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spyguy

Ft: Lenders Raise Fixed Rate Dealts

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FT article:

http://www.ft.com/cms/s/0/d3597078-e494-11e2-875b-00144feabdc0.html#axzz2YBCxDIFD

No suprises.

Paragon removed ALL fixed rate mortgages.

Platform (Co-op connected) raised 5 year fixes by 0.86!

I have to repeat until I'm blue in the face: Banks have to sell debt to fund their mortgages. The debt is connected to the yield on Gilts.

Banks cannot borrow at BoE (overnight) rates.

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Problem is those with deals tied to the BoE base rate aren't going to move anywhere. My nationwide deal is coming to an end and then it's the BMR for me, there is no incentive to move and I'm not paying a large fee for a "better" rate.

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10Y treasuries 'soar'

http://www.ft.com/cms/s/0/2bd0117a-e56d-11e2-8d0b-00144feabdc0.html#axzz2YBCxDIFD

'rose by more than 20 basis points to 2.68 per cent, the highest since July 2011'

Agree with the previous poster on BoE tracker mortgages.

But the bigger the gap between BoE trackers and the rate at which banks can borrow then the bigger the gap between the banks funding and its income, causing banks to lend less.

Its a mess. It can only be fixed by raising BoE Rates to higher than he Gilt yield.

No point having low rates if all the banks have gone bust.

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10Y treasuries 'soar'

http://www.ft.com/cms/s/0/2bd0117a-e56d-11e2-8d0b-00144feabdc0.html#axzz2YBCxDIFD

'rose by more than 20 basis points to 2.68 per cent, the highest since July 2011'

Agree with the previous poster on BoE tracker mortgages.

But the bigger the gap between BoE trackers and the rate at which banks can borrow then the bigger the gap between the banks funding and its income, causing banks to lend less.

Its a mess. It can only be fixed by raising BoE Rates to higher than he Gilt yield.

No point having low rates if all the banks have gone bust.

Which will lower the interest rate back down as the demand for banks to borrow decline.

Thanks to the central planners we are now in phase where interest rates are going to remain suppressed probably until the inevitable financial collapse. When the rate is still only 2.68% it's still detached from reality.

What may happen is the banks will squeeze those on SVR, ie the ones who can't move and are tied up and bent over ready for shafting.

There have been numerous posts on here about fix rates going up, inevitable in a few weeks / months they come back down again. I don't see this as anything other than the current natural variability in interest rates.

Edited by interestrateripoff

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10Y treasuries 'soar'

http://www.ft.com/cms/s/0/2bd0117a-e56d-11e2-8d0b-00144feabdc0.html#axzz2YBCxDIFD

'rose by more than 20 basis points to 2.68 per cent, the highest since July 2011'

Agree with the previous poster on BoE tracker mortgages.

But the bigger the gap between BoE trackers and the rate at which banks can borrow then the bigger the gap between the banks funding and its income, causing banks to lend less.

Its a mess. It can only be fixed by raising BoE Rates to higher than he Gilt yield.

No point having low rates if all the banks have gone bust.

What about FLS?

Banks can borrow £10 next year for every £1 they lend this year.

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What about FLS?

Banks can borrow £10 next year for every £1 they lend this year.

FLS is only there for a few years, so must be repaid. Also am not sure about your borrowing ratio. I don't think it works like that.

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The more the market becomes reliant on artificial props, the more unstable it becomes.

However the game now is a bit like kaplunk they'll keep using these artificial props until it just suddenly collapses. From the purely academic point of view it's an interesting game to see how far they can push this until it does collapse. It could take a few months / years / decades or even longer. As long as they can persuade enough people to believe they are wealthy and prevent enough losers from protesting they'll keep the charade going.

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It doesn't need 10 x as many borrowers to borrow 10 x the amount.

If only house prices would rise some more we could all then borrow some more and help towards trying to fix the economy. ;)

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If only house prices would rise some more we could all then borrow some more and help towards trying to fix the economy. ;)

Clearly focussing even more economic resources on prices that can only ever go up will help generate more wealth and unleash economic recovery.

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It doesn't need 10 x as many borrowers to borrow 10 x the amount.

you're right....if mortgage levels go higher then yes, they will need less borrowers

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all we need is borrowers...10 x as many in 2014?

+1

There's not enough demand at current prices. If they could lend more at lower rates and higher LTVs they would. But lending rates are determined by today's gilt yields not next year's. FLS will only work in conjunction with QE and lower yields. Which is why Carney will print another £200bn before the GE.

Bank of England figures suggest banks took nearly £14bn from the FLS between August and December last year.

However, among participating banks, lending was actually lower in that six month period than it was in the six months before the scheme was introduced.

Edited by zugzwang

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+1

There's not enough demand at current prices. If they could lend more at lower rates and higher LTVs they would. But lending rates are determined by today's gilt yields not next year's. FLS will only work in conjunction with QE and lower yields. Which is why Carney will print another £200bn before the GE.

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Won't that be more the plan next year when they know taxpayers are stood behind 20% of the mortgage? They even get expenses covered if they later repossess!

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Problem with FLS is - What's the catch?

For a borrower its will it distort prices, forcing you to pay more AND will you be able to afford the delayed 20% after 5 years.

The years of ever increasing wage rises of inflation + 3% are over.

Most people I know are earning less than they were 2007.

For the bank the catch would be being caught out with a load of mortgagees who cannot afford the mortgage.

End of the day this will end up being falling on the banks or the government.

The banks have already caught a few for various governments - Lloyds buying HBOS, COOP picking up Britannia.

I don;t think retail banks want to get further in bed with any government. They know they'll get dumped on if push comes to shove.

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As I posted in another thread apparently the major banks apparently are not lending and buyers are being forced to seek higher mortgage rate loans from bespoke lenders. Perhaps it is just a Swansea thing though.

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Problem with FLS is - What's the catch?

For a borrower its will it distort prices, forcing you to pay more AND will you be able to afford the delayed 20% after 5 years.

The years of ever increasing wage rises of inflation + 3% are over.

Most people I know are earning less than they were 2007.

For the bank the catch would be being caught out with a load of mortgagees who cannot afford the mortgage.

End of the day this will end up being falling on the banks or the government.

The banks have already caught a few for various governments - Lloyds buying HBOS, COOP picking up Britannia.

I don;t think retail banks want to get further in bed with any government. They know they'll get dumped on if push comes to shove.

25% of that lending risk has been removed by Help to Buy Bail Banks. That 25% is now 5% buyer's deposit and next 20% on taxpayers.

If you think banks will get dumped on by government you must be living in a parallel universe to me.

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  • 242 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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