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Bishop Bashes Boomers
Comments
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I think Ill give up as I have I've no idea what's being talked about anymore.
I thought Olly was inferring that residential mortgages are cross subsidised by related residential products (e.g. life, house, car, holiday insurances etc) which may not apply to BTL.
I am not so sure that mortgages are subsidised BTL or personal/residential. The term /amounts/rates being large in realtion to the "added" benefits that might accrue. Many mortgages have arrangement, legal costs and early termination costs that provide the icing.
Years ago I am sure there was some benefit derived from endowment cross sales commission - it quite probably made more in some cases.before the advent of larger arrangement fees etc."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 am not so sure that mortgages are subsidised BTL or personal/residential. The term /amounts/rates being large in realtion to the "added" benefits that might accrue. Many mortgages have arrangement, legal costs and early termination costs that provide the icing.
Years ago I am sure there was some benefit derived from endowment cross sales commission - it quite probably made more in some cases.before the advent of larger arrangement fees etc.
Well, that would bring me back to the proposition that, as BTL mortgages have a lower level of arrears than residential mortgage, one would expect the interest rate to be lower for BTL0 -
Well, that would bring me back to the proposition that, as BTL mortgages have a lower level of arrears than residential mortgage, one would expect the interest rate to be lower for BTL
I was pointing out that the banks are there to make profit.
This is one of the important points Martin always goes on about when he's doing his money talks.
If you ran a bank why would you give a business customer who isn't as highly regulated by the financial authorities for your mortgage products like your consumer clients lower interest rates when you don't have to? You wouldn't especially if your competitors aren't.
Also remember the government interferes with the consumer market.I'm not cynical I'm realistic
(If a link I give opens pop ups I won't know I don't use windows)0 -
Do you know what % of BTL mortgages are in arrears.grizzly1911 wrote: »AIUI around 1%.
Link posted earlier to FSA figures shows arrears on BTL at 1.58% compared to 1.08% for 'standard' mortgages.
http://www.mortgagestrategy.co.uk/specialist-mortgages/buy-to-let/news/fsa-reveals-extent-of-buy-to-let-arrears/1008179.article0 -
Link posted earlier to FSA figures shows arrears on BTL at 1.58% compared to 1.08% for 'standard' mortgages.
http://www.mortgagestrategy.co.uk/specialist-mortgages/buy-to-let/news/fsa-reveals-extent-of-buy-to-let-arrears/1008179.article
Thanks.
I took mine from the CML statistics
http://www.cml.org.uk/cml/media/press/3516.
I wonder if the % by amount is in the same ball park?"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 -
Well, that would bring me back to the proposition that, as BTL mortgages have a lower level of arrears than residential mortgage, one would expect the interest rate to be lower for BTL
In the scheme of things I don't suppose the variance is that great.
Perhaps BTL require a greater degree of risk assessment, monitoring and control?
Perhaps losses by £amount they are are more by average?
Historically there may have been a greater proportion of I/O mortgages attracting a premium?
IMO opinion they shouldn't be cheaper."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: »In the scheme of things I don't suppose the variance is that great.
Perhaps BTL require a greater degree of risk assessment, monitoring and control?
Perhaps losses by £amount they are are more by average?
Historically there may have been a greater proportion of I/O mortgages attracting a premium?
IMO opinion they shouldn't be cheaper.
But it goes back to the basic point - banks are there to make money.
You can make more money out of your customers who aren't as tightly regulated than those that are regardless of the risk.
If the risks for one group i.e. consumers are more then you need to find another way of making additional money out of them.
With consumers banks do this by selling products. People, while individuals in different families, are easier to sell additional products like credit cards, building and contents insurance, car insurance, saving accounts and current accounts to than businesses.
This is due to the fact that the legal entity surrounding a business varies. There as with a consumer the legal entity is always 1-4 individual people.
Edited to say: Banks do try and sell additional products to businesses. However I know from myself, my own family and other people I know this generally fails. This is due (especially now) to retail banking staff not having a clue about the multitude of business needs.
They told someone I know when they started their business that they didn't have any start up costs. This person is in a profession where to practise and run your own business you need to be on a register. One requirement of being on that register is that you pay registration fees and have professional indemnity insurance covering you for a few million pounds.I'm not cynical I'm realistic
(If a link I give opens pop ups I won't know I don't use windows)0 -
But it goes back to the basic point - banks are there to make money.
You can make more money out of your customers who aren't as tightly regulated than those that are regardless of the risk.
If the risks for one group i.e. consumers are more then you need to find another way of making additional money out of them.
With consumers banks do this by selling products. People, while individuals in different families, are easier to sell additional products like credit cards, building and contents insurance, car insurance, saving accounts and current accounts to than businesses.
This is due to the fact that the legal entity surrounding a business varies. There as with a consumer the legal entity is always 1-4 individual people.
Edited to say: Banks do try and sell additional products to businesses. However I know from myself, my own family and other people I know this generally fails. This is due (especially now) to retail banking staff not having a clue about the multitude of business needs.
They told someone I know when they started their business that they didn't have any start up costs. This person is in a profession where to practise and run your own business you need to be on a register. One requirement of being on that register is that you pay registration fees and have professional indemnity insurance covering you for a few million pounds.
whether or not banks can make more money from 'unregulated lending' compared to 'regulatd lending' doesn't tell us anything about the relative interest rates.0 -
But it goes back to the basic point - banks are there to make money.
You can make more money out of your customers who aren't as tightly regulated than those that are regardless of the risk.
If the risks for one group i.e. consumers are more then you need to find another way of making additional money out of them.
With consumers banks do this by selling products. People, while individuals in different families, are easier to sell additional products like credit cards, building and contents insurance, car insurance, saving accounts and current accounts to than businesses.
This is due to the fact that the legal entity surrounding a business varies. There as with a consumer the legal entity is always 1-4 individual people.
Edited to say: Banks do try and sell additional products to businesses. However I know from myself, my own family and other people I know this generally fails. This is due (especially now) to retail banking staff not having a clue about the multitude of business needs.
They told someone I know when they started their business that they didn't have any start up costs. This person is in a profession where to practise and run your own business you need to be on a register. One requirement of being on that register is that you pay registration fees and have professional indemnity insurance covering you for a few million pounds.
I don't disagree with your points.
I appreciate they have to make money and will endeavour to cross sell their granny these days.
Whether they are regulate or not I don't really see why business products should be priced at such fine margins as pure residential mortgages, at the bottom end of the market. I appreciate that Medium /Large caps will probably be able to fiance at even cheaper rates possibly
Residential mortgage products should be restricted to owner occupiers only IMO.
Your point about not knowing their arris from their elbow is interesting.
I remember when Bank Managers largely had to pass business, law, accountancy oriented exams and qualify before they were allowed to attain a management roles. They also undertook quasi legal training and financial risk assessment and control. Many built on that knowledge with many years at the coal face building long term relationships with their customers with discretion to make lending decisions locally (up to a point). They were expected to turn a profit and accountable for bad lending.
Something like 20 years ago that went out the window and sales alone became the driving force. As targets were missed turnover increased and the business knowledge and relationship skills went out the window for all but the larger clients."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 -
whether or not banks can make more money from 'unregulated lending' compared to 'regulatd lending' doesn't tell us anything about the relative interest rates.
Do you feel it would be a good idea if they were cheaper than a comparable owner occupier residential 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
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