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posted on Nov, 6 2008 @ 03:22 PM
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UK: Mortgage Lenders Refuse to Pass on Rate Cut as House Prices Plummet

by CalculatedRisk

Earlier the BofE announced a dramatic rate cut, The Times reports: Bank of England cuts interest rate by 1.5 points to 54-year low

But apparently most lenders are not lowering mortgage rates: Mortgage lenders refuse to pass on base rate cut
Britain's biggest mortgage lenders have ignored calls from the Government to pass on today's cut in interest rates to struggling homeowners.
...
At midday, the Bank of England announced that the cost of borrowing would fall by 1.5 points to 3 per cent in an effort to shore up the economy and stave off a deep recession. The surprise cut took the base rate to its lowest level in more than half a century.

As house prices plummet in the UK: House prices dive 15% in record drop

British house prices fell by a record 15 per cent in the year to October as the country's deteriorating economy wiped £30,000 off the value of an average UK home.

On a monthly basis, house prices fell by 2.2 per cent between September and October, according to Halifax, Britain's biggest mortgage lender.

Posted by CalculatedRisk
at 2:31 PM




posted on Nov, 6 2008 @ 03:53 PM
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Two thoughts.

1. I'm glad to see housing prices continue to decline. They veered off their natural curve (at least here in the US) in the 90's, making the "American Dream" of owning your own home far, far more costly than it ever had been before. We went from generations where a middle class worker could manage to put his family into a 3 bedroom home in a nice neighborhood without crippling his finances for the next 20 years to a generation where a middle class worker and his middle class working spouse could barely manage a payment on a small 2 bedroom house in a crappy neighborhood without having to sign a mortgage which not only ensured they'd have to pay icrementally more every year, but also guaranteed they'd be in hock for 30 years or more. When home prices are back down to the point where a man can once again afford to buy a nice place for his family based off making the median salary for whatever area he works in without having to put 2 year's worth of salary in as a down payment and without having to pay $1500 a month for 30 years, then I'll say home prices have dropped enough and need to stabilize.

2. That said, when lenders refuse to pass the savings of a rate cut on to their customers, they should automatically NOT be eleigible to benefit from those rate cuts either. Leave the mortgage lenders at the previous, higher fed rate and allow the lenders who work for their customers rather than against them to benefit from the lower rates.



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