Guardian: 95% Mortgages "not a source of risk"

Thrugelmir

ukcarper wrote: »

Made a mistake I think it is 3.63% as that is what SMI is based on figure probably a year out of date.

Doesn't mean much. Average SVR including the smaller lenders i.e. Building Societies is nearer 5%.

I doubt many HSBC borrowers are claiming SMI either.

HAMISH_MCTAVISH

Graham_Devon wrote: »

What they can make an income on has reduced, therefore a bigger margin needs to be made on fewer products

Rubbish.

What they've done is make three times as much profit on a third of the lending.

Instead of a third of the profit on three times the lending.

The only people getting screwed here are ordinary families and young FTB-s getting ripped off by the banksters profiteering.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Rubbish.

What they've done is make three times as much profit on a third of the lending.

Instead of a third of the profit on three times the lending.

The only people getting screwed here are ordinary families and young FTB-s getting ripped off by the banksters profiteering.

I have no way of confirming your figures, but going on the basis that they are true...

Yes, they may have increased the profit margin on mortgages.

But that alone doesn't tell you anything. If they have had to forgo profit elsewhere, (bad loans, PPI payouts etc etc) in order to function, the margins on other stuff has to increase. That's just business basics.

If this was an energy, water, or oil company, I'm sure you would feel differently. I'm sure you would feel that as you have told us this is how companies operate. You have argued that energy companies don't actually make that much profit per house etc etc etc.

We know you have a thing with the banks, we know you want more lending to fuel HPI. But it's pretty stupid to be using the statistics in the way you are using them. You are not applying a shred of context.

Graham_Devon

ukcarper wrote: »

Made a mistake I think it is 3.63% as that is what SMI is based on figure probably a year out of date.

Thats for tracker mortgages.

The average of SVR's 4.40%, which is the highest since 2011,

Data here: http://www.bankofengland.co.uk/statistics/Documents/bankstats/2013/Jan13/TabG1.3.xls

Thrugelmir

Originally Posted by HAMISH_MCTAVISH
Rubbish.

What they've done is make three times as much profit on a third of the lending.

Instead of a third of the profit on three times the lending.

The only people getting screwed here are ordinary families and young FTB-s getting ripped off by the banksters profiteering.

?

As has been pointed out before you require 6 times the capital to fund a 95% mortgage as a 60% one. So lenders find lower LTV's more profitable business.

Santander are pulling back from the mortgage market. As lending to SME's offers far better returns. For lower capital levels.

Boom days of mortgage lending are well and truly over. In fact in decline. Something its better to accept and adjust to. Than pretend the world is going to return to an era of 6 years ago.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Yes, they may have increased the profit margin on mortgages.

But that alone doesn't tell you anything. If they have had to forgo profit elsewhere, (bad loans, PPI payouts etc etc) in order to function, the margins on other stuff has to increase. That's just business basics.

Oh please Graham, what utter nonsense.

The banks were not subsidising mortgage profitability with other things, mortgages were vastly profitable before 2007 all on their own.

If they can no longer gouge consumers on PPI, then time for them to cut their cloth to fit and make less profits.

If British Gas tried to double your gas bill because they could no longer make profits from wind farms, you'd be absolutely up in arms about it. Raging to all and sundry about poor families being screwed over.

But you support bankers getting ridiculous bonuses through ramping up lending costs to three times the margin they were before, despite them preventing two thirds of people from buying, because you think it might prevent HPI.

Your position is absurd, and completely untenable.

ukcarper

Thrugelmir wrote: »

Doesn't mean much. Average SVR including the smaller lenders i.e. Building Societies is nearer 5%.

I doubt many HSBC borrowers are claiming SMI either.

Surely that counters your argument and the average mortgage is 4.5% above base.

Outstanding mortgage debt is £1.25 trillion PPI bill £15 billion or 1.2% compared to mortgage rate of 5%.

ukcarper

Graham_Devon wrote: »

Thats for tracker mortgages.

The average of SVR's 4.40%, which is the highest since 2011,

Data here: http://www.bankofengland.co.uk/statistics/Documents/bankstats/2013/Jan13/TabG1.3.xls

It's the figure the government use for your hated SMI and is the overall average.

Thrugelmir

ukcarper wrote: »

Surely that counters your argument and the average mortgage is 4.5% above base.

Lloyds has around £285 billion of mortgage debt.

My Building Society has £112 million.

So average of respective SVR's is meaningless.

Neither do lenders give analysis of their mortgage books. As commercially sensitive information.

ukcarper

Thrugelmir wrote: »

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.

What exactly is that .83% figure and where do you get £50k from. Default rate less than .8% recovery rate above 80% so loss .2% or £200 per £100k.