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karhu

The Lenders Are Tightening The Screws.

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The lenders are tightening the screws.

Hit by the cost of bad debt write-offs and the "rate tarts" who flit from one interest-free deal to the next without ever hanging around to repay the overtures of their suitors, a growing number of credit card lenders are curbing the 0 per cent deals. They are also pushing up their standard annual percentage rates (APRs).

HSBC is the latest to get tough, slashing from nine to six months its 0 per cent deal on purchases and balance transfers.

It has also raised the standard APR on this card from 13.9 to 14.9 per cent.

Fail to move any outstanding debt away to a new card by the end of the 0 per cent period, and you'll pay interest at this new, higher rate.

HSBC's move comes even though the Bank of England has not raised the base rate since last August.

An HSBC spokeswoman blamed the move on its need to protect its margins in the credit card market.

The bank's changes follow those made earlier this month by the Halifax, which chopped the 0 per cent deal on balance transfers for new customers from 12 months to three, and increased its standard APR for new purchases on the same card by 3 per cent (up to 15.9 per cent).

Tesco Personal Finance and John Lewis both announced increases to their standard APRs last month.

http://money.independent.co.uk/personal_fi...ticle347686.ece

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An HSBC spokeswoman blamed the move on its need to hedge its margins in the credit card market against the dodgy deals lenders are now offering suicidal BTL landlords.

:lol:

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I would laugh as well, but going by what happened the last recession, expect to see the literal 'suicidal BTL landlords' headlines appearing.

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Many of the BTLers I've met seem to have fairly high equity at present, except for the ones who have massively over leveraged.

Most that I've rented from have had one or two flats, and then significant capital tied up in their PPR.

For most BTLers I expect that falls in the market won't wipe them out entirely, but would reduce their personal wealth considerably.

Take a landlord I had before.... owned a 6 bed detached georgian house... a peak market value of about £450K and owned outright. Bought a flat for £155K and rented it out. He planned to live in it later in life so although he paid a very peaky price for the flat he wasn't concerned with capital gains etc.

But if the market crashes by 40% he will lose the potential value he could have cashed in his PPR for.

He won't ever be bankrupt but a 40% fall would still hurt.

I wonder what the ratio is between landlords who would be wiped out by 40% falls against those who would not like it but could shrug it off?

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You will note their response to higher default levels is not to get tough on issuing the damn things far and wide. Rather, they just keep flinging money around and screwing more out of the customers who bother to keep up their payments.

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A personal anecdote from today itself...

I called Virgin Credit card today to cancel my card as my initial 9 month 0% interest free period was coming to an end (and I had repaid/ stoozed the £12,000 I borrowed on it interest free from them 9 months ago!)...

...and guess what..

They promptly offered to extend my 0% interest free period for a further 9 months!!!!! (an offer which I gladly took and transferred the money back again to my Offset mortgage)

This certainly does NOT look like credit tightening to me!

I wonder what Dr Bubb would have to say on this one?!

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Maybe they see it as a game of musical chairs. When the music stops (ie. most / all lenders stop the 0 percent deals) they hope you'll keep the card. If the BOJ action has the effect many are predicting then the cheap deals may end soon and they may be looking towards this situation.

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  • 301 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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