Halifax Uncompetitive

kingstreet

John424 wrote: »

Why are Halifax remortgage rates so totally uncompetetive?

As the biggest lender probably they should not be allowed to get away with such daylight robbery to people who are most likely still mortgage 'prisoners'

These statements don't follow.

If their remortgage products are so poor, borrowers won't move to them. They'll move elsewhere.

If borrowers are mortgage prisoners, it doesn't matter how good Halifax remortgage rates are if they can't move.

Did you mean borrowers who are already with Halifax are unable to get a better deal from Halifax? If so, there are very many borrowers with many lenders in that boat and singling out Halifax for special attention would be neither fair, nor accurate.

Bank of Ireland, NRAM, Mortgage Express, Bradford & Bingley and the host of lenders who have stopped lending in the last four years should be added to your list...

Thrugelmir

opinions4u wrote: »

I think that shows that the term "fractional reserve banking" has been thrown about by conspiracy theorists as some sort mystical way of instantly multiplying money when it is anything but.

Fractional reserve banking has increased risk. In the late 60's early 70's. Banks reserves i.e. equity plus depositers money (more or less) equalled money lent.

Roll onto to 1998 and Bradford and Bingley invented mortgage securitisation. So using fractional reserve banking. Banks started to bundle up mortgages sell them on and use the released funds to lend more money.

As money was cheap to borrow there was no problem in selling these bundles of mortgages. As banks basically intra traded with each other. Until 2007 and the music stopped. (By 2007 its estimated that over 50% of banking activity was with other other banks, not third parties).

Since 2008 JP Morgan have bought 90% of all issued UK mortgage securitisation issues. Which sums up international interest in UK mortgages now.

As banks have deleveraged from the peak, i.e. contracting fractional reserve banking. Then National Governments have been forced to inject liquidity in order to maintain stability in the financial markets. In the UK this part of the purpose of QE.

Thrugelmir

Southend1 wrote: »

I had thought that most banks were insolvent most of the time

There are complex rules which determine how much capital banks are required to maintain.

Banks can quickly become insolvent. Northern Rock being an illustration. That's why confidence in the banks is so critical. Humans react like panicked lemmings which quickly results in chaos.

John424

kingstreet wrote: »

These statements don't follow.

If their remortgage products are so poor, borrowers won't move to them. They'll move elsewhere.

Did you mean borrowers who are already with Halifax are unable to get a better deal from Halifax? If so, there are very many borrowers with many lenders in that boat and singling out Halifax for special attention would be neither fair, nor accurate.

On the first point, I agree/disagree to a point as marketing muscle kicks in and a lot of borrowers are not so financially savvy to know the mortgage market and Halifax has a high profile brand. On your second point, yes I agree, many lenders are in that boat but there is now downward pressure on rates and Halifax and these lenders are slow off the starting blocks to reduce their rates and margins, Halifax is singled out by me purely because it is the biggest of the lenders and it's mine,

It also annoys me that the Govt is being duplicitous by moaning that the banks aren't lending whilst on the same token they know why they aren't lending more but with the case of Halifax I think they are taking this to the extreme.

kingstreet

Your reasoning on this issue is unsound, I'm afraid.

The Government scheme to encourage lenders to lend will impact rates for new products for new mortgages. Those of us with existing mortgages on SVR, or current deals, will not be impacted in any way by the additional funds.

Lenders will not reduce rates to existing borrowers while the FSA and Basel III requirements are pressuring them to increase their capital bases and to adopt more prudent lending practices.

The simple 2 + 2 approach that more funding = lower rates for all is fundamentally flawed. It pains me to be right about this, John.

Thrugelmir

John424 wrote: »

but with the case of Halifax I think they are taking this to the extreme.

LloydsHbos is under a European Commission directive to reduce the size of its mortgage book. Hence the sale of branches to the Co-Op. This directive was part of the requirement of the merger being allowed in 2008.

LloydsHBOS is heavily dependent on retail deposits and wholesale markets for funding. As is by far the largest pure UK retail bank. That's the problem it faces.

Just look at Halifax's ISA rates and that's an indication of the cost of borrowing to the bank.

opinions4u

John424 wrote: »

It also annoys me that the Govt is being duplicitous by moaning that the banks aren't lending whilst on the same token they know why they aren't lending more

Nail on the head. Banks don't have much money to lend, demand is low - in part due to price but in main due to lack of growth potential, and politicians know it. Sound bite bank bashing is much easier for a politician than a coordinated growth strategy.

but with the case of Halifax I think they are taking this to the extreme.

But as a firm massively impacted by the Credit Crunch it's hardly surprising.

MoneySaverLog

opinions4u wrote: »

For every £1 of customer deposits Lloyds Banking Group, who own Halifax, have £1.26 lent out.

opinions4u wrote: »

If their loan book exceeds the size of their deposits from retail customers and wholesale funders they are basically insolvent.
.

So just the wholesale funders holding them up then

John424

kingstreet wrote: »

The Government scheme to encourage lenders to lend will impact rates for new products for new mortgages. Those of us with existing mortgages on SVR, or current deals, will not be impacted in any way by the additional funds.

I have no problem being corrected!! So there won't be any knock on beneficial effect for remortgagers at all then from this initiative? Damm!

kingstreet

Remortgage products will probably get better.

However, if you have to stay with the same lender and only have their customer retention products to choose from, I wouldn't expect much change in those rates.

A remortgage involves changing lender and a new mortgage deed being required.