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Bank Of China Offers Mortgages To Uk Borrowers

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Bank of China, the world’s third largest bank, has started offering mortgages to credit-starved British borrowers at rates that undercut many of the deals available from established UK lenders.

The bank, which has previously focused on Chinese communities in the UK, wants to become a household name alongside lenders such as HSBC and Barclays.

The experience of taking out a Bank of China mortgage will not be quite the same as that offered by the traditional UK lender.

In a nod to Chinese belief in the auspicious nature of the number eight, the bank has had a mortgage arrangement fee of £888, though it this week switched it to the more recognisable figure of £995.

It will insist on meeting each new borrower personally before offering them a loan, and will fund loans from its own capital reserves, a conservative approach that was once the norm in UK banking but fell away in the fervour of the latest housing boom.

Mortgage brokers said its tracker rates ��" available for homeowners and buy-to-let customers and starting at 2.5 per cent above the base rate ��" were among the best on the market and should go some way to relieving the shortage of home loans in the UK.

The bank is beginning its mortgage business slowly, discreetly marketing its rates through four distributors, including Savills and Legal & General Mortgage Club.

Brokers said the emergence of such a large lender was welcome at a time when the mortgage market had suffered a significant contraction of supply.

“We are not saying this is suddenly going to fix the shortage of funding in the UK market, but it should be seen as a positive signal when a bank of this scale is willing to enter the market,†said Mark Harris, managing director of Savills Private Finance, the broker.

The bank is expected to initially lend fairly small amounts but could rapidly expand its loan book. It said there were opportunities to expand by attracting high quality business from the wider UK market.

Analysts believe foreign banks are in a strong position to lend in the UK as they have healthier balance sheets and do not have back books stuffed with high-risk loans.

“The UK is likely to be relatively attractive for overseas lenders who can access funding,†said Robert Law, an analyst at Nomura

Edited by crash2006

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Well this initiative simply cuts out the middle man - uk based banks.

It's a bug, not a feature.

This race to dis-intermediate is being driven by demand failure - a supply-side glut.

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No, they repossess the property as usual. Thus swapping ever useless dollars for tangible overseas assets. Simples ;)

The actions of ACC Bank in the courts against two developers in the past week should be making the minister and the Irish-owned banks very edgy.

In one case, a valuer told the High Court that the assets of one developer in Sandyford, valued in the books at €22m, were probably worth €500,000.

Outside Dublin, most land and property values are reckoned to be down by about 80%. Our problem is that virtually no market exists and the sceptics are saying it’s not a case of the wheels falling off the wagon – there were no wheels on it in the first instance.

What the Government does to protect the taxpayer in the case of NAMA, is becoming fraught with difficulties. The deeply sceptical believe even if banks get further billions of our money this crisis is so deep it will take more than favourable borrowing terms to get us out of this massive crater.

The banks remain "nervous" about lending and evidence to date strongly suggests they have used the Government’s €7bn to shore up their seriously depleted balance sheets.

They still need substantial funds to shore up their books and while the minister insisted nationalisation was not "inevitable", his choice of words left that door wide open.

It is not inevitable, but the huge concerns among businesses of all sizes over lack of credit brings that day closer unless banks start lending.

Somewhere in Government, the penny must drop that we have an economy to save, not just a banking sector scuttled by greed

Read more: http://www.examiner.ie/business/we-have-an...l#ixzz0MFKCCWPP

Ireland is a basket case

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No, they repossess the property as usual

Define "usual". At the moment it is "usual" to allow 2-year mortgage interest holiday courtesy of HM Govt.

I think Chinese would not be willing to do that but who knows.

Edited by matroskin

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this is welcome news. The shift to the east gathers pace.

Bring it on.

The Hong Kong Shanghai Banking corporation already own huge UK assets.

Edited by sammysnake

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this is welcome news. The shift to the east gathers pace.

Bring it on.

The Hong Kong Shanghai Banking corporation already own huge UK assets.

Agreed this is good news as it means more competition and hopefully better lending standards.

The Chinese are more cautious and far less spivvy than our own financial services people.

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Agreed this is good news as it means more competition and hopefully better lending standards.

The Chinese are more cautious and far less spivvy than our own financial services people.

You mean they behave like banks should?

Will they get greedy though?

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Agreed this is good news as it means more competition and hopefully better lending standards.

The Chinese are more cautious and far less spivvy than our own financial services people.

And yet, borrowing £700bn from foreigners on the money markets is what got us into the current crisis.

If we can't afford to fund our own house purchases by leveraging up our own retail savings 10:1, then we're leveraging up with borrowed money, blowing another bubble in the economy and will have to suffer the blow-up and currency risks all over again.

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You mean they behave like banks should?

Will they get greedy though?

Well I don't think the Chinese would let their banks bring down the system, or at least if they did they know what the consequences would be.

Edited by mikelivingstone

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Israel and Sweden are also getting in on the act, apparently

Leumi has the market-leading five-year tracker, at just 1.625% above three-month Libor — the wholesale rate at which banks borrow from each other. With Libor at 0.93% last week, the rate would be 2.56%.

http://www.timesonline.co.uk/tol/money/pro...icle6727441.ece

remind me what happens to Libor when money markets are a little 'distressed' again?

why not just head charge a big metal spike? or make a coat out of liver sausages and try and reason with the tigers

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Agreed this is good news as it means more competition and hopefully better lending standards.

