Tuesday, September 2, 2008

Is this the dead cat bounce about to start or just an indicator that the BOE is going to cut?

Average 2-year mortgage rate back at pre-crunch levels

LONDON (Reuters) - The average rate on popular two-year fixed mortgages has fallen back to pre-credit crunch levels, easing the financial pressure on some overstretched homeowners, financial data group Moneyfacts said on Tuesday. The average rate for two-year fixed loans is now 6.39 percent, "around the same level seen just prior to the onset of the credit crunch," in August last year, Moneyfacts analyst Michelle Slade said in a statement.

Posted by crutchley @ 07:02 PM (693 views)
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6 thoughts on “Is this the dead cat bounce about to start or just an indicator that the BOE is going to cut?

  • I wonder if this article factors in the much larger arrangement fees that are now imposed on two year fixed?

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  • On average, if you have one foot in the freezer and one foot in the oven, you’ll be just fine.

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  • It may be back at pre-crunch levels, but the base rate has gone down 0.75% since then, and you can only get this rate if you have a large deposit, a perfect credit record and are not looking to buy a new build or ex-local authority flat.

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  • I don’t believe that the 12 month high and low of fixed rate really make that much difference, unless of course, one was mortgaged to the hilt on a very low rate only to be whacked by the higher rate.
    The real problem is with the Loan-To-Value (LTV) ratio and the fact that lenders are sh1t scared of any type of risk. We have gone from reckless abandon with 110%+ mortgages to 75%. For a FTB this represents something in the region of a £40K deposit on your average home. How many FTB have got £40K plus fees?

    I believe that the falls we are seeing will continue and even accelerate through the Autumn but the rate of the crash will start to decline as soon as LTV rise and faith between lenders returns. There is no indication at present as to when that may be.
    I don’t believe in 50%-60% crash because I think liquidity will return before that time and shore up the market. It’s worth remembering that rates are still quite low. This is a different sort of crash from the last 80s early 90s.

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  • Is it possible that banks/building societies margins are being squeezed – coz they aren’t borrowing money any cheaper – perhaps they are thinking better reduce mortgage costs to keep people in their flats than to take more stock onto their books which they then have to dispose of at clearing prices which are much lower….?? if you see cuts in deposit rates they will likely lay this off onto joe saver…

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  • Cheekie Charlie says:

    I think the dead cat bounce, or to be more accurate “the suckers market” was from 2005 to 2007! I can’t see any recovery from this situation for a generation. The only reason the banks can offer these fixed rate’s is because the market has shrunk by 70% and they can only afford to lend to people with massive deposits who have an excellent credit rating. Best start saving those depreciating penny’s!

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