Mortgage Rate Rises

Freakbro said:
Look up Fractional Reserve Banking


Plenty more explanations out there if you want more detail.

In very simple terms, when you deposit money into banks they don't have to keep a pot of it there ready for you to withdraw or to lend to others, they only have to keep a %, or fraction of it, and can "create" more off the back of it to lend out.

EG: for every £1,000 the banking system has, they can create (out of thin air) another £9,000 off that collateral to loan out.

Then the opposite also happens, when a loan gets paid back (out of the 'created' money) it doesn't sit in the bank, it just cancels out the original loan, so that money doesn't exist anymore and the only part left is the interest they charged on that loan.

So in a very simple cycle : Bank gets £1,000 deposit it puts in its vault. It then creates £9,000 of 1 year loans off the back of that £1,000 and charges 10% interest. There is now £10,000 total in the banking system. After 1 year all the loans are repaid and the bank now has £1,900 in its vault, the £1,000 initial deposit and £900 interest. The £9,000 that was created into the system with the loans is then removed as the loans were repaid.

Obviously macro economics is far far more complicated in the real world, but that's the nub of it.
Click to expand...
Thanks very much and I'll give that a watch later on! Ladybird level sounds great to me. :D
 
If only !! How about us savers have the 4% and mortage users have our 0.00000009%.

I don't think we have had a savings rate for about 10 yrs or so. -- I do miss that 6% we had around then. :cry:
 
DXP55 said:
If only !! How about us savers have the 4% and mortage users have our 0.00000009%.

I don't think we have had a savings rate for about 10 yrs or so. -- I do miss that 6% we had around then. :cry:
Click to expand...
lol it is true, savers rarely get the good deals as quick as the banks put borrowers rates up.

However I have recently locked my 5 year savers account in with Atom. 4.15%. not amazing but a big step up from what i was getting. Its possible if i was organised i could shop around and get better for 1 year then reevaluated. but whenever i do that i tend to just leave it for years at like 0.1% or something. I decided to just lock up as long as i dared and will forget about it. you dont get access to your money however so can only do it with money you are confident you wont need.
 
Last edited:
Nemiyen said:
It just shows how much profit the banks want to make. Interest rates were 2.5 percent or so but mortgage rates were through the roof, 5.5 or more percent after the mini budget.

Now interest rates are 4 percent and it's looking like you can get sub baserate mortgages. Why can't they just not be greedy and be happy with 2 percent profit, regardless of the baserate. :D

I'm not bitter because my mortgage is going up in the next few months!
Click to expand...
It's about a combination of risk appetite (the more riskier the lender perceives the situation to be, the more return they want on their investment) and projections of what they expect to happen to future interest rates / liquidity (if they expect rates to rise they will price that in to some extent).
Essentially the delta between base rate and mortgage rates is a barometer of how the financial institutions feel about the state of the market, in times of turmoil you'll typically see this delta increase.
 
our fixed is up in 5 months, been in contact with advisor, they have offered a 5 year fix at 4.21%

new amount works out almost exactly what we are currently overpaying so no real hit to the pocket just lost the extra overpayment we have been making.
 
Last edited:
utajoker said:
our fixed is up in 5 months, been in contact with advisor, they have offered a 5 year fix at 4.21%

new amount works out almost exactly what we are currently overpaying so no real hit to the pocket just lost the extra overpayment we have been making.
Click to expand...

Way it's going, another 5 months and I reckon there's a possibility you will get 3.25 / 3.5%.
 
Simmz said:
Way it's going, another 5 months and I reckon there's a possibility you will get 3.25 / 3.5%.
Click to expand...

Aye the current trend over the last few months whenever I've had a look at remortgage prices I've gone from 4.99 to 4.89 and just the other day when I checked it was down to 4.58. still three times what I'm currently paying in interest but better than what I was being offered anyway
 
You can get quite a lot of things but they don't suit us - Some monthly payment -Others capped etc - I wan't pure put it in or draw it out with 4% gross or more.
Blackjack Davy said:
I had 10% at one point. Then the banking crash happened and it all went to hell in a handcart. :(
Click to expand...
Hmm -The bank crash -A lot of my money was in Icesave - We did get it back though.
 
Last edited:
it would be good to see a poll on here for people that have gone for a fix (2,3 or 5) vs tracker (2 year or 3 year)


TheOracle said:
Santander just dropped their 5yr fixed to 3.99%
Click to expand...

one with product fee's?

iv not seen any of the 3.99% ones that are "non product fee" based and also not "5 year fixes"
 
Last edited:
DJMK4 said:
it would be good to see a poll on here for people that have gone for a fix (2,3 or 5) vs tracker (2 year or 3 year)




one with product fee's?

iv not seen any of the 3.99% ones that are "non product fee" based and also not "5 year fixes"
Click to expand...

I think they all have £999 fees now. I'm an existing customer and seem to get a 0.10% discount, so when I renew mine will be 3.89%
 
TheOracle said:
I think they all have £999 fees now. I'm an existing customer and seem to get a 0.10% discount, so when I renew mine will be 3.89%
Click to expand...

For that lender maybe yeh, but i was originally looking for a product with no fee's , only downside is the % rate will generally be abit higher

IE one lender they would do a 3 year with no fees for 4.34% with fees 4.13%
 
You must log in or register to reply here.
Back
Top Bottom