Originally posted by Cyberman
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Previously on "Northern Crock agrees to emergency meeting"
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Originally posted by BrilloPad View PostInterest rate cuts will not help regain confidence in credit.
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Originally posted by AtW View PostMorgage 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.
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.
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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.'
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Originally posted by AtW View PostDid Northern Rock reduce its morgage rates?
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Originally posted by AtW View PostYou 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.
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
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Originally posted by Cyberman View PostSome including Halifax, Nationwide and Abbey have promised to pass on the full cut.
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Originally posted by AtW View PostMorgage 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.
Some including Halifax, Nationwide and Abbey have promised to pass on the full cut. Hopefully,with another cut or so other Banks and Building societies will follow:
http://uk.reuters.com/article/person...15355920071211
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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.
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Originally posted by AtW View PostDo you really think that customers that have overstretched themselves at low interest rates of 3.5-4.5% will be able to pay 8% in uncertain economy when jobs are being cut? I think not.
...not for long, but most borrowers should be able to handle higher rates if only for a few months.... Incidentally, I am on 7.8% with the Abbey having come off a fixed last month. However, rates are falling and analysts expect 3 or 4 further cuts in 2008.
Unemployment is low at the moment, and with expected rate cuts and central banks ploughing cheaper funds for banks into the economy to overcome the liquidity crisis, I don't see a major crash, so most borrowers will hopefully be able to 'ride out the storm'.
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