MSE News: Mortgage misery as Halifax and RBS raise standard rates
Comments
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UKFInotFFP wrote: »Both Halifax and RBS are taxpayer funded.
And thus should charge the market rate for mortgage interest costs so not to put both the public purse and savers at risk.
I welcome the rate increase and hope it is passed to savers as well.:exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.
Save our Savers
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What does that actually mean?
Clearly we aren't going to leave the whole thing to market forces—the initial bailout alone cost taxpayers £46bn. And—obviously—we will carry on paying out executive bonuses even though RBS made a loss. 2011 figures, losses of £1.80bn, bonuses of £0.85bn...
In other news this week, the BBC reports that RBS is amongst the British banks which has borrowed ECB funds of £31bn at...wait for it..an interest rate of 1%. In the case of RBS, the amount borrowed is €10bn. So clearly the right moment to gouge further money out of borrowers. Still, at least this is matched by a rise in savings rates, right?
We are all in this together. Not.
800 banks in Europe drew funds from the ECB. Which illustrates the extent of the issues which are facing the financial system.
We regularly seem to ignore the fact that our banks are international. The banks have European operations. This money will be used within their subsidiaries overseas. So has no relevance to UK mortgage operations.
UK banks borrowed £13 billion by the way. Current outstanding UK mortgage debt is £1,200 billion. So even if used for mortgage purposes is a drop in the ocean. LloydsHBOS has to repay the Treasury £23 billion this year which puts the figures in further perspective.
What does commerciality mean? If it costs a bank 2% to borrow then it lends at 4%. So as to make a profit. Nothing complex. The problem is people assume that banks at funded by the BOE. Which is and never has been the case.0 -
Im so glad i dont work for RBS any more. Some rediculous comments - RBS have a nerve...what! i used to hear stupid comments by customers all the time and had to bite my lip. I can just imagine people demanding late charges back because "i own a share of this company" or something along those lines.
Just because we the tax payer own a share of it, doesnt mean we get a say it. Its not there to subsidise cheap mortgage lending. Its a business like any other, i would very much like to see it make a profit so we (the tax payer) get our money back sooner so it can be invested in jobs, parks, schools, the nhs or somewhere its needed and more deserved.I am a Mortgage AdviserYou should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Exactly, Thrugelmir. Why should the tens of millions of taxpayers subsidise the uneconomically priced mortgages of 1 million Halifax/RBS mortgage borrowers?
What's pathetic is that it's taken them this long to do anything about it.
As for the headline - lazy journalism. Anyone who is suffering "misery" because their mortgage rate has gone from an exceptionally-low (historically) rate to a quite-low (historically) rate needs to put things into perspective. And anyone who can't afford this increase in rate was living on borrowed time.0 -
MarkyMarkD wrote: »uneconomically priced mortgages of 1 million Halifax/RBS mortgage borrowers
Current London Interbank Borrowing Rate is around 1%.
A 3.99% mortgage lending rate represents margins of nearly 300% above funding costs.
The banks are making near record profit margins on mortgage borrowing.
No wonder bankers are paying themselves billions in bonuses.... They're ripping off the public like there's no tomorrow.“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”0 -
It is. But a premium over and above this is charged according to risk. So RBS and LBG will be well above this mark.HAMISH_MCTAVISH wrote: »Current London Interbank Borrowing Rate is around 1%.
But not if they're paying 2% or more due to the premium mentioned above.A 3.99% mortgage lending rate represents margins of nearly 300% above funding costs.
Net lending margins in reports and accounts for large banks show a narrowing compared to last year.The banks are making near record profit margins on mortgage borrowing.
Bad debt over the past 3 or 4 years has been at record levels with many mortgage lenders operating at a loss.
Whatever.No wonder bankers are paying themselves billions in bonuses.... They're ripping off the public like there's no tomorrow.0 -
To be honest, even if this was just a move to make more profit (which it isn't - where do people think the money for their 4% Vantage accounts or high paying Halifax ISAs comes from? It funds mortgage lending, therefore the cost of funding mortgage lending has gone up...), it would still be fairly justifiable considering that both Lloyds and RBS Group have recently posted incredibly large losses.urs sinserly,
~~joosy jeezus~~0 -
JuicyJesus wrote: »both Lloyds and RBS Group have recently posted incredibly large losses.
Not on UK residential mortgage lending.
They're milking near record high profit margins from mortgages, and using it to subsidise losses elsewhere.“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”0 -
opinions4u wrote: »It is. But a premium over and above this is charged according to risk. So RBS and LBG will be well above this mark.
I'd be surprised if the "risk" premium is more than a few tenths of a percent.
And given they're majority owned by the UK government, the risk premium should be zero.But not if they're paying 2% or more due to the premium mentioned above.
See above.Net lending margins in reports and accounts for large banks show a narrowing compared to last year.
Which only reflects the return of a tiny element of competition to the market.
Current mortgage lending margins remain at near record high levels.Bad debt over the past 3 or 4 years has been at record levels with many mortgage lenders operating at a loss.
Northern Rock's "bad bank" contains about the worst of all UK mortgages, and even it made a 300 million pound profit last year.
No major bank is making losses on it's mortgage book, instead they're subsidising losses elsewhere with near record high mortgage lending margins.“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”0 -
HAMISH_MCTAVISH wrote: »Not on UK residential mortgage lending.
They're milking near record high profit margins from mortgages, and using it to subsidise losses elsewhere.
The profits from selling PPI were used to subsidise mortgage products previously.
So mortgage margins are increasing as there's no longer cross selling of products.
As for margins themselves. Lloyds have reported decreasing gross lending margins in 2010 and 2001. With 2012 forecast to be even lower.0
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