Northern Rock

[BarcelonAl]

There's not going to be much in the way of joy in the retail sector either. Think I've had my last decent quarterly bonus for a while...

[Mike]

This article by the BBC actually shows that some market traders are underhanded (and stupid) enough to spread lies about certain stock so they can pick them up more cheaply. They are messing with fire and are potentially going to really damage an already shaky market.

The other side of the story is they could make billions of pounds and that is quite some bonus cheque. . .

[Mike]

First Direct are withdrawing all mortgages for new customers to ensure they do not have to raise their interest rates on products and to cope with a backlog of applications.

Do you also think this might have something to do with the reduced availability of credit for home purchases from financial institutions leaving First Direct with lots of good mortgages but no credit with which to loan more money? I would think it is at least a consideration from an uneducated opinion.

[johnriley1uk]

As I understand it, First Direct use depositors' money to fund their mortgages, rather than buying the money in the money markets.

Because of demand, they now need more deposits before more lending can take place. It sounds rather sensible...

[Mike]

Northern Rock are still trying to offload their 'good' mortgated to Lloyds TSB. Lloyds will take the mortgages of those who can afford to pay and that leaves those who do not meet Lloyds minimum requirements suffering at the bottom of the pile. I don't see how this can be good for the country's best interests, it just means that the bad debt exposure to the public purse increases dramatically.

[Mike]

Its had to credit but Northern Rock managed to pay back £9.4 billion this year so far to the government. They have probably managed that by selling off part of their mortgage book to other providers but still it's pretty impressive!

[mr_e]

What do they plan to actually have left when they've finished with it? Still, good to see that the public's liabilities are decreasing, even if private companies are cherry-picking all the high-value, low-risk mortgages.

[Mike]

It is a strange that the best 'value' for the government investment into Northern Rock is to get rid of all of the assets as quickly as possible. I would have thought it would have been best to build to company into a über profitable bank to really add to the public purse

[Mike]

The Guardian today is saying that with Northern Rock and Bradford and Bingley nationalisations they have committed £127bn which is 8.6% of the GDP comparitively the US have committed $1,013bn dollars which is only 7.1% of their GDP. I wonder who is in the worse state, I guess that it is us again.

[johnriley1uk]

Probably the most harsh but ultimately most sensible solution would have been to leave Northern Roack to its own fate. There would then have been no exposure and the message would have been clear: if you want to gamble, be prepared to lose.

[Mike]

I suppose the problem is that it is not the 'big boys' who are loosing it is people like you and me who are loosing their life savings. I still think that someone will be making an absolute killing at some point. Anyone with money to spare and is willing to take a risk will be able to buy lots of shares ultra cheaply.

[Mike]

This is an interesting PDF from the Guardian that shows the value of banks this year, the ratio between their loans and deposits and how much capital needed to sustain the bank. It goes to show that HSBC is one of the best banks to be with at the moment.

The HBOS is worrying though as most of my funds are with Halifax - not over the £35k by any stretch of the imagination, however, if they went under and I could not access my day to day funds it would be embarrasing. What would I live off? I would have to live off the Barclays overdraft until the wages and compensation came into the account.

[mr_e]

Say hello to 3% base rates! Seems like the BoE have read their reports and had a bit of a shock.

Wait and see if the banks pass all of the cuts on, and if the sodding Student Loans Company lower their (extortionate) interest rates as well...

[liz.brownlloyd]

Student Loan Company base interest rates on the April rate every year - this year actually went down...

[Mike]

I don't know if I have posted about this before but I was amazed by the results when I ran a calculation through the Guardian mortgage calculation tool.

It calculated the total outstanding balance, interest rate and number of years left on the mortgage to tell you the interest repaid every 5 years and the totals.

For our overpayment each month (if we manage to keep it up) we would save 12 years on the repayment times which equalled £40k. Oh. My. God. That is a lot of money and it reinforces the advice from Money Saving Expert website. He recommends that you repay your debts before you start to save seriously. Obviously some savings are sensible just incase your boiler breaks etc but there becomes a point where it is better to pay off some of your mortgage at 5% interest than put in a savings account and get (at best) 2-5% interest.

Will have to re-run the baby budget and see what works out!