The Chinese are more cautious and far less spivvy than our own financial services people.

:huh::huh:

You are joking right?? Over the last year or so all the Chinese banks have been ordered to lend on a massive scale. There will be trouble when all the defaults begin. (The only positive is that Chinese banks have to retain a certain amount of profits in non -distributable reserves to act as cushion).

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:huh::huh:

You are joking right?? Over the last year or so all the Chinese banks have been ordered to lend on a massive scale. There will be trouble when all the defaults begin. (The only positive is that Chinese banks have to retain a certain amount of profits in non -distributable reserves to act as cushion).

He is having a larf.

The following comment from a contributor to a MarketTicker thread on failed Chinese government bond auctions probably sums up the situation

China loan growth is up 300% YoY. Banks are writing loans to consumers for the sole purpose of commodity speculation. Their market is up +70%. Beijing houses are rising 6.5% per week. Yeah, why would anyone be buying bonds? Their CB has completely lost control. China is a car flying down a black ice covered road at 200 mph. Everything looks ok, until they tap the brakes..

http://tickerforum.org/cgi-ticker/akcs-www...1669&page=2

Just another day in bubble land

http://www.bloomberg.com/apps/news?pid=206...id=aV4OPwuOlwAw

Edited by stenosis

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im beginning to wonder if the UK housing market has an Event Horizon

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Agreed this is good news as it means more competition and hopefully better lending standards.

The Chinese are more cautious and far less spivvy than our own financial services people.

they will be more cautious , offering decent rates at low lending multiples compared to the high rates at high lending multiples we currently have with our high street banks.

if they are successful it might set the benchmark back to how mortgages use to be.

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Guest DissipatedYouthIsValuable
And yet, borrowing £700bn from foreigners on the money markets is what got us into the current crisis.

If we can't afford to fund our own house purchases by leveraging up our own retail savings 10:1, then we're leveraging up with borrowed money, blowing another bubble in the economy and will have to suffer the blow-up and currency risks all over again.

I propose we give Ireland to the Chinese on a long lease in return for them calling off their debtpushers.

It's got a nice symmetry to it.

Or just Northern Ireland. It does after all have the most highly valued property of Britain, and the Chinese are very decisive when dealing with sectarian issues.

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According to an online translator (it's probably wrong) the simplified Chinese for Liar Loan is

说谎者贷款

My Chinese isn't great but probably better than most peoples on this board so I'll give it a shot and guess the meaning is something like 骗的贷款. 贷款 meaning 'bank loan', I didn't actually know that word just got it from your translation and looked it up, and 骗 is a Chinese word I know that means cheat or lie which has many uses.

For those who haven't been paying attention to the wider picture, this is all part of China's expansion plan whereby it wants to (and has announced, see Injin's thread) that it wants to sponsor Chinese companies to take business assets (tangible valuable things like market share in real markets) and resources, when it says Chinese companies this probably means 90% it's own state owned companies just like Bank Of China ;)

The Chinese are efficient but are also ruthless profit seekers and I wouldn't say they neccessarily give people a better deal unless it's in their interest, in this case gaining a strong brand name in the UK mortgage market is their interest rather than making a profit, once they make a name for themselves they will put up their rates I'm sure.

They are definitely not making money off those mortgages especially since sterling is dropping and it's from their own reserves since you can bet if the Chinese government have a $2 trillion reserve then it's population of successful businessmen have 30-40x that amount, even more so if you consider how disconnected China's tax system is and that many large transactions are done off the books especially with regards to exports.

So I believe they have the reserves to do it, and any money lost is a drop in the ocean.

To add some balance to my opinion, there is a property bubble in China which is 5x worse than the UK's however a lot of purchases are done in cash from rich businessmen then loans often to stupid idiot middle class who can just about afford a mortgage and think owning a property makes your quality of life much better that it's worth throwing away all their disposable income for 30 years. But I find it incredibly hard to believe the Chinese banks need shoring up by the government considering private wealth should be multiples of the governments and largely stored in Chinese banks.

Most people don't know the extent of the wealth in China, there are thousands of very wealthy businessmen in every city and many even in small provinces. Imagine China is half the whole world and that it's been providing value added goods and services to the other half due to the other half of the world living on credit and you can begin to understand, then take into account it's vast natural resources and cheap migrant labour which allowed it to profit well from selling goods.

When I say cheap migrant labour, I don't mean India or Africa style slavery labour, I honestly think considering the immense pressure of labour oversupply the Chinese workforce still manage to earn a reasonable living wage as the costs are low here, but obviously the caveat being they often have to work long hours like 60/ week.

I honestly think this property owning obsession isn't a British thing, it's human nature and as most people in most countries have little economic sense, they are driven by their instincts to own rather than think of the logical costs involved.

Edited by Saberu

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Guest DissipatedYouthIsValuable
I think it more likely the Yanks will let the Chinese walk into Australia if they forgive their debts.

That'll wipe the smile off the faces of those street-shitters.

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