Thursday, Mar 27, 2008
British Pound Could Break 2.0 if Disaster Hits UK Mortgage Lenders
daily fx: According to an article in the UK Times, Nationwide, the country’s second largest mortgage lender is planning to turn away business. We wonder why a mortgage lender would resort to this unless trouble was brewing in house
According to an article in the UK Times, Nationwide, the country’s second largest mortgage lender is planning to turn away business. We wonder why a mortgage lender would resort to this unless trouble was brewing in house. The Times argues that Nationwide is attempting to gain greater control over the amount that it lends and is doing so by increasing the rates on its tracker deals by more than 50bp. Efforts such as these are exactly why central banks including the UK and the US are struggling to contain the credit crisis.
Posted by chris @ 10:31 PM (642 views) Add Comment
10 Comments
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1. happyrenterz said...
From the FT "The move brings Nationwide’s pricing into line with the rest of the sector. It is a deliberate strategy to help it slow an unmanageable number of customer inquiries, since Nationwide had been pricing below the competition."
2. greytornado said...
This is reading too much into things. Fact is, the Nationwide is the largest Building Society in the UK. They have never de-mutualised, so remain a Building Society, although changes in legislation let them do things they couldn't do 40 years ago when I worked for them. Nationwide have always been a sensible and prudent organization. But, faced with what is going on now, if I were the Directors of Nationwide, I would be taking steps to ensure that the lending of this Building Society was in fact sound & sensible lending - ie quality not quantity and I would be taking active steps to discourage 'iffy' mortgages that will be problem cases a couple of years down the line. Nationwide are simply taking steps to avoid being a reckless lender and to avoid being saddled with basket cases. They want to retain their fully justified reputation as being a sensibly run business.
3. drewster said...
The central banks are "pushing on a string". No matter how much liquidity they inject into the system, they can't force the banks to lend and they can't force people to borrow. It's all looking a bit Japanese...
4. it_is_going_with_a_bang said...
They should not ever be trying to force people to borrow. On a small level it would be much healthier for people to save and spend.
On borrowings as high as houses etc it should ONLY be done if it can be easily repaid providing value for money. The pricing level of housing is just way over what is acceptable lending criteria.
Sensible lending means winding back the House Price clock about 5 years at least.
5. cornishman said...
"We wonder why a mortgage lender would resort to this unless trouble was brewing in house"
- a bit over dramatic, I think.
If availability of mortgages is decreasing and demand for re-mortgaging is high, then the price goes up. Quite simple, I would have thought.
6. bystander said...
Pound just touched 79 pence to the euro again. Wouldn't like to bet against 85pence before the ECB pull their fingers out their @rse, and start to cut too.
7. cornishman said...
Couldn't log on to Nationwide Internet bank again this morning. Just like Northern Rock.
Having said that, I don't worry about the solvency of Nationwide[not at the moment anyway!], but I do worry about how easily a run can start on a rumour.
8. theboltonfury said...
cornish, it is quite ironic that after months of going along with a vast amount of the sensationalist stuff on here, particularly as a big fan of S2R and his 'opinions' od global depression etc etc - as soon as a financial org is in the news that houses your savings all of a sudden you jump on the bandwagon of unsubstantiated rumour and dramatism. Suits to scaremonger at times and not others doesn't it?
Just a thought
9. Rentinginthesouth said...
Nationwide is fine... apparently they have people flocking to them to deposit their savings. - It was in a BBC news article a few months ago (post credit crunch)
10. cornishman said...
bolton - not unsubstantiated rumour - merely fact. I can't log on to my bank account today, I couldn't log on yeterday either until late in the day. It feels just the same as it did when I couldn't log in to my [now closed] Northern Rock account.
I'm not saying any more than that.