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Boom'n'Bust

Playing The Percentages

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EXCERPT

"Borrowers could be forgiven for feeling that some lenders have been particularly stingy in not passing on the full savings. 'Base rate cuts are intended to benefit consumers and boost the economy, not widen the profit margins of banks and building societies,' says Simon Tyler of Chase De Vere Mortgage Management."

Mouth open, if you are surprised

Don't some - perhaps, most - mortgage advisers talk a load of cr@p!

Surely this idiot should know that banks and building societies are commercal organisations whose main purpose is to make money. And, because they're in a competitive market, they have to provide a fairly good deal to keep their customers. Although the BoE sets its own Base Rate, it's entirely up to these lenders what rates they wish to charge.

And, what is Chase de Vere's advice? Take advantage of a trivial discount for a poxy two years and tie your future payments (within a Tracker Mortgage) to a totally indeterminable moving figure. I know of no-one whose income goes up and down with base rate, so why would anyone want their largest outgoing to be tied to it. Talk about going blindly into the night!

Additionally, some people seem to think that lenders mind losing customers. In fact, they don't mind at all if 'rate tarts' go off to their competitors. I know, because I've been involved in such an exercise i.e. stay uncompetitive for a while - those customers who spend their time worrying about rates p|ss off to your competitors - they (you're competitors) land up with the demanding and unprofitable rate chasers and you're left with the higher rate paying, passive and long term undemanding ones. Your organisation gains in two ways. Firstly, you benefit from the higher rate. Secondly, there's a lot less work and cost involved in looking after (!) the customers who stay. At some point, you make a decision that you want to keep your remaining customers and move your rates nearer the market. Bob's Your Uncle! You've made your organisation more profitable but, just as importantly, you've made your competitors less so.

p

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For as long as I can remember banks have been accused of raising rates as soon as the Bank does, but not cutting them when it does. Mortgage interest rates should now be at about 1000%!

With the end of housing mania will also come the end of banks "giving away" money by lending money at less than the price they borrow it and a greater realisation of the risks that they face in lending in a stagnent market and worsening economy. Mortgage rates will have to climb.

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For as long as I can remember banks have been accused of raising rates as soon as the Bank does, but not cutting them when it does. Mortgage interest rates should now be at about 1000%!

With the end of housing mania will also come the end of banks "giving away" money by lending money at less than the price they borrow it and a greater realisation of the risks that they face in lending in a stagnent market and worsening economy. Mortgage rates will have to climb.

and on that note... just be informed that ybs has cut its ISA from 5.25% down to 4.9% - a**holes.

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  • 302 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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