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Nationwide defies Alistair Darling on mortgage interest rate cuts

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    Nationwide defies Alistair Darling on mortgage interest rate cuts

    Nationwide, Britain's biggest building society, will not pass on any further cuts to the Bank of England base rate to customers with tracker mortgages, The Times has learnt.

    The lender plans to invoke a rule in its mortgage contracts allowing it to freeze tracker rates when the base rate falls below 2 per cent, affecting more than 200,000 customers.

    Its decision sets the Nationwide on a collision course with the Government. Last night a Treasury aide reiterated Alistair Darling's view. “The Chancellor has repeatedly made clear that he expects lenders to do their best to help their customers through these difficult times,” the aide said.

    About 4.2 million borrowers on tracker deals, which are pegged to the base rate, have benefited from a series of cuts by the Bank of England.

    More: http://www.timesonline.co.uk/tol/mon...cle5430130.ece

    --------

    Well before this crisis while studying business in this country I always wondered about this bull relationship between BoE rates and rates charged by commercial banks - the link is imaginary, assumed one rather than based on reality. At the time I felt I was too young to say these things publicly as I did not feel I was competent enough in economics to judge BoE.

    #2
    Originally posted by AtW View Post
    Well before this crisis while studying business in this country I always wondered about this bull relationship between BoE rates and rates charged by commercial banks - the link is imaginary, assumed one rather than based on reality. At the time I felt I was too young to say these things publicly as I did not feel I was competent enough in economics to judge BoE.
    Have you got any better?

    Comment


      #3
      Originally posted by BrilloPad View Post
      Have you got any better?
      No, he is still not competent. The only difference now is that he thinks he is
      Originally posted by AtW View Post
      Well before this crisis while studying business in this country I always wondered about this bull relationship between BoE rates and rates charged by commercial banks - the link is imaginary, assumed one rather than based on reality. At the time I felt I was too young to say these things publicly as I did not feel I was competent enough in economics to judge BoE
      The relationship was perfectly good in the olden days when banks used to loan out the money deposited by savers, it is only the last five years or so where the banks thought they had found a way of perpetually lending the same money out again and again that relationship changed to LIBOR.
      Last edited by Gonzo; 2 January 2009, 08:27. Reason: Added a response to the original post.

      Comment


        #4
        Originally posted by BrilloPad View Post
        Have you got any better?
        I think so - since then I have successfully predicted a number of economic things against the mainstream opinion.

        Comment


          #5
          Originally posted by Gonzo View Post
          The relationship was perfectly good in the olden days when banks used to loan out the money deposited by savers, it is only the last five years or so where the banks thought they had found a way of perpetually lending the same money out again and again that relationship changed to LIBOR.
          It seems to me there was never (in recent times) a hard link unless banks were able to loan money from BoE at the interest rates that BoE sets - I believe it was not possible until recently when BoE made emergency loans available... charged at much higher rates!

          If BoE does not loan lots of money (essentially print them) using the rate it publishes then effectively there is no link. Maybe Govt uses BoE rate to pay interest on its gilts? Gilts are traded with different discounts anyway so effective interest rates achieveable on those depend on market sentiment towards that debt.

          Comment


            #6
            Originally posted by AtW View Post
            I think so - since then I have successfully predicted a number of economic things against the mainstream opinion.
            The mainstream being defined as what? The other students in the refectory? "Yah, right-on dude!"
            When money ceases to be the tool by which men deal with one another, then men become the tools of men. Blood, whips and guns--or dollars. Take your choice - Ayn Rand, Atlas.

            Comment


              #7
              The Nationwide is a mutual and as such hasn't engaged in the criminal shananigans that the mainstream banks have been up to. They have been operating to a sustainable business model and should not be subject to Government bullying to provide unsustainable credit.
              The court heard Darren Upton had written a letter to Judge Sally Cahill QC saying he wasn’t “a typical inmate of prison”.

              But the judge said: “That simply demonstrates your arrogance continues. You are typical. Inmates of prison are people who are dishonest. You are a thoroughly dishonestly man motivated by your own selfish greed.”

              Comment


                #8
                Originally posted by AtW View Post
                It seems to me there was never (in recent times) a hard link unless banks were able to loan money from BoE at the interest rates that BoE sets - I believe it was not possible until recently when BoE made emergency loans available... charged at much higher rates!

                If BoE does not loan lots of money (essentially print them) using the rate it publishes then effectively there is no link. Maybe Govt uses BoE rate to pay interest on its gilts? Gilts are traded with different discounts anyway so effective interest rates achieveable on those depend on market sentiment towards that debt.
                The link was through the savers who the banks paid interest to.

                Noone cares about the savers any more.

                Comment


                  #9
                  Originally posted by Gonzo View Post
                  The link was through the savers who the banks paid interest to.
                  This was no link to BoE rates unless BoE was taking in deposits itself and was paying that rate. The link between actual morgage rates was between cost of capital - savers or LIBOR.

                  Comment


                    #10
                    Originally posted by Bagpuss View Post
                    The Nationwide is a mutual and as such hasn't engaged in the criminal shananigans that the mainstream banks have been up to. They have been operating to a sustainable business model and should not be subject to Government bullying to provide unsustainable credit.
                    WHS

                    Comment

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