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Lloyds Lifts Standard Variable Rate As Mortgage Pledge Dents Profits

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http://www.guardian.co.uk/business/2010/may/27/standard-variable-mortgage-rates-raised

Lloyds TSB has become the second big lender to buckle under the pressure of guaranteeing that its standard variable rate will not rise more than 2% above the Bank of England's base rate: the bank is to introduce a second, more expensive rate for new borrowers from 1 June.

Lloyds will impose a "homeowner variable rate", now at 3.99%, on all new mortgage customers as their fixed or tracker deal ends. As the shortest mortgage deal it offers lasts for two years, borrowers will start paying the new rate in June 2012.

The new rate will not apply to existing borrowers, who will continue to benefit from the guarantee, which was first made at the beginning of the decade. This means they will either remain on the standard variable rate (SVR) of 2.5%, or revert to it when their mortgage deal ends.

Nor will the rate apply to Halifax and Bank of Scotland mortgage customers, who have their own SVRs: 3.5% for Halifax, and 4.84% for BoS customers, who have predominantly borrowed higher risk buy-to-let and self-certified loans.

Emma Partridge, a Lloyds spokeswoman, refused to specify how many borrowers were on the lower SVR but said the move was a response to market conditions of prolonged low base rates and high wholesale borrowing costs. She said that by raising the "go rate" that borrowers would eventually pay, the bank could offer more attractive initial deals. "We have to price them for the duration of the mortgage. By making the back end a little bit higher, we can reduce the costs at the beginning," she said.

Michelle Slade, of Moneyfacts.co.uk, said: "When Lloyds TSB made the decision to guarantee its SVR it never expected bank base rate to go so low. The lender has seen its balance sheet dented by borrowers reverting to a record low rate of 2.5%. Many of its borrowers are opting to stay put and overpay their mortgage rather than remortgage to a new deal at a higher rate."

The news comes two days after Nationwide building society admitted that its same guarantee that its SVR would not rise more than 2% above the base rate had cost it £450m in annual profits. The society introduced a higher SVR for new customers a year ago to combat the problem, but the first borrowers will only move on to the new rate of 3.99% in six months.

Just think of what will happen when the base rate starts to go up.....

Still its all contained and locked in.

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I talked to a Lloyds mortgage advisor about a year ago whilst I was in there sorting something else out that was going to take half an hour.

I was told that all their short-term deals dropped back to base + 2% for the rest of the mortgage term. With the BoE keeping base artificially low, I thought this would be a deal to remember when it comes time. At the time, I thought it's an odd commitment to make so I specifically asked about this base+2% and was told that its was Lloyds long-term policy and their mortgage business was based around it.

So much for the long-term. Lying banking scum.

When they need the cash urgently in the next crash phase, I see banks going all out to repo everything they can get their hands on, first going after the ones with the most equity and loading them up with more charges.

VMR.

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I talked to a Lloyds mortgage advisor about a year ago whilst I was in there sorting something else out that was going to take half an hour.

I was told that all their short-term deals dropped back to base + 2% for the rest of the mortgage term. With the BoE keeping base artificially low, I thought this would be a deal to remember when it comes time. At the time, I thought it's an odd commitment to make so I specifically asked about this base+2% and was told that its was Lloyds long-term policy and their mortgage business was based around it.

So much for the long-term. Lying banking scum.

When they need the cash urgently in the next crash phase, I see banks going all out to repo everything they can get their hands on, first going after the ones with the most equity and loading them up with more charges.

VMR.

I think calling them lying banking scum is a bit much on the basis of this change... no one who took a mortgage under the old regime has lost out have they ?, no one has been lied to about the operation of their own mortgage contract have they ?. Banks even in the brave new world are not charities and will make money where they can.

And before you dive off the deep end remeber if Lloyds hadn't effectively made one bad decision to buy HBOS then they'd not have had to take govt cash at all, and of all the bansk their underwriting was probably the most stringent and the least relaxed.. as an unexample they never allowed the sort of liar loan appraoch others did... so I'd think a little before you decide to jump of the deep end in future if I were you.

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The banks are finding it difficult to make money with low interest rates. I think they are starting to create a narrative in the media which leads to transactional charging on current accounts (monthly/annual fees).

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I talked to a Lloyds mortgage advisor about a year ago whilst I was in there sorting something else out that was going to take half an hour.

