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  • FIRST POST
    • Former MSE Helen
    • By Former MSE Helen 17th May 12, 12:50 PM
    • 2,324Posts
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    Former MSE Helen
    MSE News: Eurozone crisis could push mortgage rates up
    • #1
    • 17th May 12, 12:50 PM
    MSE News: Eurozone crisis could push mortgage rates up 17th May 12 at 12:50 PM
    This is the discussion thread for the following MSE News Story:

    "Banks pay more to fund home loans which could mean higher costs for mortgage holders ..."

Page 1
    • brit1234
    • By brit1234 17th May 12, 1:34 PM
    • 5,191 Posts
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    brit1234
    • #2
    • 17th May 12, 1:34 PM
    Good news
    • #2
    • 17th May 12, 1:34 PM
    This will help deflate the housing bubble faster, let hope the house price falls are speeding up so people can buy affordable homes again.

    Even with these coming mortgage rate rises they will still be low on a historic basis. I just hope they bump interest rates for savers who have been the true loosers this last 4 years.

    Scams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.

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  • jamesd
    • #3
    • 17th May 12, 1:52 PM
    • #3
    • 17th May 12, 1:52 PM
    If I recall correctly both HSBC and RBS fund almost all of their mortgage lending from deposits and RBS was saying it wasn't lending as much as it could from deposits and was looking to do more.

    If my recollection is correct this makes me wonder why RBS would have a reason to use increased borrowing costs as a reason to raise rates.
  • The J
    • #4
    • 17th May 12, 2:15 PM
    • #4
    • 17th May 12, 2:15 PM
    Even with these coming mortgage rate rises they will still be low on a historic basis. I just hope they bump interest rates for savers who have been the true loosers this last 4 years.
    Originally posted by brit1234
    I've been saving for the last 4 years at very decent rates of return. You haven't been investing in cash have you brit? Because that would be silly. Someone as financially astute and aware of risk as you will have an incredibly diverse portfolio.

    It's nice of you to think of the ordinary man saving his £50 a month but I'm pretty sure he's just happy to have his money. Unlike you or I, I don't think he wants to think too much about it. He just wants to know his £50 is safe which is fair enough in the deepest recession of our lifetimes.
    The J is a Financial Advisor-This site doesn't check anyone's status and as such any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Always seek professional advice.
    • Frozenace
    • By Frozenace 17th May 12, 2:34 PM
    • 245 Posts
    • 181 Thanks
    Frozenace
    • #5
    • 17th May 12, 2:34 PM
    • #5
    • 17th May 12, 2:34 PM
    I'm moving to HSBC if they're willing to accept me... getting a decision next week.
    • Credit-Crunched
    • By Credit-Crunched 17th May 12, 3:11 PM
    • 2,114 Posts
    • 4,139 Thanks
    Credit-Crunched
    • #6
    • 17th May 12, 3:11 PM
    • #6
    • 17th May 12, 3:11 PM
    I'm moving to HSBC if they're willing to accept me... getting a decision next week.
    Originally posted by Frozenace
    Lol good luck
    • Conrad
    • By Conrad 17th May 12, 3:25 PM
    • 31,494 Posts
    • 55,821 Thanks
    Conrad
    • #7
    • 17th May 12, 3:25 PM
    • #7
    • 17th May 12, 3:25 PM
    Yes mortgage rates could be pushed up, and..........?? Whats to discuss? It is what it is.
    • Consumerist
    • By Consumerist 17th May 12, 3:27 PM
    • 5,247 Posts
    • 2,630 Thanks
    Consumerist
    • #8
    • 17th May 12, 3:27 PM
    • #8
    • 17th May 12, 3:27 PM
    If I recall correctly both HSBC and RBS fund almost all of their mortgage lending from deposits and RBS was saying it wasn't lending as much as it could from deposits and was looking to do more. If my recollection is correct this makes me wonder why RBS would have a reason to use increased borrowing costs as a reason to raise rates.
    Originally posted by jamesd
    Reading between the lines of what you recall, it's possible that RBS has continued to rely mainly on the money markets to fund mortgages. If they now intend to use savers deposits then they will need to improve savings rates to attract those deposits. Maybe that's the underlying reason for claiming increased borrowing costs.

