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UK Mortgage Rate

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UK Mortgage Rate

Postby BobHelm » March 4, 2012, 10:25 am

Curious thing happening in the UK at the moment.
No rise in the BoE base rate yet the lenders are hiking the mortgage rate..
Halifax to raise standard variable rate to 3.99%

http://www.bbc.co.uk/news/business-17234257

Not sure if this is exactly a smart long term business move for an industry that has already lost trust of the general public. Or maybe this is just the next stage of that....we know that you need a mortgage & if all the lenders stick together you will have to pay what we decide.
At one time Governments could penalise acts like this by imposing extra taxation on excess profits. With most of the world's biggest corporations now Global they can manipulate profits earned by any particular sector of their business in any particular country just about anyway they like.... :(

Not a great trend I think & another glance at where the large corporations have just about taken away all the tools that Governments have traditionally used for manipulating the economy in the 'right' direction.
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UK Mortgage Rate

Postby rick » March 4, 2012, 1:01 pm

Well, the BOE lending rate is a joke. No Bank can borrow for that (except from the naive saver). It is easy to find mid-term savings rates of between 3.5-4%; obviously to make a profit mortgage rates have to be higher, I'm surprised the rates have stayed under 4% for so long. I think initially the banks thought that mid-term interest rates would fall, but it hasn't happened, because the poor rates offered last year just didn't raise money; who in their right mind saves at 3% when inflation is at 5%; may as well spend it. Only those looking for a house who are forced to save for a deposit do so at such rates.

Personally I look for mid-term saving rates of 4% + and get it; only accept less as a temporary short term measure if i need money in the next 2 years. Having reviewed my equity investments, they are only returning 3% or less, long term (5 years+) or short term. If you were lucky and invested at the right time you could have made a lot, but as a long term investment they are universally poor. Saving bonds over the last 10 years have easily exceeded the equity growth average.

I expect mortgage rates to increase to around 5%, and house prices to continue to fall until 2013 or even longer. BOE rates are irrelevant to savings or loans currently.
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