MSE News: Mortgage misery as Halifax and RBS raise standard rates

Thrugelmir

Consumerist wrote: »

The big question in my mind is whether this is likely to be the trigger for a slow collapse in house prices. The fallout would be horrendous for home-owners tipping into negative equity coupled with a shortage of mortgage lending.

Collapse or correction? Prices will adjust to available lending levels. Negative equity will resolve itself over time like it did in the early 90's.

GB350

Selden wrote: »

It may make you feel more comfortable to reduce peoples' concerns to a simplistic Aunt Sally, but I would recommend a re-reading of George Osborne's Together we will ride out the storm speech delivered as recently as October 2011.

Stringent austerity measures were seen as a painful necessity—"I know we are asking a lot from people"—but to balance this there would be an extended period of low interest rates, with the Government pumping cash through the banks to restart the flow of credit.

So where has all that QE cash gone? Why is it still so hard for small businesses to obtain loans or refinance? Why are banks handing out massive bonuses despite what are in some cases poor results—when many taxpayers have faced salary freezes for the last 3 or 4 years? And why mortgage rate rises now when the economy is still so vulnerable?

In short, are bankers playing their part in this plan or have they reneged on the covenant?

Could'nt have put it better myself.

MobileSaver

Mortgage misery ... huge hike in their payments ... pay a typical £200 extra each year

Is MSE really the place for sensationalist reporting like this?

Is £16 a month really a "huge hike" and going to cause "misery" for hundreds of thousands of people??!?!

Articles like this don't do any justice to the detailed journalistic research MSE bases its reputation on.

waveneygnome

I really feel for the Virgin One customers.

First they were sold a tracking mortgage, then when rates started dropping (2008/9) and RBS didn't pass these on, many people complained. FOS partially upheld some complaints, but left RBS still able to say that Virgin One customers were not on tracking mortgages.

Now............wholesale rates have gone up...........and low and behold Virgin customers find they ARE tracking wholesale interest rates!

This is not irony - its RBS having their cake and eating it.

HAMISH_MCTAVISH

MarkyMarkD wrote: »

the real cost of inter-bank borrowing (which obviously isn't just LIBOR, however high quality the bank -

That sounded wrong to me, and a bit of research shows it is indeed incorrect.

As it turns out, LIBOR is the average rate actually paid by banks for Interbank borrowing on the day.

http://www.thisismoney.co.uk/money/markets/article-1645325/LIBOR-Latest-inter-bank-lending-rate-charts.html

It also turns out LIBOR is now falling again, but I'd be prepared to bet those greedy banksters won't be passing along their falling funding costs to borrowers.

The big four banks in the UK made £10 Billion profit on retail lending last year alone.

An amount most people would consider to be excessive given that their lack of lending is holding back the recovery.

MarkyMarkD

Ho ho ho! "A bit of research" >>> reading the Mail's website.

I think you need to redefine "research".

LIBOR is the lowest perceived rate at which the contributor banks can obtain funds from other banks.

Many (most) banks and building societies will pay more than that to obtain funds from other banks and building societies. Most of them are not the banks who contribute to the calculation of LIBOR (who are the biggest international banks).

No bank or building society is able to obtain all of its funding from other banks, without paying a very significant premium to LIBOR.

Banks and building societies have been forced by regulatory pressure to hold more cash, and to hold higher ratios of capital to loans. Both of these reasons have reduced their propensity to lend, not any imaginary reluctance to do so. In case you didn't notice, banks make money by lending - at least, at sensible rates - and keeping money "in their back pocket" is not done "for the sake of it".

So, attributing a delayed recovery to the banks' "reluctance to lend" is missing the point - the banks are unable to lend more than they are doing, because they are expected to hold more cash, and more capital.

Andy_Hamilton

Can anyone tell me if my Halifax mortgage will be effected?
I was one of those people who received a "goodwill" payment from Halifax because the cap limit between SVR and interest rates was brushed under the carpet.
Although the cap still applies, the interest rate has not gone up so should my SVR with cap now go up?

Thrugelmir

Andy_Hamilton wrote: »

Although the cap still applies, the interest rate has not gone up so should my SVR with cap now go up?

The cap has increased. So the Halifax have allowed themselves room to raise the SVR another .25%. Even if there's no change to BOE base.

Andy_Hamilton

Cheers for the clarification can't ever win with mortgage companies.
Higher lender fees of £1200 because I'm a risk(in their eyes).
They don't honor their contract and give a goodwill gesture which is really is what they owed.
Then 13 months later they pull the rug again.
I'm now at 78% mortgage (from 97% 4 years ago) so there is nothing I can do.

stutray

Bank Of Irelend (This includes those previously with Bristol & West) have today announced an increase of:

+ 1% from June
+.5% from September

Changing from current rate of 2.99% to 4.49%