    Just a thought but if that sentiment is repeated throughout the mortgage industry then it bodes well for savers down the line if only the BoE could be relied on to constrain inflation. Little hope of that with QE working its way through the system.
    Warning: In the kingdom of the blind, the one-eyed man is king.
  • jamesd
    • #9
    • 17th May 12, 3:36 PM
    • #9
    • 17th May 12, 3:36 PM
    If I recall correctly the claim was that they were lending less than 90% of what they had on deposit with them, something like 86 or 88%, but in any case under 90%.
    • Consumerist
    • By Consumerist 17th May 12, 4:21 PM
    • 5,247 Posts
    • 2,630 Thanks
    Consumerist
    If I recall correctly the claim was that they were lending less than 90% of what they had on deposit with them, something like 86 or 88%, but in any case under 90%.
    Originally posted by jamesd
    That's higher than I expected. Aren't banks required to hold a certain proportion of deposits in reserve, anyway?
    Warning: In the kingdom of the blind, the one-eyed man is king.
    • danothy
    • By danothy 17th May 12, 5:30 PM
    • 2,056 Posts
    • 2,690 Thanks
    danothy
    That's higher than I expected. Aren't banks required to hold a certain proportion of deposits in reserve, anyway?
    Originally posted by Consumerist
    I don't think the UK has a fraction prescribed as such, but it has other requirements for banking liquidity that can effectively enforce one and there is supposedly a practise of voluntary reserve fraction ... the list on wikipedia has reserve fractions from 0% to 30% in various other countries.
    If you think of it as 'us' verses 'them', then it's probably your side that are the villains.
    • Thrugelmir
    • By Thrugelmir 17th May 12, 5:48 PM
    • 64,850 Posts
    • 57,215 Thanks
    Thrugelmir
    Just a thought but if that sentiment is repeated throughout the mortgage industry then it bodes well for savers down the line if only the BoE could be relied on to constrain inflation. Little hope of that with QE working its way through the system.
    Originally posted by Consumerist
    Merely a slow return to how it used to be. Around the year 2000 mortgage debt was entirely funded from retail deposits. Trouble is now lenders are dependent on some £600 billion of wholesale funding finance.
    “If the financial system has a defect, it is that it reflects and magnifies what we human beings are like. Money amplifies our tendency to overreact, to swing from exuberance when things are going well to deep depression when they go wrong. Booms and busts are products, at root, of our emotional volatility.”
    ― Niall Ferguson
  • daveg72
    Luckily, I'm not in a postition where my rate has risen, but the banks have re-written the rule book on mortagage rates and variable interest rates. It's scary and disgusting that they have been allowed to get away with doing this and I really hope that at some point in the future they are made to pay it all back as with PPI and to an extent charges.
    • ReflexReaction
    • By ReflexReaction 18th May 12, 10:49 AM
    • 72 Posts
    • 12 Thanks
    ReflexReaction
    Wait a minute. They're talking about SVRs right - not the base rate? This announcement from the BoE could have been clearer imo.
    • mrbilbs
    • By mrbilbs 18th May 12, 1:58 PM
    • 81 Posts
    • 22 Thanks
    mrbilbs
    Im on a LIBOR mortgage - currently Im paying less than I would be if I was on a high street one. Any thoughts from anyone how the LIBOR rates will go. I think with all the current trouble they will go back up again but I do hope Im wrong. I know I wouldnt be able to move for a good few years yet anyway.
    • samtoby
    • By samtoby 18th May 12, 2:14 PM
    • 2,396 Posts
    • 11,999 Thanks
    samtoby
    What happens if everyone takes their money out of Santander?
    DS 18.06.2004 --2013-- 2.05.2014
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    • brit1234
    • By brit1234 18th May 12, 3:20 PM
    • 5,191 Posts
    • 11,968 Thanks
    brit1234
    Im on a LIBOR mortgage - currently Im paying less than I would be if I was on a high street one. Any thoughts from anyone how the LIBOR rates will go. I think with all the current trouble they will go back up again but I do hope Im wrong. I know I wouldnt be able to move for a good few years yet anyway.
    Originally posted by mrbilbs
    I expect LIBOR to keep rising like it has done the previous months. The chart on the link shows how it is going up and how much it has gone up from last week, last month and last year.

    http://www.bankrate.com/rates/interest-rates/libor.aspx
    Scams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.

    Save our Savers
  • jamesd
    What happens if everyone takes their money out of Santander?
    Originally posted by samtoby
    Santander UK borrows money from emergency funds provided by the Bank of England and the Europeans. Maybe a takeover is arranged. Santander in Spain tries the same but from the EU.

    If for some reason those things don't happen the FSCS takes over and uses the living will provisions to cause the accounts to continue operating normally, borrowing whatever it needs from the Treasury under it's pre-arranged facility to do that.

    Regulators have hugely improved their handling of this since Northern Rock.
    • Bloomberg
    • By Bloomberg 19th May 12, 9:30 AM
    • 657 Posts
    • 268 Thanks
    Bloomberg
    This will help deflate the housing bubble faster, let hope the house price falls are speeding up so people can buy affordable homes again.

    Even with these coming mortgage rate rises they will still be low on a historic basis. I just hope they bump interest rates for savers who have been the true loosers this last 4 years.

    Originally posted by brit1234

    Mortgage payers have had it too good for too long at the expense of those who have been careful with their money. Us savers have been punished on account of those who have taken out mortgages which are too big for their incomes. Lets get rates back up where they should be, 0.5% is a big falsehood which is unsustainable. The housing market will crash eventually, the government are just delaying the inevitable and they know it.
    Money is a wise mans religion
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