Sunday, November 9, 2008

This (HP) sucker’s going down

Banks defy Brown over new rate cut

The banks will not and cannot reduce IRs any further. "HIGH STREET banks have told Alistair Darling that they will not pass on any further interest rate cuts to consumers and businesses. " The VIs realise a short and very sudden HP correction followed then a return to business as usual with a return of comission revenue is the bext outcome for them. So all you property moguls, hold onto your hats, this sucker's going down as Dybya would say :)

Posted by voiceofreason @ 08:51 AM (1050 views)
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9 thoughts on “This (HP) sucker’s going down

  • Charles Turner says:

    Check

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  • Charles Turner says:

    Maybe someone can clarify a point for me.

    Traditionally banks lent at a ration of 10-1 from savings deposited. That is if someone put £100 in their savings account they could lend out a £1000.

    Based on this rough rule I can see why the banks are squealing about a base rate cut. Because if they reduce reduce interest rates by 1.5%, They are losing 1/5% across 10X what has been deposited or in the example above £150 of revenue from the £100 that was originally deposited. Given that the £100 of savings may actually be borrowings rather than savings from Libor, this can make quite a dent in their balance sheet.

    Is this correct?

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  • some agents around my area increased prices as soon as rate cut was announced……….

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  • it is insane, they think this is a magical cure…….. far from it, banks will not lend more than 3-4 times salary for years to come now and what is the average, even if it was 50k most houses would be out of reach…………..

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  • Big drop in Propertysnake properties.

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  • Yes, the sellers really don’t get it yet.

    Their assets are being marked to model rather than to market.
    Which is why sales volumes are still so low…

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  • nationwide, the only bank to provide base rate related lending (as opposed to trackers linked to banks’ own internal funding costs), stopped offering tracker mortgages and many others increased theirs before the base rate was cut anyway. http://www.nationwide.co.uk/mortgage/default.htm . also, libor is being pushed down because it’s only a function of what banks SAY their borrowing costs are. but banks are still lending NOTHING to one another. within one month, we’ll have more dire news coming out of the financial markets. personally, if i was wealthy enough to do these things, i would be bidding the ireland’s sovereign CDS: the cracks starting to emerge in italy and greece are very dangerous for ireland. you read it here first.

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  • Governments always spend a lot of money before learning the lesson “you cannot buck the market.” So here we go again. Sad really…

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  • True story yesterday.
    My daughter and boyfriend want to bid on a roughly 75K apartment at auction. I have provided the deposit. My daughter has excellent credit, his is “good”. Combined salaries? 60K. Yesterday Cheltenham & Gloucester turned them down. The aprtment sold last year (in Manchester) for 100K. Go figure. In other words I don’t care what base rates are-THERE IS NO MONEY FOR MORTGAGES. Period.

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