interest rate rip off

Thrugelmir

michaels wrote: »

The level of financial illiteracy on this board still manages to surprise me sometimes.

In the main because the serious intelligent posts are simply ignored.

The disconnect between BOE base and mortgage fixed rates has been discussed on numerous occasions.

bingobob777

The_White_Horse wrote: »

when the interest rate was 4.5% i got a 5yr fix on 5.29% - 0.79% above base.

Now the best 5yr fix is 3.99% or thereabouts which is 3.49% above base.

I know banks want to increase their reserves, but this is ridiculous.

!!!!!! is going on here??????

Base rate is irrelevant, what were libor rates at both times?

Mr_Mumble

White Horse, you don't seem to be taking into account that when you were getting a 5yr fix at 0.79% above base rate we had a bubble situation and you were getting too good a bargain.

Banks could package up a bunch of mortgage loans and sell the CDSs to German pension funds or Singaporean wealth managers who were demanding the paper thanks to credit agencies and the regulatory framework (Basel II) giving them a stamp of approval.

Mortgage debt will not be seen as such a safe investment again. Since everybody's home loan is now considered riskier everyone will be paying higher rates. Banks do need to build capital and may be profiteering from a lack of competition now. But, if you expect rates to back to the mid-noughties levels, well, it just isn't going to happen.

Loughton_Monkey

The_White_Horse wrote: »

.....They seem to be working in collusion to keep rates, just so. I think this not right.

Now that would be a very serious criminal offense. Ask the airlines and oil companies.

[Deleted User]

The_White_Horse wrote: »

i am just surprised that no bank or building society at all is prepared to undercut these massive rates.

its like Morrisons, Sainsbury's and ASDA all charging 5 quid for a loaf of bread. You can bet Tesco would be selling it for 50p within a week. That is the free market. What we have here seems to be a cartel who have all agreed to keep rates offered to the public massively high compared to the base rate.

the big 4 supermarkets are a massive cartel,the 21st century unacceptable face of capitalism,out of the 000`s upon 000`s of lines they all stock they only compete at best on a few 100 at any given time

A._Badger

Generali provided the answer quite a few posts ago.

Few seem to have taken in the point he made. And it's a very serious one - not just true of banking.

kmmr

Thrugelmir wrote: »

In the main because the serious intelligent posts are simply ignored.

The disconnect between BOE base and mortgage fixed rates has been discussed on numerous occasions.

I only drop into this board from time to time, and I completely agree with the comment about financial illiteracy.

No point explaining it, as it doesn't fit in a two line post, so people don't read it.

blueboy43

Generali wrote: »

Free market my rrrrr.

The Corporatist system in place in the UK and much of the rest of the West means that in the UK most of the mortgages are written by 6 banks.

There's hardly any competition and it's virtually impossible to set up a competitor so the banks are making out like bandits.

Necessary conditions of capitalism is that failing companies fail and that competitor companies can be set up reasonably easily. Neither applies in the UK banking market. No new banking licences were issued in the 20th Century and 1 has been in the 21st if memory serves.

Probably true - although current account banking in the UK is close to unique in that it is "free if in credit", ie no charge for transactions.

I'd be interested if you thought that this market (current) wasn't competitive.

telboyo

The_White_Horse wrote: »

i have never said it is not fair. I just asked !!!!!! is going on. it is a reasonable question. You have a supposed free market, yet all the rates are almost identical. Surely, in a true free market, one bank would be aggressively undercutting rates to obtain business/market share. They are not. They seem to be working in collusion to keep rates, just so. I think this not right.

If a provider undercuts a competitor the other players in the market will either match them or beat them otherwise they will make no sales. Eventually all offers will be at the same price the only differentiation will be in levels of service etc. if you are willing to pay this premium you are welcome to pay it. As the banks all have similar costs it is no wonder that all their products are similar.

If you go down to a traditional fruit and veg market you will see that the fruit and veg stalls all sell the basic stuff at the same price otherwise they could not attract the custom. If they drop the price too low they would be selling at a loss and go out of business.

look at ebay practically anything you buy on there ends up at the same price otherwise it goes unsold, this is how a free market works. If the mortgage providers could undercut each other without risk they would be doing it. Oh hang on that is how we got into this mess- mortgage companies selling debt and then getting other mugs to buy that debt under the belief " House prices will continue rising for ever". Funny how everybody was happy to take money out of their houses and talk up the price so they made a profit- Now they have spent the money they are happy to blame the bankers-Everyone who has taken equity from their to live the life of riley is as guilty of greed as the bankers.

bendix

woodbine wrote: »

the big 4 supermarkets are a massive cartel,the 21st century unacceptable face of capitalism,out of the 000`s upon 000`s of lines they all stock they only compete at best on a few 100 at any given time

And yet the big four supermarkets have managed to bring food prices down significantly lower than they would be if they were sold in small independent outlets, and provide incredible convenience.

Yes. Lower prices for the consumer. Convenience. Carparks. They truly are evil.