Moneymarket Rates

[oneb0y]

Not sure if this is the rght place for this thread, but here we go.

Seen over the last few days that rates on the moneymarkets have seen an increase for savings (so firms can price higher savings bonds) and also increased on mortgage rates (meaning again that the rates for mortgages will increase) These rates have increased by 0.10% over the past week already.

Question is what factors make these rates increase beside the obvious move in Bank of England rates? Also this in tunr puts the cost of mortgage borrowing up - in this case without the stimulus of an MPC decision.

[erd]

Not sure if this is the rght place for this thread, but here we go.

Seen over the last few days that rates on the moneymarkets have seen an increase for savings (so firms can price higher savings bonds) and also increased on mortgage rates (meaning again that the rates for mortgages will increase) These rates have increased by 0.10% over the past week already.

Question is what factors make these rates increase beside the obvious move in Bank of England rates? Also this in tunr puts the cost of mortgage borrowing up - in this case without the stimulus of an MPC decision.

Inflation on the up will push them higher, people want to at least match some form of real price inflation, ie not cpi!

It also is a sign that interest rates are more likely to rise now, rather than stay the same.

[Time to raise the rents.]

It shows you that the housing market is on the up.

After a few months of discounting short term fixed rates to attract business, that money has now been lent and the banks have enjoyed a good few months. They are now in a position to raise their fixed rates a little.

[oneb0y]

But surely the banks would back the continued growth of the property market and not to want to nip the recent spurt in mortgage approvals in the bud by raising rates and making it more difficult to borrow funds? Or is that a little naive of me to think this way!

[OnlyMe]

There was a concerted effort to drop savings rates pre-emptively before the BOE rate cut this summer.

With a bit of luck those establishments that did so will start seeing a greater loss of savings on their books.

Stick with the best headline monthly rates (which compund - need to check carefully if some of the yearly rates offered realy are competitive) with no time locks and stupid tricks, play them at their own game, if they don't deliver the best rate chop them.

[Levy process]

It shows you that the housing market is on the up.

After a few months of discounting short term fixed rates to attract business, that money has now been lent and the banks have enjoyed a good few months. They are now in a position to raise their fixed rates a little.

You have to be joking right? When interest rates were cut you where whooping about that being a sign that the housing market was going to go up. So interest rates going up means house market is going up, and interest rates going down means house market going up? Errmmmm.

Do you think that the sun coming up in the morning is a sign that the housing market is on the up?

Come on mate, you're getting desperate with that sort of stuff.

Edited November 4, 2005 by Levy process

[CrashConnoisseur]

Do you think that the sun coming up in the morning is a sign that the housing market is on the up?

Of course it is. A bright sunny day means people need to spend less on their heating....which means they have even more money to spend on a bigger mortgage. Simple really.

[Time to raise the rents.]

But surely the banks would back the continued growth of the property market and not to want to nip the recent spurt in mortgage approvals in the bud by raising rates and making it more difficult to borrow funds? Or is that a little naive of me to think this way!

Lets just say all they care about is the earnings on their loan books.

You have to be joking right? When interest rates were cut you where whooping about that being a sign that the housing market was going to go up. So interest rates going up means house market is going up, and interest rates going down means house market going up? Errmmmm.

Do you think that the sun coming up in the morning is a sign that the housing market is on the up?

Come on mate, you're getting desperate with that sort of stuff.

I don't think you've thought it through.

The housing market was tough & lending slowed, fixed rates were dropped and the base rate was dropped (this was good for the housing market), lending has picked up, the housing market has picked up, fixed rates have risen a LITTLE (BECAUSE the lending market and housing market has picked up).

Now who's laughing? Me of course.

[CrashIsUnderWay]

"now who's laughing? Me of course"

TTRTR, you are asking the wrong question. You should be asking WHY you are laughing.

feel free to choose from these alternatives

1: you are a mentalist in a straightjacket with 20 minutes internet access a day

2: you are a c*cks*cker.

[Rapid Descent]

Lets just say all they care about is the earnings on their loan books.

During boom times they care about turnover, which means as much cheap discounted rates as you can get, which in turn fuels the boom.

Once people twig that the boom has become an unsupportable pyramid scheme, the banks tighten and worry about bad debt, which means rates creep up so they can cover their ar$es.

I guess you think we are still in the former, my gut feeling is we've been transitioning into the latter over the last six months, and will continue to do so for the next 18 months.

[Time to raise the rents.]

"now who's laughing? Me of course"

TTRTR, you are asking the wrong question. You should be asking WHY you are laughing.

feel free to choose from these alternatives

1: you are a mentalist in a straightjacket with 20 minutes internet access a day

2: you are a c*cks*cker.

Weren't you off somewhere recently, was it jail? (I prefer the American spelling thanks) Have they now let you out again?

It won't be too long until you're back in, enjoy the fresh air while you can.

[Levy process]

Lets just say all they care about is the earnings on their loan books.

I don't think you've thought it through.

The housing market was tough & lending slowed, fixed rates were dropped and the base rate was dropped (this was good for the housing market), lending has picked up, the housing market has picked up, fixed rates have risen a LITTLE (BECAUSE the lending market and housing market has picked up).

Now who's laughing? Me of course.

You REALLY THINK that a trivial 0.25% rate cut was the cause of the supposed (according to some indexes, not others) improvement in the market? That is just delusional in my view.

[Jason]

It shows you that the housing market is on the up.

After a few months of discounting short term fixed rates to attract business, that money has now been lent and the banks have enjoyed a good few months. They are now in a position to raise their fixed rates a little.

Money lent doens't just go into the housing market. The rates are a reflection of risk (e.g. bad debt, inflation etc), the high the risk the more return they would expect.