Tuesday, Apr 22, 2008
Short back and sides, Sir?
Guardian: King's saved the banks but will he save homebuyers?
Banks will rebuild their profits. They say mortgage costs set to remain high for some time.
Posted by letthemfall @ 01:27 PM (509 views) Add Comment
3 Comments
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1. Icarus said...
(1) The lower the Libor rate the lower the cost to banks of taking part in the scheme. But like the CPI the Libor rate can be fiddled, in this case by...er.....the banks. (2) No swap privileges for American mortgage-backed assets... but Irish and Spanish etc. ones are OK? (3) The BoE's action is not specifically designed to encourage new mortgage lending, but in tandem with this action Badger is urging lenders to pass on cuts in IRs to borrowers. Does he mean only existing borrowers? Explain.
2. quiet guy said...
will he save homebuyers?
It all comes down to interest rates now. King's liquidity scheme is designed to save the banks, not the poor suckers who bought over priced houses near the top of the boom. If the BoE cuts the base rate again, the banks might feel obliged to pass on at least some of that to borrowers but can further cuts be justified? I suspect they will hold rates for a few months to wait and see what impact the liquidity scheme has.
3. mark wadsworth said...
No, not the ones who have already bought. But future home-buyers have nothing to worry about, they just have to hang on for a couple of years in rented.