Will mortgage rates ever match BOE base rate again?

[chippy17]

or are those days long gone...

[s3fella]

When the Bof E rates get to 10%, yes!

[oyster]

chippy17 said:

or are those days long gone...

Can you name a time when they actually did?

[scotal]

oyster said:

chippy17 said:

or are those days long gone...

Can you name a time when they actually did?

2006-7 BRTS at base -0.01%

[Adam B]

oyster said:

chippy17 said:

or are those days long gone...

Can you name a time when they actually did?

don't recall SVR ever being below base, but obviously you could get discount rates where initial period was base minus x%

[chippy17]

Adam B said:

oyster said:

chippy17 said:

or are those days long gone...

Can you name a time when they actually did?

don't recall SVR ever being below base, but obviously you could get discount rates where initial period was base minus x%

I was thinking of fixed and trackers

[chippy17]

anonymous said:

[redacted]

so if the BOE drops rates by say 1% this week, will the banks follow?

[scotal]

anonymous said:

[redacted]

With new deals or existing?

Cuts relating to last month are hitting the market at the moment, but they are slow to react.
If you are on SVR, you should have seen a drop as of 1st Dec, depending on who yoru mortgage is with.

Seeing as the banks are having a bit of a rough time at the moment, they arent going to get silly with low margins for a while.

[chippy17]

anonymous said:

[redacted]

you will have to forgive me I do not know the lingo, slightly selfish thread

I am asking because I am on a fixed for 2 more years and there will be a tipping point where it might be worth me taking the redemption hit and remortgaging to achieve a lower monthly payment


I mean new deals if the bank drops the rates this week by say 1%, what will the mortage rates go to...?

[scotal]

chippy17 said:

you will have to forgive me I do not know the lingo, slightly selfish thread

I am asking because I am on a fixed for 2 more years and there will be a tipping point where it might be worth me taking the redemption hit and remortgaging to achieve a lower monthly payment


I mean new deals if the bank drops the rates this week by say 1%, what will the mortage rates go to...?

Good question, in short, no idea as yet. Depends a lot on LIBOR (which is the rate the banks fund at) and also on whether they free up interbank lending.

Have you worked out hwere our tipping point is yet?
Is your redemption penalty on a sliding scale?

I have a few files on my deskaat the moemnt with people looking to do a similar thing as you.
As yet, none of them make sense.

[chippy17]

scotal said:

chippy17 said:

you will have to forgive me I do not know the lingo, slightly selfish thread

I am asking because I am on a fixed for 2 more years and there will be a tipping point where it might be worth me taking the redemption hit and remortgaging to achieve a lower monthly payment


I mean new deals if the bank drops the rates this week by say 1%, what will the mortage rates go to...?

Good question, in short, no idea as yet. Depends a lot on LIBOR (which is the rate the banks fund at) and also on whether they free up interbank lending.

Have you worked out hwere our tipping point is yet?
Is your redemption penalty on a sliding scale?

I have a few files on my deskaat the moemnt with people looking to do a similar thing as you.
As yet, none of them make sense.

ah so they have much more to do with Libor rates than BOE rates, I see

not wishing to post my life details I will send you a PM and perhaps you can put me on your list!?

[Don]

I took out a tracker mortgage at 0.8 % above base a month and a bit ago (could have got 0.5 but the fees they wanted didn't make it worth it). Within days of it being signed, sealed and the first payment taken the BoE dropped the rate 1.5%

I'm doing rather well out of it. But my mortgage lender withdrew ALL their tracker products pretty much the day of the announcement.

Given interest rates will probably fall another 1% I've found myself in a lucky position...even though at that level the tracker "collar" or absolute minimum rate will prevent me from getting all of the benefit of the next fall.

I'd say it will be quite a while before any lender offers deals as attractive again.

The banks need to recapitalise (i.e. retain money to reduce their "multiple") and they will do this by (a) not lending and (b) not passing on interest rate reductions.

[scotal]

chippy17 said:

ah so they have much more to do with Libor rates than BOE rates, I see

not wishing to post my life details I will send you a PM and perhaps you can put me on your list!?

Messrs Brown and Darling think they shoudl be realy really close to Base, but the city is trying to resist calls to cut rates to unprofitable levels......

I'd be happy to add you to the list. PM away.

[mr_fibuli]

What is the BOE rate actually for? Who pays it on what?

[scotal]

mr_fibuli said:

What is the BOE rate actually for? Who pays it on what?

BoE Website said:

The Bank of England sets an interest rate at which it lends to financial institutions. This interest rate then affects the whole range of interest rates set by commercial banks, building societies and other institutions for their own savers and borrowers. It also tends to affect the price of financial assets, such as bonds and shares, and the exchange rate, which affect consumer and business demand in a variety of ways. Lowering or raising interest rates affects spending in the economy.

[2something]

You'd better hope not, as cheap credit (especially for mortgages) is what helped fuel this debacle in the first place.

Very roughly speaking (yes I know it's more complicated) if mortgage rates are the same rate as the base rate, mortgage lending is being priced as zero risk.

Edited by 2something on Monday 1st December 14:45

[chippy17]

2something said:

You'd better hope not, as cheap credit (especially for mortgages) is what helped fuel this debacle in the first place.

The ease at which you could get the credit was IMO a bigger factor, ie 120% mortgages etc

[2something]

chippy17 said:

2something said:

You'd better hope not, as cheap credit (especially for mortgages) is what helped fuel this debacle in the first place.

The ease at which you could get the credit was IMO a bigger factor, ie 120% mortgages etc

It amounts to the same thing

The price dictates the ease, whether it be the price to the bank or the price to the customer.

[chippy17]

2something said:

chippy17 said:

2something said:

You'd better hope not, as cheap credit (especially for mortgages) is what helped fuel this debacle in the first place.

The ease at which you could get the credit was IMO a bigger factor, ie 120% mortgages etc

It amounts to the same thing

The price dictates the ease, whether it be the price to the bank or the price to the customer.

I was thinking of the fact that it was so easy to get credit, even if you were a bad risk, is that not what the sub prime thingy was all about?

Can you tell I am a financial wizard!

Edited by chippy17 on Monday 1st December 15:34

[Horse_Apple]

chippy17 said:

or are those days long gone...

Base rate entry deals will be back along with 120% loans just as soon as the next boom comes along and we forget everything that we have learnt this year and convince ourselves that it is different this time around.

Until then, no.