Nationwide puts up mortgage rates - welcome to the crunch

WTF?_2

If you think low central bank interest rates are going to save the housing market's bacon, think again:

http://news.bbc.co.uk/1/hi/business/7204231.stm


The UK's biggest building society is the latest lender to hike rates despite no movement from the Bank of England. Nationwide said rates on its tracker mortgages, which follow the Bank's base rate, would rise for new borrowers by between 0.05% and 0.15%.
It is the second time it has increased rates since November, despite the base rate falling in December.
Nationwide, which joins a growing list of lenders, said it was having to pass on the increased costs of its funding.
People need to realise that low rates aren't being introduced to bail out borrowers - they are there to ease things for lenders so that they can borrow money at lower rates themselves. Any benefit for borrowers is entirely coincidental.

PasturesNew

!!!!!!? wrote: »

People need to realise that low rates aren't being introduced to bail out borrowers - they are there to ease things for lenders so that they can borrow money at lower rates themselves. Any benefit for borrowers is entirely coincidental.

This year people will learn a lot about the mortgages they signed and how they work.

Paul_N_4

Also noticed their ebond fixed rate dropping from 6.7%, to 6.45% to 6.25% all within a month despite just one cut from BofE of 0.25%.

speedbird1973

I guess they're certain there'll be a drop in the BOE rate next month, and thinking there is a chance of a 0.5% cut.. in effect they're reducing the effect of that. It only effects "brand new customers only".

If they put up their SVR then I'd say that was more of a worry

movilogo

I read some where else that banks might stop offering base rate tracker mortgages altogether in not so distant future.

Once their rate is linked with BoE rate, they can't do too much to raise their profit.
With the probability of IR going down, no one is showing interest on fixed rates (for 2-3 yrs) and they are opting for trackers instead. In this way, consumers are avoiding bank's SVR which they can control themselves!

WTF?_2

movilogo wrote: »

I read some where else that banks might stop offering base rate tracker mortgages altogether in not so distant future.

Once their rate is linked with BoE rate, they can't do too much to raise their profit.
With the probability of IR going down, no one is showing interest on fixed rates (for 2-3 yrs) and they are opting for trackers instead. In this way, consumers are avoiding bank's SVR which they can control themselves!

I wouldn't be too sure about IRs staying low. For sure they will be reduced in the near term as the government tries to stimulate growth to avoid a recession.

However once we are into a recession, if we should see stagflation creeping in they will have no option but to raise rates quite considerably to tackle it, recession or not. If your currency starts to become worthless then that's a very serious threat to your economy indeed and tacking that will take priority over making it cheap to borrow money in the hope that things pick up.

Of course if the recession keeps inflation low then rates can afford to stay low.