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Bad News for Banks....
Comments
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There's a debate on another board that the banks are "awash with cash" & as a result are less likely to offer decent rates to savers. Many savers have been expressing discontent at the rates on offer at the moment (less than 4% for 3+ years is the norm - not even close to matching inflation after tax...).
Is this news likely to offer savers some hope? Are institutions likely to increase their rates to increase the capital they hold?
Or, is the low rates being offered a contrast to Merv's allegations?It's getting harder & harder to keep the government in the manner to which they have become accustomed.0 -
lemonjelly wrote: »Or, is the low rates being offered a contrast to Merv's allegations?
I doubt it is an allegation. Probably more informed than idle chatter on an internet forum.
To build capital reserves. Banks need to be profitable. For the past few years have done little more than tread water. Likely to continue to do so for some time yet.0 -
I doubt it. The banks have conditioned their customers to derisory rates and would not want to undo their work of the last few years. There is no competition amongst the major institutions and if they do need money in the near future they know they will be able to soak it up quite easily offering the pittance they are at the moment. Of course if someone was to bring out a decent rate then that could all change but if the evidence of the last few years is anything to go by, I won't hold my breath!lemonjelly wrote: »Is this news likely to offer savers some hope? Are institutions likely to increase their rates to increase the capital they hold?0 -
lemonjelly wrote: »
Is this news likely to offer savers some hope? Are institutions likely to increase their rates to increase the capital they hold?
No respite until the Governement/BOE pull up the drawbridge on their cheap funds. Review due 2014 but any ones guess what they will do."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
grizzly1911 wrote: »No respite until the Governement/BOE pull up the drawbridge on their cheap funds. Review due 2014 but any ones guess what they will do.
Well my guess is that it will definitely be extended until after the next election (I'm presuming that the coalition won't go t!ts up next year).
Whilst savings rates remain low, the electorate grumble about the banks. If, however, mortgage rates were to increase significantly, and significant numbers of aspirational homeowners were to start being reposessed, then the electorate are likely to make a far bigger noise about the government rather than just the banks."When the people fear the government there is tyranny, when the government fears the people there is liberty." - Thomas Jefferson0 -
MacMickster wrote: »If, however, mortgage rates were to increase significantly, and significant numbers of aspirational homeowners were to start being reposessed, then the electorate are likely to make a far bigger noise about the government rather than just the banks.
More savers than borrowers though.
If asset prices were to fall then would put pressure on the banks. As many interest only mortgages issued in the past decade. Would then be heading for negative equity. Creating a vicious downward spiral.
BOE is trying to buy time. So that the situation unwinds itself in a stable manner.0 -
MacMickster wrote: »Well my guess is that it will definitely be extended until after the next election (I'm presuming that the coalition won't go t!ts up next year).
Whilst savings rates remain low, the electorate grumble about the banks. If, however, mortgage rates were to increase significantly, and significant numbers of aspirational homeowners were to start being reposessed, then the electorate are likely to make a far bigger noise about the government rather than just the banks.
Who cares about savers?
Government is losing tax revenue too, both from the savings interest and the reduced consumption. I know a number of pensioners who are curtailing little holidays and similar niceties."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
Thrugelmir wrote: »More savers than borrowers though.
If asset prices were to fall then would put pressure on the banks. As many interest only mortgages issued in the past decade. Would then be heading for negative equity. Creating a vicious downward spiral.
BOE is trying to buy time. So that the situation unwinds itself in a stable manner.
The BOE is naturally seeking to buy time for the banks to get their balance sheets in order. Unfortunately I believe that the medicine for the banks (low interest rates) is a long-term poison for the UK economy, gragging out the pain rather than having a crash and starting again from the new normal.
This process is something that most western economies are going to have to go through, and I suspect that it will be those that bite the bullet and get the pain over with who will eventually emerge stronger."When the people fear the government there is tyranny, when the government fears the people there is liberty." - Thomas Jefferson0 -
MacMickster wrote: »The BOE is naturally seeking to buy time for the banks to get their balance sheets in order.
Many households likewise. A fall in asset prices (for everyone) could result in a nightmare scenario.0 -
There may be more savers than borrowers, there certainly ain't anywhere near as much savings than borrowings.0
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