Resentment against SVR hikes grows, Economists call for BOE to drop rates to 0%

Graham_Devon

shortchanged wrote: »

Hamish this sounds like the ramblings of a desperate man.

Many of your ilk on here stated that people would cope just fine with interest rate rises. This doesn't sound like the case now.

Just how many times has Hamish told us interest rates make no difference....people afforded their mortgage in 2007, so why not now?

Yet a 0.5% rise has him digging to these depths, trying to suggest it's going to derail the recovery.

Firstly, if such a small rise in SVR's for a relatively small amount of people ruins a recovery, it isn't really a recovery.

Secondly, if Hamish really believed everything he said about people paying their mortgages without problems in 2007 (1150% higer than they are now), why has he completely u-turned on this?

hillcats

Ok then, so it is being considered to lower BofE rate to counteract the various bank SVR increases. What happens when the banks attempt another increase, how will that be handled ?

Thrugelmir

hillcats wrote: »

Ok then, so it is being considered to lower BofE rate to counteract the various bank SVR increases.

No its not. Base rate changes are not determined by mortgage lending policy.

The BOE's aim is to maintain financial stability in the banking system. There are sizable obstacles ahead.

onceuponatime_2

Whats the easiest way to make money. Hit joe public in every way possible first. Then if all else fails hit the home owner. Its just a reverse of what happened in the 80's - 90's

HAMISH_MCTAVISH

Thrugelmir wrote: »

I had the same thoughts. Is if Hamish was taking this lastest change in rates affected him personally.

No, as I've made clear in numerous previous posts on here and indeed on hpc, my mortgage is with C&G and hence contractually bound to a BOE + 2% cap. These rises have absolutely no impact on my mortgage payment at all.

But yes, I do take it extremely personally when banks threaten to derail the wider economic recovery, as should everyone else not blinded by a deranged obsession with lower house prices.

You lot are honestly quite mad.... It's obvious you'd cheer on a global pandemic if it resulted in house prices falling.:(

HAMISH_MCTAVISH

Thrugelmir wrote: »

No its not. Base rate changes are not determined by mortgage lending policy.

The BOE's aim is to maintain financial stability in the banking system. There are sizable obstacles ahead.

The BOE's primary aim is to adjust liquidity within the economy so as to target inflation to a desired range over the next 2 years.

If banks unilaterally engage in activities which jeapordise the BOE's adjustment of liquidity within the economy, then it can and should act by reducing base rates to compensate.

julieq

Honestly Hamish, it'll make no difference. It has a low overall impact on the mortgage market generally, if anything it signals more willingness to lend by attracting saving, and we know from history that people have no problems with rates at these levels anyway. Competition within the market will keep a lid on mortgage rates even when base rates eventually rise.

HAMISH_MCTAVISH

Graham_Devon wrote: »

if such a small rise in SVR's for a relatively small amount of people ruins a recovery, it isn't really a recovery.

That has to be the dumbest statement you've made in ages Graham, and you make some pretty dumb statements.

You're talking about billions of pounds a year.

Which can obviously change a fragile recovery back into a recession, when things are as finely balanced as they are.

HAMISH_MCTAVISH

julieq wrote: »

Honestly Hamish, it'll make no difference. It has a low overall impact on the mortgage market generally, if anything it signals more willingness to lend by attracting saving, and we know from history that people have no problems with rates at these levels anyway. Competition within the market will keep a lid on mortgage rates even when base rates eventually rise.

No julie, it's not about house prices. We all know that it's not nearly a big enough change to impact that.

What has me genuinely annoyed about it is the reckless behaviour of bankers profiteering at the expense of the wider economy, because they know damn well that they have no competition and so act like a cartel.

As if it's not bad enough that they've hiked margins by a factor of 300% to compensate for cutting lending by two thirds so the greedy sods make the same profit for a third of the lending, they now want to ramp them up further and risk the fragile recovery.

It really is time they got a good slapping. And I'd suggest there is now genuine anger that is spilling into the mainstream with articles like this appearing in the Telegraph.

Generali

HAMISH_MCTAVISH wrote: »

http://blogs.telegraph.co.uk/finance/philipaldrick/100015452/isnt-it-time-the-bank-cut-interest-rates-to-zero/

Well well well....

It seems the banks may have over-reached themselves this time.

This is going to get interesting.

Cutting base rates will make no difference IMO.

The problem is, 5 of the top 10 mortgage lenders from previous years are now nationalized and competition has been destroyed by the crazy decision to allow HBOS and Lloyd's to merge.

There are 2 ways to get interest rates down in the market: create more competition or intervene directly to mandate mortgage rates. The former would involve breaking up the big banks which is very hard to do. The latter would be idiotic IMO. Governments setting prices rarely works out well.