Mortgage rates going up

wotsthat

SecondLegDownIsTheBigOne wrote: »

But I can't cancel my Sky package, I need it!

Sky subscribers up (again) in 2011. Average annual payment per user £535.

People overspend but they are not stupid so I don't believe they are going to prioritise Sky, or other luxuries, over mortgage payments.

RenovationMan

There are too many people on SVR and the banks don't like it because they make a lot of money from the mortgage arrangement fees. The Halifax, and possibly some other banks, will raise their SVR rates a little to try and 'nudge' people into getting a mortgage product. Hopefully their customers will be nudged to get a mortgage product with a rival bank.

wotsthat

RenovationMan wrote: »

There are too many people on SVR and the banks don't like it because they make a lot of money from the mortgage arrangement fees. The Halifax, and possibly some other banks, will raise their SVR rates a little to try and 'nudge' people into getting a mortgage product. Hopefully their customers will be nudged to get a mortgage product with a rival bank.

This is just Halifax trying to increase margins and they can't do it to people on trackers or fixed rates. Cynically, they also know that people tend to be on SVR's because they are the type of borrower who either can't be bothered to look for a better rate or aren't in a situation where they could jump ship. These customers make easy targets for a bit of margin enhancement.

On the news they've blamed increased costs of funding in wholesale markets - bit of a laugh when they've just had a ton of money at 1% from the ECB.

Graham_Devon

It's not just Halifax. RBS have also raised it's interest on 3 mortgages, though I asume these are new mortgages. The BBC are reporting that more banks are to follow suit.

However, 0.25% won't do anything to anyone really. All it will do is squeeze some more out of households while increasing the banks take.

I'm not sure what the bigger aspects of such a move are though. What it would do to confidence etc. It's another cost rise on top of already increasing costs elsewhere. It will put a dampner on things as already people are suggesting they won't be able to afford it. Which seems a little over the top.

PaulF81

Is 700 quid a year on a 150K mortgage according to the mail. Thats quite a lot for those on the fringe and on the edge of default at the mo.

Graham_Devon

Just read that it's RBS who have just already increased their rates 0.25% and the Halifax are looking to raise them 0.49%. An extra £25 per month for a £100,000 mortgage.

As one commentator states....it's small numbers, but the worst of all worlds. Low interest rates allowing higher inflation and banks moving away from low interest rates to put costs up. When the bank rate does eventually go up, it will be another increase on top.

Pimperne1

wotsthat wrote: »

I think it's being reported that this affects 1m Halifax customers which is close to 10% of total UK mortgages. If mortgage holders are living at the edge of penury as implied by many then then this increase will be significant to the total market as distressed sellers hit the market.

However, the doom mongers glee will be short lived because it's not going to make a jot of difference other than an annoyance to mortgage holders.

If these 1m Halifax customers are so hard up that they have to cancel their Sky subscription then I might take a different view.

Although they have around 10% of the market I would think that a lot of their customers are on trackers or fixes. Anyhoo, anyone who can't afford their house with an SVR of around 4% shouldn't have been buying in the first place.

wotsthat

Graham_Devon wrote: »

I'm not sure what the bigger aspects of such a move are though. What it would do to confidence etc. It's another cost rise on top of already increasing costs elsewhere. It will put a dampner on things as already people are suggesting they won't be able to afford it. Which seems a little over the top.

SVR mortgages must be profitable to banks but they want to enhance margins. There seems little point in a business that can sell already sell products profitably putting prices up if they lose all the customers. The banks must think their customers can find their money. In that respect I'd consider it a vote of confidence in an improving economy.

Graham_Devon

wotsthat wrote: »

SVR mortgages must be profitable to banks but they want to enhance margins. There seems little point in a business that can sell already sell products profitably putting prices up if they lose all the customers. The banks must think their customers can find their money. In that respect I'd consider it a vote of confidence in an improving economy.

I think I would have to strongly disagree with you that it's a vote of confidence in the improving economy. I'm not even sure where you get that from.

Notice the big difference though? The other day, this was aimed at just those who had an SVR with the mortgage split between two products. 3 days later, it's everyone on SVR.

Rather than a vote of confidence, I see it as a storing up of trouble ahead. Seems a bit 2007'ish again at the moment. The squeeze on households just getting worse as each week passes. Large corporations making record breaking profits. Oil accelerating ahead. And the worst thing? We can do absolutely nothing but print print print this time around....only adding to the squeeze.

michaels

See it from the banks perspective - if you have borrowers who are currently on a better rate than they could get if they try to remortgage then it is a no brainer to increase their rate as they won't go elsewhere and the bank makes more profit.

When the credit card companies tried this on borrowers won the right to reject any rate rise and pay off the balance at the initial rate. I can not see how this is any different, a captive borrower being fleeced.