Recuce Mortgage interest PETITION

_Andy_

oh dear oh dear

Idiophreak

opinions4u wrote: »

If mortgages aren't obtainable, due to lack of profit potential, then property values would fall dramatically.

The whole point of OPs suggestion is to reduce profit potential. If it was mandated, someone would do it, mortgages wouldn't be unobtainable.

Would you react the same way if the cap was +3% instead of +1%?

opinions4u wrote: »

And what happened 3 years ago? Ah yes, many went t!ts up. Good plan!

Are you a banker? Your post reads that way.

Most people suggest that the crisis 3 years ago was due to irresponsible lending. Your idea that this lending could have been supported had banks offset their risk by charging more interest across their mortgages is definitely...banker logic.

agrinnall

If Eddie and Idiophreak think this is such a great idea I suggest they start a bank offering it. I'm sure the rest of us will be more than happy to take out one of their low interest mortgages and of course they will be making a perfectly reasonable profit out of it (according to them anyway) so we all win.

opinions4u

Idiophreak wrote: »

The whole point of OPs suggestion is to reduce profit potential. If it was mandated, someone would do it, mortgages wouldn't be unobtainable.

If you can't make a profit out of something over a reasonable timescale, there's no incentive to offer it. This is the same in any industry.

Would you react the same way if the cap was +3% instead of +1%?

Probably. Price controls lead to inflexibility. An example I'll give you is tuition fees. Government says maximum allowed is £9k. It seems most universities have hit the maximimum or close to the maximum. Centralised price capping has lead to a market place that means there is little competition - everybody looks to maximise the market.

If the number was 3% there would be players in the market. They would all exploit the "cap" and maximise profit at the expense of the consumer. So I would be totally against it.

Are you a banker? Your post reads that way.

I was. Does it matter? It means I have a reasonable feel for the profitability (or otherwise) of the mortgage market, the risks of mortgage lending and the losses made in poor markets like we've seen over the past few years.

Most people suggest that the crisis 3 years ago was due to irresponsible lending. Your idea that this lending could have been supported had banks offset their risk by charging more interest across their mortgages is definitely...banker logic.

Irresponsible lending doesn't help.

Lending at 1% above base rate to the financially clueless is an example of some of the pre-Credit Crunch loans that were available.

Price controls inhibit market places.

Capping interest charges at 1% above BofE base rate would close down the mortgage market, destroy property values and lead to the biggest depression the nation has ever seen.

Idiophreak

opinions4u wrote: »

I was. Does it matter? It means I have a reasonable feel for the profitability (or otherwise) of the mortgage market, the risks of mortgage lending and the losses made in poor markets like we've seen over the past few years.

It just means you see things from the other side of the fence.

The problem's irresponsible lending.

Most people see the solution as being to tighten lending criteria, take larger deposits, that kinda thing.

Bankers see the solution to make so much money out of everyone that they can afford more losses.

No right, no wrong and all that.

(ETA: I don't think OP has a good idea, by the way, because it's based on plenty of wrong assumptions and backward math...I just disagree with your reasons for disliking it)

opinions4u

Most people see the solution as being to tighten lending criteria, take larger deposits, that kinda thing.

Which is what the banks have done.

Bankers see the solution to make so much money out of everyone that they can afford more losses.

Well capitalised banks with good quality assets are an absolute must for a successful economy. At the moment they are well capitalised (thanks to bailout, rights issues and overseas investment) but have a load of junk "assets" on their balance sheets which are draining off slowly.

The only way banks can expect to return to sustainable profits is through sensible lending at a margin reflecting the risks taken. Good bankers have always recognised this. Stupid bankers lend recklessly without expecting losses to happen (or buy banks that did the same). There is a difference.

Thrugelmir

eddie701 wrote: »

Banks have been going "bust" for other reasons than these.....high street vs financial markets.

Interestingly enough I went to a talk tonight given by Paul Moore the whistleblower at HBOS, who for good measure was head of group regulatory risk. Alot of the Q&A session centred on the acquistion of HBOS by Lloyds. One fact that emerged on a powerpoint slide in an anaylsts presentation in March 2009. Was that 28% of consumer lending and 43% of commercial lending on HBOS's books was outside and above the risk tolerance of the Lloyds Group. In essence HBOS was advancing funds in the knowledge that a high proportion of its customers would struggle to repay the debt.

dunstonh

eddie701 wrote: »

Banks have been managing on a margin of 1% for quite some time.

Banks have been going "bust" for other reasons than these.....high street vs financial markets.

Lets cut to the chase here. You are lone voice and most posters here think you dont know how funding works. So, tell us what you would do with raising the finance to lend on mortgages if you ran a bank?

How much would you pay savers? if savings accounts are 5% and mortgages are 1.5%, who would pay that difference?

If LIBOR is running above Base rate, how would raise capital to lend to people?

davieesox

Thrugelmir wrote: »

Surely its in the interests of the taxpayer not to let defaults go unchecked. Otherwise the situation will merely be worse.

Again very true,but if someone loses a house getting employment is made harder and the state then has to pay to house the family and pay benefits etc, so why not keep the family in the house and at least give the family a chance, the bank will only auction off the house more often than not at below its value, if the family are alowed to stay put and do get back on ther feet the mortgage should be extended in length.The banks are basically are owned by the goverment anyway,if we can afford to pay for obscene bankers bonuse's we can afford to pay the mortgage of the taxpayers who
who bailed these fiscal incompetents:mad:

opinions4u
spoken like a true ex-banker:rotfl:

opinions4u

Thrugelmir wrote: »

Interestingly enough I went to a talk tonight given by Paul Moore the whistleblower at HBOS, who for good measure was head of group regulatory risk. Alot of the Q&A session centred on the acquistion of HBOS by Lloyds. One fact that emerged on a powerpoint slide in an anaylsts presentation in March 2009. Was that 28% of consumer lending and 43% of commercial lending on HBOS's books was outside and above the risk tolerance of the Lloyds Group. In essence HBOS was advancing funds in the knowledge that a high proportion of its customers would struggle to repay the debt.

Moore's an interesting one. When it came to retail risk, he got his way on a number of issues. A lot of new risk roles were created in 2003, presumably in response to his warnings about the sales culture in the bank.

As for the imbalance in lending, I have no idea around the truth of what Moore did or didn't say, although his evidence to the Treasury Select Committee is public record. His suggestion that HBOS was a business that didn't encourage challenge is untrue. Under Crosby and Hornby the retail business clearly encouraged challenges, ideas etc and would often respond with well thought through change, making life better for customers and staff. Obviously I didn't work directly for either of them though. He did.

What I will never understand is the quality of corporate lending. I came through the Halifax side of the business where strong underwriting and conservative lending were the order of the day.

When Halifax and BoS merged in 2001 Crosby made a big thing out of the benefits of broadening the lending base away from the property market. It all made sense to me. So I found it quite amazing that when they collapsed in 2008 it was because they had over extended themselves lending to developers to build new properties that those builders were then selling to buyers who were getting their mortgages from various parts of HBOS.

It remains patently obvious that this kind of double exposure business strategy would blow up sooner or later. Given Crosby's 2001 statements, so did he. I just never realised the BoS Corporate side was so in to property.