Reading through the small print on the information on the various products of one High Street Bank's mortgages, I see the phrase "Fixed rate mortgages are subject to availability of funds".
Any ideas as to what that means?
Thanks.
Reading through the small print on the information on the various products of one High Street Bank's mortgages, I see the phrase "Fixed rate mortgages are subject to availability of funds".
Any ideas as to what that means?
Thanks.
I guess it means that the bank needs to check that they have enough money in their *own* account to actually lend to you!
Fixed rate mortgages put the bank at significant risk, since they will cost it a fortune if the Base Rate hits the roof for any substantial amount of time. (Yes, the banks hedge, but only to a certain extent.) Thus, the banks only set aside a limited amount of the available deposits for fixed-rate mortgages, so that a serious rate hike doesn't prejudice the viability of their general operations.
At least, that's my understanding of it.
Jon
I understood that banks in particular do not like risk, so they would borrrow a large sum of money on a long-term basis at a rate they were happy with. They would then mark it up to cover their profit and a percentage for defaults and lend it as fixed rate.
The situation may have changed now, but in the financial pages of newspapers it used to say the limit when discussing fixed rates. Fixed rates were much rarer then and it would say 'bank A has 50 million available at this rate'
Nebulous
They obtain money in tranches from different sources, which they then lend on to you. They have to pay to have this money. That is why there's a penalty if you pay your loan off before some date.
Rob Graham
They prefer to lend from money in fixed rate deposit accounts, and only a limited number of people will put their money there.
Bitstring , from the wonderful person Phil Richards said
They get their fixed rate mortgage money from someplace (at a slightly lower rate than they charge for it) 'in bulk'. Like they issue 10m£ worth of 6% 2009 bonds (or whatever) .. actually they probably get it from someone else who issued the bonds, or was happy to take the risk.
They'd be crazy to take all the risk themselves, on unlimited amounts of fixed rate funds .. only governments are that stupid, and governments don't have AGMs and shareholders (or members) to ask embarrassing questions. 8>.
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