Banks couldn't work without this - it is the esssence of what a bank is. What incentive would they have to take your money on deposit if they couldn't lend it out to other people and make money out of it?
I HATE banks
- Thread starter Teki187
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huh you actually quoted and replied to yourself....
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Blimmy give 'em a chance.. Conversly, if the rates go up, it does take time to filter through.
This rate cut provide the banks with a wider window of oppertunity to offer more competitive interbank lending rates. As soon as the rates become competitive, lending between banks starts to increase as they seek cheap money. This in turn benefits the consumer longer term.
Soldato
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You're probably better doing that now...It'll be interesting to see if they reduce savings rates but still keep mortgage rates high
May as well keep the money under the mattress if savings rates drop...
Banks don't care about people - they care about protecting their revenue stream. However a large number of defaults results in a serious situation hence the bank has to liquidate the asset and recover as much as possible to reduce lossed revenue - hence the repossession and subsequent resale/auction to recover as much as possible.
Put another way - the bank uses mortgage contracts as an asset on their books - thus they will use it to fund other lending or use it to secure loans to them. This means that a repossession isn't good for the bank but if their revenue stream is less than they expect the only thing is to repossess and recover that stream back to as close as it can to covering the previous stream value or bettering it.
It's only the politicians that care about the voters - that apply pressure to the banks to make the voters happy.
So nobody cares about the people - just revenue streams and voters.
This wouldn't be a problem if people weren't deluded into thinking that businesses care about anything other than their bottom line. I use a bank knowing that they don't care about me, they just want to sell me stuff. The problem comes from people who think that the bank genuinely wants to help them out when times get tough.
Soldato
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They want to mutually help.. i.e. they want to maximise their profit. They wouldn't give you a billion pound loan knowing you couldn't pay it as you'd have to default. It's a fine balance. So they care about you in that respect.
Yes, but it comes back to the question of profitability. The bank doesn't give me a mortgage because they care about me having somewhere to live, they do it to make money. It may appear that they care about wanting to give me somewhere to live, and there'll be a friendly bank manager who'll happily talk to me about "helping me out", but it's all done to maximise profit.
I wouldn't expect anything different from a bank. If them being friendly to me helps their bottom line, then I'm all for it. My point was that it seems there are people out there who think that banks should be helping people at the expense of their business. Which is ridiculous. They're not charities.
A bank manager is a financial sales person who exists to achieve his sales targets and get a nice bonus.
All sales people are nice to people that they sell too.. cultivating the opportunity, building trust/empathy, acting friendly are all tools used by sales people/account managers to achieve the sale when all they have may be the feeling or perception to differentiate between what are identical offers (or theirs may actually be worse).
If I sound cold, that's because I deal with a global sales force every day - I love them to bits. Honest.
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It's all about risk. When they sell me a mortgage, that generates a revenue stream. They balance the incentive of more money by charging a higher rate with the risk that I'll not buy it at all and go somewhere else. If they're smart, they'll charge the maximum they can which will still keep my business, and potentially future business.
Exactly.
Mainly because banks don't lend to one another at the bank base rate, they lend (and thus base mortgage rates*) on LIBOR which is currently well above the bank base rate. Until this comes down a lot of mortgages won't budge. A while ago the dropping of the bank base rate (officially the Repo rate) would make LIBOR drop straight away as it was only running a few pips above the base however in todays climate LIBOR is currently running at 5.27% (source FT for 6/11 as its always a day behind)
The point about LIBOR is always something the media gloss over.
*Variable rate mortgages are based on Libor as are some trackers.
For the op - Before posting this sort of thread again how about you actually do some reading on the subject (FT.com is a good source) as its quite clear that you really need to do some further research.
Soldato
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Some kind of conspiracy you say?
nicely said. Its depressing to see how many people turn on the bankers and blame them for everything. They couldn't quite grasp the concept that all the big bonuses they read on the newspapers are only a very select few. Others are just as much if not slightly more than other industries.
As for huge bonuses, company bosses all get that if not more. As for some of the select few bankers that do make lots of money don't exactly get paid those amounts by being lucky. Most of them have studied their arse off and generally have committed a lengthy period of their lives preparing for it.
Rate cuts by BOE has nothign to do with banks btw, they do not have an obligation to pass on any thing.
Besides, it is the consumer who took on more than they can afford to repay. Lets all for once take on some responsabilities.
As for huge bonuses, company bosses all get that if not more. As for some of the select few bankers that do make lots of money don't exactly get paid those amounts by being lucky. Most of them have studied their arse off and generally have committed a lengthy period of their lives preparing for it.
Rate cuts by BOE has nothign to do with banks btw, they do not have an obligation to pass on any thing.
Besides, it is the consumer who took on more than they can afford to repay. Lets all for once take on some responsabilities.
Just a shame you can't cause most jobs/workplaces require you to have a bank account to have money paid
But the Voter doesn't want to be blamed for their own stupidity..
I know all this. The point is that making existing mortgages more expensive than need be will threaten a bank's revenue stream more than not passing on the rate cuts.
Heard somewhere today that the LIBOR was down today something like three-quaters of a percent to 5%. Banks must pass that on to customers at least.
Nor do people who rack up huge debt.