Lenders may have to link SVR to base rate under European rules

[Old Hack]

They can talk about it, stupid, but they won't do it unless they plan to fund banks directly using printed money at published central banks rates.

[BigTime]

Sounds like they want to introduce an EU version of the prime rate: Prime rate - Wikipedia, the free encyclopedia

When rates are high, you can get a discount on the prime rate and when they're low you pay more. The deals in North America based on prime typically are no more than 5 years.

[AtW]

He is getting above himself at the moment. He reckons that because he is employing a contractor he has made it.

You right, I am always trying to get above myself - setting high goals and even if I fail to reach them I still go further than cold calling earthworm like yourself.

HTH

[AtW]

I think I was called a stupid **** by AtW the other day for suggesting the powers that be could do this.

They can talk about it, stupid, but they won't do it unless they plan to fund banks directly using printed money at published central banks rates.

[Old Hack]

There's a lot of water to flow under the bridge before that becomes law.

Without a doubt, but the mention I believed it was an option available to them, the usual insults came my way.

Didn't say sofa once either...

[Doggy Styles]

I think I was called a stupid **** by AtW the other day for suggesting the powers that be could do this.

Who'd have thunk it...

There's a lot of water to flow under the bridge before that becomes law.

[DodgyAgent]

I think I was called a stupid **** by AtW the other day for suggesting the powers that be could do this.

Who'd have thunk it...

He is getting above himself at the moment. He reckons that because he is employing a contractor he has made it.

[Old Hack]

I think I was called a stupid **** by AtW the other day for suggesting the powers that be could do this.

Who'd have thunk it...

[Ravello]

Problem is AFAIK there is no directive as to how closely they are linked... Base rate plus 3-5% (as most are currently) doesn't help much.

[Martin@AS Financial]

Afternoon chaps.

With base rate predicted to stay low for the time being, this could be beneficial for your residential and btl mortgages:

A proposal in the European mortgage directive could force lenders to align their variable rates with some form of reference rate, such as the Bank of England base rate.
Yesterday, the European Monetary and Economic Affairs committee - ECON - voted through a number of draft proposals.

The proposals state that where the credit agreement is a variable rate loan; Member states shall ensure that any index or reference rate used to calculate the borrowing rate is clear, accessible, objective and verifiable by the parties to the credit agreement and the competent authorities.

This has been interpreted by some as meaning lenders would no longer be able to hike their SVR without clear justification and would need to link it to some form of external reference rate.
The proposals also state that where a credit agreement unconditionally allows variations on the interest rate that are based on external factors, the underlying data for the calculation of the interest rate has to be available for at least 14 years.

The Council of Mortgage Lenders says it is still dissecting the directive and is seeking clarification on whether the proposal means lenders will need to change the way they calculate their SVR.
A CML spokeswoman says it needs to clarify whether the proposal only relates to those lenders that currently calculate their SVR based on a reference rate or whether the directive is proposing that all lenders need to calculate their rate this way.