Interest rates

[jonny72]

A view from inside the industry - I know that last week Nationwide & Halifax were seeking a legal opinion on their Collars. Nationwides is at 2.75% base rate & Halifax have theirs at 3%.
It may well be that the legal bods said they can't do it, which is why they passed on the full amount. That would apply in particular to the Halifax because they took that bit out off their KFI's (Illustrations) a while ago after the FSA told them to make it shorter.

Is the jury still out on whether the collars / floors are legal or not? A story on the BBC website gave the impression the FSA had told them they were most likely unenforceable as they weren't in the key fact illustrations and that Halifax (and some others) had just given up on it and basically removed the clause permanently.

I'm on a base rate +0.79% with the Halifax, so I'm laughing all the way to the Leeds at the moment. I was happy enough with the 3% floor, you can't really complain with paying 3.79% can you? Then Thursday morning I find out Halifax have dropped the floor clause, then at lunch time the base rate drops another 1%.

They didn't mention the floor to me when I took out the mortgage (I'd been on a fixed rate, then standard variable) which was all done over the phone and who reads the small print in the terms? But even if I'd known I'd of still taken the mortgage, so I'm in two minds as to whether I'd be annoyed if they did implement it or not.

I reckon dropping the base rate is the best chance of getting the economy going again. Every 1% drop puts another £100 or so in the pockets of 50% of the mortgage holders in the country, which is a lot more money than anything else they've done so far.

[Phil_S]

I know nothing about mortgages but is that a standard(ish) deal and who was dishing those out?

Thankfully I have a mate pretty high up in Barclays that tipped me off before things crashed and I got in on a cushdy tracker effort. 

Just checked it was with the Halifax in April 2007, & another was with Alliance & leicester the same month

[Phil_S]

I have long suspected you are 'The Man' Rob. This confirms it

Phil S..can you just confirm what I already know...me and Mrs Oooh! re-did our mortgage back in June time...our initial deal had come to an end. We went for a fixed rate of 5 point something over 3 years.

Depends on the penalty payable for coming out, but it is unlikely to he financially beneficial. In particular ne w tracker artes now are tracking at a much higher level above base. Consider what will happen when rates go back up.  However with another base rate cut possible in the pipeline,  LIBOR rates could force fixed rates down a bit more & in that case it might be worth paying a penalty if its not too big a %


Hmmmm, If it makes you feel any better I'm in the middle of a five year fixed rate myself.  I guess there's no way out of that really is there? It was a good deal at the time and we made a decision on the information available at the time.. it's always nice to be paying a bit less though isn't it? I don't suppose there's any way out of it really is there?

P.S. Don't worry, I'm not suicidal or owt

[Phil_S]

I reckon dropping the base rate is the best chance of getting the economy going again. Every 1% drop puts another £100 or so in the pockets of 50% of the mortgage holders in the country, which is a lot more money than anything else they've done so far.

Certainly a bit more effective than wasting 12 billion on cutting 17.5% off of VAT. !

[mexico red]

Certainly a bit more effective than wasting 12 billion on cutting 17.5% off of VAT. !

i wish they had cut 17.5% of VAT!!  THE 2.5% they cut is hugely beneficial and will save me and my business about 20 grand a year.

[janaage]

That's what I expect.  They should pass on the rate cut, the thieving bastards.  Fuck them and the horse they rode in on.

No they shouldn't Donkey, as they themselves do not get the funds to fund mortgages on a base rate level, they use the LIBOR, which does not fall in line with the BoE base rate.  It's like me gettin a loan at 5% to then lend to you at 6%, the BoE then reduce the interest rate to 3% but my interest rate doesn't fall, i'd still have to charge you 6%, or at least above 5% to make me money, which is what it's all about.

(I realise you may be fishing but some who read this may genuinely have that view)

[jonny72]

No they shouldn't Donkey, as they themselves do not get the funds to fund mortgages on a base rate level, they use the LIBOR, which does not fall in line with the BoE base rate.  It's like me gettin a loan at 5% to then lend to you at 6%, the BoE then reduce the interest rate to 3% but my interest rate doesn't fall, i'd still have to charge you 6%, or at least above 5% to make me money, which is what it's all about.

(I realise you may be fishing but some who read this may genuinely have that view)

Lets not forget that it is the banks themselves that have caused the problems to a large degree. They've been bailed out and supported by public money so personally I don't think they should be making a penny in profit until they've paid it back and sorted themselves out. I have absolutely zero sympathy for them.

[janaage]

Disagree they are businesses, who have a duty to their shareholders, employees and customers, they can't just give money away.  Don't forget the customers themselves have to shoulder some of the blame, and so do their advisers to some extent.  I'm sure Phil S knows many advisers who have increased their customers incomes to get them extra borrowing.

People need to start taking some responsibility for their actions, many people took the cheap option by going on a variable and now are not getting the full benefit of having opted for a tracker.  It's the same when the floods happened, those with insurance claimed, those without moaned to the government, watchdogs and got bailed out.  I'm not saying the poor should be left to fester but people need to start making proper plans and act like grown ups.

[Simon Pieman]

Did anyone see that programme called the great bank robbery, about a student taking out 4 different accounts and maxing the overdrafts in the space of 48 hours. Obviously she paid it back the next day because she wasn't stupid, but it just goes to show how shit the banks are at lending money.

[janaage]

Or, on the other hand, how idiotic people can be.

[chalkies_shorts]

People need to start taking some responsibility for their actions,

I thought thats what the Governement did now. 

[janaage]

Seems that way.

[Simon Pieman]

Or, on the other hand, how idiotic people can be.

That was the other point of the show. Some student had borrowed £40k from several banks, whilst a student, then had to go bankrupt in the end.

The most poignant part was Halifax and Lloyds TSB, who have been given taxpayers money to stay afloat, not bothering to check if she had any other student accounts.

You can blame people for borrowing too much and exploiting the system, but if you ever have the pleasure of looking at larger a bank's lending system, especially when the government has guaranteed money towards it, it's not very prudent.

[jonny72]

Disagree they are businesses, who have a duty to their shareholders, employees and customers, they can't just give money away.  Don't forget the customers themselves have to shoulder some of the blame, and so do their advisers to some extent.  I'm sure Phil S knows many advisers who have increased their customers incomes to get them extra borrowing.

People need to start taking some responsibility for their actions, many people took the cheap option by going on a variable and now are not getting the full benefit of having opted for a tracker.  It's the same when the floods happened, those with insurance claimed, those without moaned to the government, watchdogs and got bailed out.  I'm not saying the poor should be left to fester but people need to start making proper plans and act like grown ups.

I just don't think the banks are feeling enough pain. If it wasn't for the government support a lot more would of gone under, except the government couldn't let this happen and had to bail them out. Whilst they've lost a lot of money, the shareholders are left with something solely as a result of the government bail out.

But what about all the people who have had their homes repossessed or been made bankrupt. They haven't been bailed out or supported to the same degree. Why not? They have been no more irresponsible than the banks.

Its made worse by the massive bonus and dividend payments these same banks were paying up until a year ago (or even more recently in some cases). How can they go from massive profits to bankruptcy? Why weren't they retaining those profits to make their business more solid.

[Samdy Gray]

Another 0.5% today then and my lender (Nationwide) have already promised to pass on the full rate cut. Luverly jubberly.