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Guardian: 95% Mortgages "not a source of risk"
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Thrugelmir wrote: »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.
What did PPI add to the average mortgage and what cut of that went to banks a lot less than increasing margin from say 2% to 4%.0 -
Graham_Devon wrote: »They don't borrow the money at bank rate and then lend it out to people - even I know this and I'm meant to be the dunce of the class!
Please - don't fall for Hamish's headline rates. You need to apply context to what's stated.
Libor less than 0.5% and funding for lending even less.0 -
What did PPI add to the average mortgage and what cut of that went to banks a lot less than increasing margin from say 2% to 4%.
£15,000,000,000 of provisions so far for mis-selling of PPI, and the numbers still rising.
HSBC made a return on capital of around 8% in the 2012 financial year. Banks in their heyday were returning in the region 150% from PPI. To put the numbers in perspective and profitable it was.0 -
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Libor less than 0.5%.
Is that the one which was fiddled to the tune of billions of pounds.
By the same people who were caught money laundering drug profits to the tune of billions of pounds.
And funnelling billions of pounds to terrorist organisations.
(None of the above is conspiracy, by the way. It's all been admitted to and blamed on accounting discrepancies)
What talented and trustworthy people they must be.
We need these people to sort out our economy.0 -
Libor less than 0.5%.
Banks borrow the money from all sorts of sources. They don't just borrow it at LIBOR or BOE rate. They also need to match long and short term requirements.
Santander for instance are currently paying me3%."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: »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.
I accept all that.
I was more thinking if you write off say £50k on one debt. Then only make say 0.5% on a mortgage before operational costs, then for a 100K/25years mortgage, gross profit would be say £6k over the lifetime. >8 mortgages would have to be lent full term to recover that write off. All figures as an example only.
A lot of effort for what may have been one generous loan/mortgage."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: »I was more thinking if you write off say £50k on one debt.
Ok. Sorry went off on wrong track.
The £50k hit will be taken in one financial year. So if the lenders net margin pre tax is 0.8% .
Then this would wipe the booked profit on 62 mortgages of around £100k each or 124 mortgages of £50k each.
I used 0.8% as I believe LloydsHBOS to be around .83% in 2012. This figure is before bad debt provisions for arrears etc.0 -
Thrugelmir wrote: »Banks don't borrow at 0.5%........
How do you know the average mortgage rate is 3.87%?
Made a mistake I think it is 3.63% as that is what SMI is based on figure probably a year out of date.0
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