We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
Debate House Prices
In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non MoneySaving matters are no longer permitted. This includes wider debates about general house prices, the economy and politics. As a result, we have taken the decision to keep this board permanently closed, but it remains viewable for users who may find some useful information in it. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Guardian: 95% Mortgages "not a source of risk"
Comments
-
Graham_Devon wrote: »What if....say, I dunno....base rates fell to an all time low and therefore the differential between the costs for the banks and the profits fell dramatically.
What do you think would happen to profits then?
Thats the first of 2 questions.
Try rephrasing it so that it makes sense.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »Try rephrasing it so that it makes sense.
Just answer the bloody question.0 -
Graham_Devon wrote: »Just answer the bloody question.
Seriously, rephrase it so that it makes sense.
I have no idea what you're trying to ask.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »Seriously, rephrase it so that it makes sense.
I have no idea what you're trying to ask.
What would happen to your 3% profit margin if base rates fell to an all time low?0 -
Graham_Devon wrote: »What would happen to your 3% profit margin if base rates fell to an all time low?
Sorry Graham, still not with you.
The current margin is 3%, on a third of previous lending. The previous margin was 1%, but volumes were 3 times higher.
Either way lending was then and is now staggeringly profitable.... And exceedingly low risk.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Your avoidance speaks volumes and pretence that you can't understand the simple quesion of "what happens to your calcs if the base rate falls".
I do like how you pretend to be utterly dense when you wish to avoid answering a question as you know it will totally undermine your previous point. Respect.0 -
I must admit to being abit lost.Graham_Devon wrote: »Your avoidance speaks volumes and pretence that you can't understand the simple quesion of "what happens to your calcs if the base rate falls".
I do like how you pretend to be utterly dense when you wish to avoid answering a question as you know it will totally undermine your previous point. Respect.
If they lend at a margin of 3% gross they will continue to maintain that margin over the cost of funds if they retain the current policy.
2+3 = 5
1 +3 = 4
0+ 3 = 3
Their profits come out of the 3% margin not the total rate.
If they need to change margin then that would affect their profit.
The cost of funds to them isn't linked soley to base rate as you have previously pointed out."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 -
Graham_Devon wrote: »Your avoidance speaks volumes and pretence that you can't understand the simple quesion of "what happens to your calcs if the base rate falls".
I do like how you pretend to be utterly dense when you wish to avoid answering a question as you know it will totally undermine your previous point. Respect.
Graham, seriously, your question MAKES NO SENSE.
I'm not the only one to mention it.What if....say, I dunno....base rates fell to an all time low
OK, what if they do?and therefore the differential between the costs for the banks and the profits fell dramatically.
How does the "differential between the costs and profits" fall if base rates do?
What the heck is a differential between costs and profit?
Profit is defined as the differential between costs and revenue minus overheads.
Gross profit (or gross margin) is defined as the differential between provision cost and sales revenue on the sale of a product or service, excluding other overheads.What do you think would happen to profits then?
You've gone from muddle to gobbledegook I'm afraid.
Can you try rephrasing the question so that it makes sense.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
grizzly1911 wrote: »I must admit to being abit lost.
If they lend at a margin of 3% gross they will continue to maintain that margin over the cost of funds if they retain the current policy.
2+3 = 5
1 +3 = 4
0+ 3 = 3
If they lend at 5% and base rates fall (as happened pre 2007) at 3% profit and it's costing then 2% to borrow the money....
If base rates fall and the interest rate on the mortgage is now 3.5% (instead of 5%) and the cost to the bank is still 2%, the profit level has fallen. While base rates have fallen and the interest the customer pays has fallen it doesn't neccesarily mean your costs of purchasing the money have fallen. (indeed, they can't fall to 0).
This is what has happened to the likes of Bank of Ireland. Also what happened to Halifax.
So the profit levels fall and they have to make that up via other products. Hamish seems to be stating they should just take the loss forever more.0 -
Graham_Devon wrote: »If they lend at 5% and base rates fall (as happened pre 2007) at 3% profit and it's costing then 2% to borrow the money....
If base rates fall and the interest rate on the mortgage is now 3.5% (instead of 5%) and the cost to the bank is still 2%, the profit level has fallen. While base rates have fallen and the interest the customer pays has fallen it doesn't neccesarily mean your costs of purchasing the money have fallen. (indeed, they can't fall to 0).
This is what has happened to the likes of Bank of Ireland. Also what happened to Halifax.
So the profit levels fall and they have to make that up via other products. Hamish seems to be stating they should just take the loss forever more.
Why couldn't you have asked that the first time?“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 352.1K Banking & Borrowing
- 253.6K Reduce Debt & Boost Income
- 454.2K Spending & Discounts
- 245.1K Work, Benefits & Business
- 600.8K Mortgages, Homes & Bills
- 177.5K Life & Family
- 258.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.6K Read-Only Boards