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Guardian: 95% Mortgages "not a source of risk"
Comments
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Lenders tell me that even thier lie to buy self cert books remain high performing with a very low delinquency rate.
When you say Lenders tell you who exactly are you talking to?
Their governance guys or the sales/marketing interface? How far up the tree is that source?"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 -
It shows that gas retail companies charge an extra 50% on the price they pay and still make a reasonable profit while the banks add over 600%.
They are different product mixes."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 -
True but if they made reasonable profits with a 1% margin before the crash they can do it now.
Before you take too much notice of a headline figure from Hamish, think about how that profit was made.
Miss-selling, LIBOR scandals, repackaged loans.
Profit margin on a mortgage doesn't tell you too much really. What they can make an income on has reduced, therefore a bigger margin needs to be made on fewer products, especially considering the higher risk now that it can't simply be sold on to some mug.0 -
grizzly1911 wrote: »They are different product mixes.
What has that got to do with it. We are talking about the profablity of mortgages not if they should be used to cross subsidise loses from elswhere. Judging by the bonuses the banks are paying I would hope they are making money in the casino arms.0 -
Don't forget banks make their own money out of thin air and then charge you interest on the money that didn't exist before you borrowed it.
Forget talent, even a monkey could run that business and make a profit.0 -
What has that got to do with it. We are talking about the profablity of mortgages not if they should be used to cross subsidise loses from elswhere. Judging by the bonuses the banks are paying I would hope they are making money in the casino arms.
Utility companies are selling a commodity that every one uses and have no real choice about.
If you are a bad risk you have to pay in advance. If you are on credit and don't pay they stop supply (unless there are hardship issues). They sell volume at low margin with little risk of non payment.
Where do you get the 600% figure from just the margin over funds.?"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 -
What was that margin prior to crash
Then you need to take into account where the retail side of banking was making much of its profit. Out of products such as PPI. You cannot take one product line alone. Low rate and below BOE base trackers were being subsidised by cross selling of products.0 -
grizzly1911 wrote: »Utility companies are selling a commodity that every one uses and have no real choice about.
If you are a bad risk you have to pay in advance. If you are on credit and don't pay they stop supply (unless there are hardship issues). They sell volume at low margin with little risk of non payment.
Where do you get the 600% figure from just the margin over funds.?
Bank rate 0.5% average mortgage rate 3.87%0 -
grizzly1911 wrote: »Are you chaps aware of any data that shows how many good mortgages are required to to run their course for each one that loses money?
Banks won't work on individual mortgages. There'll base their calculations over the total asset (mortgage) book. Using a matrix of factors based on risk. Depending on the book at any point in time they'll tighten \ relax criteria, along with allocating tranches of funds to different products.
The risk to the banks is now in interest only. Repayment mortgages by there very nature progressively guarantee full repayment of the debt. Hence why mortgage lending historically has been low margin.0 -
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