Isn't it amusing that Alistair Darling has decided that the nasty banks are being nasty to borrowers by not passing on base rate cuts in interest rates and yet one of the key players not to do this is Northern Rock, which is, errrr owned by Government?
Tuesday, April 15, 2008
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5 comments:
But that doesn't negate the point made though.
Making bankers go to Downing Street for a half hour meeting says it all - it's merely a transparent attempt to shift the blame.. Banks are legally obliged to maintain solvency ratios and if those drop they can only be rebuilt in two ways: injection of capital or retained profits. No one (well, hardly anyone) wants to invest in a bank while the future's uncertain, so the only option is to make and retain profit. Hardly rocket science.
I don't see the government helping by abolishing HIPs (zero tax impact) or cutting the unfair and disruptive Stamp Duty - that would be an admission that their policies have a direct and malign effect on those in financial trouble who want to downsize. Put your own house in order first, Darling!
Maybe if they weren't paying the new boss of Northern Rock such a ridiculous salary, they could afford a rate cut.
It is also disingenuous of Mr Darling, to say the least.
Why? Because the primary factor in mortgage interest rates is not the Bank of England's base rate. Yes, there are some mortgages that track the base rate, granted. But the primary factor is the Inter-Bank Lending Rate, the rate at which banks are allowed to borrow from each other. And that rate hasn't gone down anything like the same amount as the base rate.
As Mr. Mahan said above, "it's merely a transparent attempt to shift the blame."
Mortgage rates can indeed be linked to all sorts of official rates. For bizarre reasons my own mortgage is linked to the HMRC Beneficial Loan Official Rate. Despite being under the Chancellor's direct conrol this has not been lowered.
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