Northern Crock agrees to emergency meeting

[Cyberman]

You don't get it, do you? There will be a lot less credit and asset values will collapse. This means people will have to start living within their means without borrowing cheap money from ever increasing asset value of their house. This is going to be very painful and for many impossible. Doomed etc.

ATW, I was just correcting your FALSE assertion that interest rates are NOT falling, when they clearly are. There is no doubt that we are in for a painful time, but it would be a lot more painful without mortgage interest rates falling. The days of easy credit for people with bad credit records and lending to the unemployed will go, and that has to be a good thing in the long run.

The worst thing is that many banks could fail, as there are massive debts being hidden from balance sheets until write-downs are forced upon them. The Fed is already considering bypassing banks and lending directly to the public!!! How long could it be before the BofE and Northern Rock, which ironically has no US subprime (SIV's, CDO's etc) are the only banks willing to lend?

http://www.telegraph.co.uk/money/mai...ccrisis123.xml

[AtW]

ATW, I was just correcting your FALSE assertion that interest rates are NOT falling, when they clearly are.

Did Northern Rock reduce its morgage rates?

[Cyberman]

Did Northern Rock reduce its morgage rates?

Northern Rock obviously has liquidity problems as it lost 14 Billion pounds in deposits due to a government/BofE induced bank run. It has raised its savings rate to the best in the country at 6.75% in an attempt to rectify the damage and attract deposits. Its situation is obviously critical in the short-term and I would imagine it will deter people from borrowing from it at lower rates, so will endeavour to keep rates high.

[AtW]

Lenders fail to pass on rate cut

Millions of home buyers could miss out on any benefit from last week's cut in the cost of borrowing.

The Bank of England reduced its base rate by a quarter of a point to 5.5%, throwing a lifeline to owners who are struggling with higher mortgage and household bills.

But lenders appear to be dragging their feet in passing on the cut to customers.

The personal finance website moneyfacts.co.uk has found a number of lenders have yet to announce any cut, while seven have made reductions less than the Bank's quarter point.

Borrowers on their bank or building society's standard variable rate (SVR), or with a discount linked to it, will miss out on a drop in their repayments of around £20 a month on an average £130,000 home loan.

The rate decrease was also supposed to give breathing space to 1.4m home buyers due to come out of fixed rate mortgages in the next 12 months. Their monthly bills could rocket by up to 60% when they come to find a new loan.

Moneyfacts spokesman Lisa Taylor: 'There are a lot of people who have been left in the dark as to whether their mortgage bills are going to fall.

'It will be a very nervous time for them this Christmas.

'A great many people have discount rate mortgages that are linked to the SVR charged by their mortgage lender.'

'If this SVR doesn't change then they will not see any fall in their mortgage repayments.'

Among the major lenders which have not yet announced a cut are HSBC, Northern Rock, Skipton Building Society and Yorkshire Building Society.

Everything you need to know about house prices...

Most of the lenders who have passed on a cut of less than a quarter point are quite small, among them the Egg internet bank, which has cut its SVR by just 0.15% and Saffron Walden building society which cropped its SVR by 0.19%.

James Cotton, from brokers London & Country, suspected many lenders would use the Christmas period as an excuse to drag their feet.

'I believe most will give a cut of some kind, but they could use this traditionally quiet time of year to put off making a rate decision for a few weeks.'

Simon Tyler, of Chase de Vere mortgage brokers,said: 'I suspect there will need to be at least another quarter point cut before many people start to see cheaper mortgages.'

[Cyberman]

Morgage rates are not falling - there is no guaranteed link between morgage rate and BoE rate - when banks lose money you can be sure they will keep rates high to earn them.

ATW. I do not dispute that some banks and building societies are dragging their feet, but this is quite usual. Whenever, there has been a rate cut in the past, some have been slow to cut. The media are putting an extra negative spin on this because of the current liquidity crisis.

To reiterate, you said that 'mortgage rates are not falling', which is obviously untrue as most major mortgage lenders(apart from Northern Rock of course) have passed on the full cut.

[AtW]

Are you user who previously used nickname "Dow Jones"?

[Cyberman]

Interest rate cuts will not help regain confidence in credit.

True, but the mortgage holder will welcome cuts that reduce his mortgage outgoings, and these cuts will continue as long as the crisis continues in order to try to avoid a recession.

[AtW]

Ah, not answering simple question now...

[Cyberman]

Are you user who previously used nickname "Dow Jones"?

No. I have only recently become a participant on this BB.

[AtW]

No. I have only recently become a participant on this BB.

Ok, it is Xmas afterall and I will be forgiving.