I was told that all their short-term deals dropped back to base + 2% for the rest of the mortgage term. With the BoE keeping base artificially low, I thought this would be a deal to remember when it comes time. At the time, I thought it's an odd commitment to make so I specifically asked about this base+2% and was told that its was Lloyds long-term policy and their mortgage business was based around it.

So much for the long-term. Lying banking scum.

When they need the cash urgently in the next crash phase, I see banks going all out to repo everything they can get their hands on, first going after the ones with the most equity and loading them up with more charges.

VMR.

Interesting to see that it's the two banks most likely to collapse in the 'next phase' of the crunch coming soon, which are under discussion here regarding residential lending. They both have massive commecial property loans needing refinancing over the next year (£hundreds of millions), a large proportion of which are already in negative equity territory. If the money markets stop them, then......Ahhhhhhhhhhhhhhhhhhhhhhhhh. Bump. RIP

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Interesting to see that it's the two banks most likely to collapse in the 'next phase' of the crunch coming soon, which are under discussion here regarding residential lending. They both have massive commecial property loans needing refinancing over the next year (£hundreds of millions), a large proportion of which are already in negative equity territory. If the money markets stop them, then......Ahhhhhhhhhhhhhhhhhhhhhhhhh. Bump. RIP

Luckily they aren't competing with govts who also need to roll over billions in debt as that could be a problem in the sensual contained locked in recovery.

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I think calling them lying banking scum is a bit much on the basis of this change... no one who took a mortgage under the old regime has lost out have they ?, no one has been lied to about the operation of their own mortgage contract have they ?.

Yes, maybe a shallow end jump would have been more sensible. Skipton were the ones that scr3wed the existing mortagees and Nationwide were the first to introduce "another SVR so we dont have to meet our SVR long-term committments". When I see "homeowner variable rate", I see weasel words to get out of SVR committments along the lines of "we weren't lying, we just changed meaning of the words".

The Lloyds change is more in the Nationwide style than the Skipton style.

Banks even in the brave new world are not charities and will make money where they can.

I would consider banks are UK's biggest charities, having received the biggest bailout of all time "for the public good".

And before you dive off the deep end remeber if Lloyds hadn't effectively made one bad decision to buy HBOS then they'd not have had to take govt cash at all, and of all the bansk their underwriting was probably the most stringent and the least relaxed.. as an unexample they never allowed the sort of liar loan appraoch others did... so I'd think a little before you decide to jump of the deep end in future if I were you.

I know a bank manager at LLoyds (personal loans) and their lending may have been the least relaxed but was certainly reckless. Everything was target driven with the managers encouraged to write loan applications to beat the computer (a chain of bonuses depended on it). Loans were made to meet lending targets with no care for collection, there was for another department to deal with and did not affect lending bonuses/target.

VMR.

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Yes, maybe a shallow end jump would have been more sensible. Skipton were the ones that scr3wed the existing mortagees and Nationwide were the first to introduce "another SVR so we dont have to meet our SVR long-term committments". When I see "homeowner variable rate", I see weasel words to get out of SVR committments along the lines of "we weren't lying, we just changed meaning of the words".

The Lloyds change is more in the Nationwide style than the Skipton style.

I would consider banks are UK's biggest charities, having received the biggest bailout of all time "for the public good".

I know a bank manager at LLoyds (personal loans) and their lending may have been the least relaxed but was certainly reckless. Everything was target driven with the managers encouraged to write loan applications to beat the computer (a chain of bonuses depended on it). Loans were made to meet lending targets with no care for collection, there was for another department to deal with and did not affect lending bonuses/target.

VMR.

While of course Lloyds has and had a target driven retail network and within that there were of course abuses..... there are in any target driven system.. even teaching.... but that to one side I wouldn't agree at all that Lloyds were reckless, they made one bad ( oh, ok absolutely stratospherically dumb) move buying HBOS but that aside I suspect they would have joined HSBC in not needing re-capitalisation and bearing in mind the madness that was going on around housing finance and bearing in mind they hadno international or investment businesses to share the burden of pain with, and bearing in mind they were the largest retail banking operation in the UK actually reflects pretty well on their lending policies all things considered... so I wouldn't agree they were reckless by the standards of yesteryear or todays standards...... by the by in case you thought it was othersie whereever the lending policies are set up and down the Uk in every bank and building society branch you'll find bank workers making a judgement on what actions are allowed and not allowed and where the grey areas are and making decisions based on their personal targets as a result..... even if its for targets ( where theres no bonus at the end) you'll see it still effecting behaviour.

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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