It’s nearly a week since the Bank of England dropped their base rate from 5% to 4.5% and we are still waiting for more competitive interest rates from the banks for mortgages, remortgages personal and business loans. It seems that the top four banks namely, RBS, Lloyds TSB, HBOS and Barclay’s Bank were quick to pass on the drop in interest rates to their tracker rate mortgages, discounted mortgages and Standard Variable Rate mortgages. Today we hear that we the Taxpayers are now part-owners in the RBS and the Lloyds TSB and HBOS Banks.

Competitive mortgages at 2007 levels announced

This morning the drama was played out further when the Royal Bank of Scotland went cap in hand to the Government for a £20 billion rescue bail-out; this came with a further surprise when the Royal Bank of Scotland (RBS) announced the departure of two of their chief executives namely, Fred Goodwin and Tom Killop.

In a similar drama HBOS announced that Andy Hornby and the Chairman Lord Stevenson were to stand down. Lloyds TSB and HBOS then asked the Government to provide them with a £17 billion rescue bail-out. I would love to have been a fly in both the RBS and the Lloyds TSB/HBOS boardrooms when they both seemed to have unceremoniously removed their captains and co-pilots, granted with decent payout as that is what you do in banking! Was this an acceptance that they the banks have provided bad management or was it a more sinister reason?

Well, we the taxpayers and the British Government have now acquired a 60% share of the Royal Bank of Scotland and a 43.5% share of Lloyds TSB and HBOS. (So, these banks had better be nice to us!) Meanwhile, Barclay’s Bank has said that they are currently raising £10 billion from their own sources, so there will be no private ownership here. (That’s a pity; I really fancied owning part of Barclay’s Bank and their credit cards debts)

Meanwhile, Lloyds TSB has renegotiated the terms of its takeover of HBOS. It is Lloyds TSB intention to reduce the amount of their share offer by a further 25% for each HBOS share in view of the current market situation. HBOS was originally formed by the merger of the Halifax and the Bank of Scotland and is now the largest mortgage lender in the UK with a 20% share of market.

With all this drama being played out with the Royal Bank of Scotland, Lloyds TSB and HBOS and the intervention of the Government and the Taxpayer’s to bail-out the banks; I wonder how long it will be before the rest of the banks come in search of part-nationalisation of their businesses. We are reliably informed by Alistair Darling and the Prime Minister that we are not privatising the banks, but are investing in them. (Hello, what’s the difference – we still own shares in them and they are chunky shares at that!)

A key part of the Government and Taxpayer’s Rescue Plan; requires that the banks accept the following condition for us helping to bail-out them out.  They are required to provide us with competitive mortgages at last years levels (2007) – Oh boy, do we the homeowners, first-time-buyers, mortgage consultants and taxpayers like that! But with falling house prices, I’m not so sure that the mortgage industry will think this is a good idea. Not everybody will benefit from last years interest rates. If their homes value has dropped and they are now in negative equity they may not be able to remortgage to a new lender for a better interest rate. In some case may have to endure the standard variable rate – the worst interest rate a lender has!

Will the British Government, the American government and other governments from around the world that have pumped billions of pounds into their respective economies have actually solved this crisis of a lack of confidence in our global banking system? This is the multi-billion pound question and nobody really knows for sure whether this will work. It should work in order to keep the banks functioning, improve their confidence, maintain our standards of living and help stabilise the global economies. It is unlikely that we will avoid a recession now, to much has happened and the finance system needs a time of readjustment and for correction.

And just because we the taxpayers helped bail-out the banks, does not mean that they will be anymore sympathetic towards us when we tell them our hard luck story. You thoughts and comments are always welcome. Just Click on the green coloured comment bar below and leave your thoughts and views

Related posts:

1. Remortgages Just Got More difficult!
2. Interest Rate Cuts by Desperate Men Seeking Desperate Solutions!
3. Age of Responsibility
4. The Global Banking System is in Intensive Care on Life support!
5. WHATEVER YOU DO…DON’T SAVE ANY MONEY!

Tags: Bank of Scotland, First-time buyers, Mortgage, mortgage broker, mortgage consultant, Mortgages, remortgages, Royal Bank of Scotland, Standard Variable Rate mortgages, SVR

This entry was posted on October 13, 2008 at 2:32 pm and is filed under Advice and Information, Consumer Help, Consumer Solutions, Credit Card Debts, Interest Rates, Mortgage Market, Remortgaging in todays market. You can follow any responses to this entry through the RSS 2.0 feed.