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Fscs Levy May Force Societies To Raise Mortgage Rates

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FSCS levy may force societies to raise mortgage rates

Building societies have warned that they may have to increase their mortgage rates, at the same time as reducing their savings rates, in order to meet the costs of the increased Financial Services Compensation Scheme (FSCS) levy.

According to research launched at the Building Society Association's (BSA) annual conference in Harrogate earlier this week, 60 per cent of society chief executives believe mortgage rates may have to rise in order for societies to meet the costs of the FSCS levy.

A further 53 per cent thinking savings rates may also have to fall to meet the increased costs.

The research also found that society CEOs forecast net lending to fall on average 22 per cent in 2009, but advances are forecast to recover by the end of 2010, with an 8 per cent increase year-on-year.

Net receipts are also forecast to fall by an average of 9 per cent in 2009, but are expected to recover in 2010 with an 8 per cent increase.

However, despite the current economic downturn, the research also found that 55 per cent of CEOs remain optimistic about 2009, with many feeling that the building society model is trusted by the general public.

Adrian Coles, director-general of the BSA, said: "The last 12 months have certainly been tumultuous, but it's encouraging to see that the majority of building societies have a positive outlook.

"Despite challenges faced by building societies, their CEOs feel they are in a strong position to overcome them.

"The next year is not seen as a period of growth, but a time when balance sheets can be strengthened, and the business primed to take advantage when market conditions become more favourable."

The news comes as Fitch downgraded its ratings for Chelsea, Newcastle, Principality, West Bromwich and Yorkshire building societies due to their "high-risk lending".

May have to increase? More like 'have' to...

So, despite all the sound advice from McTavish, Sibley, Valerius, and Rinoa, now might not be the best time to be buying property.

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Why not just encourage their members to set fire to their cash in communal money-burning centres. At least you get something in return for your cash - a nice warm glow and something you can spread on the geraniums afterwards.

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Why not just encourage their members to set fire to their cash in communal money-burning centres. At least you get something in return for your cash - a nice warm glow and something you can spread on the geraniums afterwards.

nice.

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May have to increase? More like 'have' to...

So, despite all the sound advice from McTavish, Sibley, Valerius, and Rinoa, now might not be the best time to be buying property.

Higher interest rates will be here quite soon (IMHO)!

It's a pity that the "prudent" societies, are being taxed to bail out the reckless banks! :angry:

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