MSE News: Regulator asks lenders to explain why they haven't passed on base rate... 12 September 2016 at 2:30PM edited 12 September 2016 at 4:43PM in Mortgages & endowments 9 replies 1.5K views

Legacy_user

Mortgage lenders that have not yet passed on base rate savings to their customers could attract the attention of the FCA...

Read the full story:
'Regulator asks lenders to explain why they haven't passed on base rate savings'

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jamesd

Part of the answer seems easy: those on the SVR are more likely to be mortgage prisoners who can't just freely move their mortgage.

SavingSteve

A bit stupid really, as there are no savings to pass on. The banks aren't borrowing from BoE at Base rate and then lending to borrowers, that's just not how it works.

Either the regulator is clueless (likely) or the likes of MSE are sensationalising the story for a few clicks and hits (very likely).

MiserlyMartin

Crazy. The banks and BSocs reserve the right to run their businesses as they see fit. For too long savers have borne the brunt of all rate cuts. Now its about time the savers and pensioners are protected from rate cuts to already low rates. Mortgages are already rock bottom and people are borrowing far too much against extremely overpriced housing. For the regulators to moan and the BoE to even cut in the first place was irresponsible.

dawnylou

MiserlyMartin wrote: »

Crazy. The banks and BSocs reserve the right to run their businesses as they see fit. For too long savers have borne the brunt of all rate cuts. Now its about time the savers and pensioners are protected from rate cuts to already low rates. Mortgages are already rock bottom and people are borrowing far too much against extremely overpriced housing. For the regulators to moan and the BoE to even cut in the first place was irresponsible.

Within reason, surely. We pay 4.3% we tried to remortgage a couple of years back purely to get a lower rate of interest but the mortgage provider said our house was no longer worth the amount it was valued at. We lost our application fee (which is a lot of money to us) and then had to carry on paying at this rate.

Pincher

I am waiting for the interest rate to go negative, say -0.1% and then I'll borrow £100million, and get paid £100,000 a year. Sign a 10 year fixed loan, and build myself a palace.

As I will be spending the money, and not hording it, the economy will benefit.

I will be buying British steel, and lots of Pilkington glass.
Can't guarantee the labour will be British, it's up to the contractors whom they hire. Not using that many bricks, but lots of stone cladding.

Come on, I want to do my bit to kick start the economy, but they just won't lend it to me.

Alright, I haven't actually asked.

Need to be more positive about these things.

Power of Positive thinking. If I keep saying "They will lend me £100million, They will lend me £100million." And they will.

footyguy

It's understood West Bromwich has no plans to reduce its SVR mortgage offering in line with the base rate cut.

So when they officially tell the regulator this, will the regulator be giving them a severe slap?

Or just a mild gumming, which I suspect will be the worst case scenario?

:cool:

footyguy

MiserlyMartin wrote: »

... For ... the BoE to even cut in the first place was irresponsible.

The decision to cut interest rates to 0.25% was approved unanimously by all nine members of the MPC and is the first change in interest rates since March 2009.

Source: http://www.bbc.co.uk/news/business-36976528

Perhaps you should start a petition to disband the MPC made up of very experienced financiers/bankers, and get you put in sole charge instead? :cool:

Also included in that report:

The governor said that banks have "no excuse" not to pass on the lower borrowing costs to customers and will be charged a penalty if they fail to do so.

I wonder if West Brom will be raising their rates to fund that penalty?
Or perhaps they will fight any penalty, claiming they are not a bank...

SavingSteve

The lack of knowledge, perpetuated by the BoE in this case, is shocking. Mortgages are long term debt, the lender often lending for 10-25 years. The base rate is the rate at which banks can borrow SHORT TERM from the BoE.

The two things really aren't as correlated (unless you're on a tracker) as people have been led to believe.

Cheaper short term debt 'should' result in the availability of cheaper long term debt to the banks. But not necessarily.

For the BoE to perpetuate the myth (and the press, especially MSE, to never question it) that there are savings that can be "passed on" to mortgage borrowers is highly simplifying a complex situation.

MiserlyMartin

footyguy wrote: »

Source: http://www.bbc.co.uk/news/business-36976528

Perhaps you should start a petition to disband the MPC made up of very experienced financiers/bankers, and get you put in sole charge instead? :cool:

Come on now, everybody knows that Carneys reputation lies in shreds, that is why he keeps appearing before the treasury select commitee. He should go back to Goldman Sachs and get back to pumping up Canadas housing bubble.