banking.
  • Generali wrote: »
    Remind me what a collared SVR is, I've never worked in retail banking.

    A capped SVR is guaranteed to never rise above X% above base rate. For example all the old Nationwide and Lloyds SVR's are guaranteed never to be more than 2% above BOEBR.

    A collared SVR has a floor as to how low it can go. For example, the SVR tracks base rate at +2%, however can never fall below 3%.
    “The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.

    Belief in myths allows the comfort of opinion without the discomfort of thought.”

    -- President John F. Kennedy”
  • Graham_Devon
    Graham_Devon Posts: 58,560 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    Generali wrote: »
    Remind me what a collared SVR is, I've never worked in retail banking.

    My mortgage product is currently Bank Rate + 2%.

    That's whats in all the paperwork.

    However, there was apparently, always a "collar" applied, whereby if bank rates dropped below a certain amount, the mortgage would in effect, become Bank Rate + whatever.

    Currently it's BR + 3.25%, as I'm paying 3.75%.

    If base rates went negative, to say -2%, I could be paying BR + 5.5%.

    So the collar seems to kick in at 1.75% BOE rates, and the mortgage, based on BR + 2% will no longer apply.

    Therefore, I was wondering if it applies on the way up too? Should I fall back in line with BR + 2%. I'd assume so, but consideirng this wasn't in any of the paperwork, but they got away with it due to being bought out, I'm not so sure it will just fall back.

    Sorry if you don't know much about them, was just looking for your insight on the matter really.
  • Percy1983
    Percy1983 Posts: 5,244 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    Good to see the downward trend continues, I slow decline is the best for everybody involved.
    Have my first business premises (+4th business) 01/11/2017
    Quit day job to run 3 businesses 08/02/2017
    Started third business 25/06/2016
    Son born 13/09/2015
    Started a second business 03/08/2013
    Officially the owner of my own business since 13/01/2012
  • Really2
    Really2 Posts: 12,397 Forumite
    10,000 Posts Combo Breaker
    My mortgage product is currently Bank Rate + 2%.

    That's whats in all the paperwork.

    However, there was apparently, always a "collar" applied, whereby if bank rates dropped below a certain amount, the mortgage would in effect, become Bank Rate + whatever.

    Currently it's BR + 3.25%, as I'm paying 3.75%.

    If base rates went negative, to say -2%, I could be paying BR + 5.5%.

    So the collar seems to kick in at 1.75% BOE rates, and the mortgage, based on BR + 2% will no longer apply.

    Therefore, I was wondering if it applies on the way up too? Should I fall back in line with BR + 2%. I'd assume so, but consideirng this wasn't in any of the paperwork, but they got away with it due to being bought out, I'm not so sure it will just fall back.

    Sorry if you don't know much about them, was just looking for your insight on the matter really.

    Is it BOE base rate or BBBR (BBR)
    Unless it is a BOE tracker I think the base rate is not always the BOE base.
  • The rate of falls is clearly gathering pace. It looks grim for house prices next year.

    "The three-month on three-month comparison, a less volatile measure of house price changes, showed a 2.1% fall in November.
    This drop has accelerated towards the end of 2010"

    What's it likely to do when the -3.6% blip drops out of the wuarter? ;)
    :wall:
    What we've got here is....... failure to communicate.
    Some men you just can't reach.
    :wall:
  • Generali wrote: »
    At present there is very little competition in mortgage markets (banks don't seem to want to lend nor people borrow plus there are fewer banks than there were) and rates are generally low.

    As a result, the difference between what banks borrow and lend at (the margin or spread) is pretty high historically.

    Most likely, interest rates will only start to rise as the economy recovers. In that case, banks will start to compete a bit more for business and perhaps more lenders will enter the market too.

    In that case, banks will look to cut their margins in order to attract business. My guess would be that an increase in base rates to 5% would increase mortgage rates by perhaps 4-4.5%.

    I would agree.

    The only way the wider economy will recover is when lending recovers. And when lending recovers, competition will return to the market.

    Margins above base rate for mortgages will be therefore be lower.

    In 2007, the average margin above base was around 1%. Today it is over 3%. If base rates ever return to 5% (and it is entirely possible they don't in my lifetime) bank margins will almost certainly have reduced from current levels.

    The likeliest scenario in my opinion is that the neutrality point for interest rates over the next decade is between 2% and 3%. Meaning effective average mortgage rates of between 5% and 6% based on current spreads, or right around where they were in 2007.
    “The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.

    Belief in myths allows the comfort of opinion without the discomfort of thought.”

    -- President John F. Kennedy”
  • Graham_Devon
    Graham_Devon Posts: 58,560 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    Really2 wrote: »
    Is it BOE base rate or BBBR (BBR)
    Unless it is a BOE tracker I think the base rate is not always the BOE base.

    I'd have to get the paperwork out to be 100% sure, but it followed every single rate rise and fall, so I'm guessing BOE.
  • Really2
    Really2 Posts: 12,397 Forumite
    10,000 Posts Combo Breaker
    I'd have to get the paperwork out to be 100% sure, but it followed every single rate rise and fall, so I'm guessing BOE.
    Not sure on the way down but BBR matched boe for 14 years pre 2007, not sure now?
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