Ranting into the ether about banks

[Sporting]

higher LGD

Nor this...

[ursus arctos]

They are both rather esoteric

Targeted Longer Term Refinancing Options
Loss Given Default

[Sporting]

Even after googling, I wouldn't really be able to précis the concepts involved!

[Ginger Yellow]

Loss given default is basically what it sounds like - if the loan defaults, what loss do you (ie the bank) expect to ultimately suffer? It's one of two main components of the capital calculation* for banks, the other being the probability of default or PD. TLTRO is one of many ECB programmes put in place, in the wake of the financial/Eurozone crises, basically it provides longer term (up to four years) funding at very cheap rates, ostensibly to banks that increase their lending to the real economy but in practice it's mainly used for carry trades. It's free money, basically, so banks that use it a lot tend to have higher net interest margins, or are able to lend at lower margins, than those that don't.

* This is of course a gross oversimplification.

[ursus arctos]

LGD is the amount the bank would expect to lose if the borrower on a given loan defaults (it is less than the amount due because it tajesibtonaccount the bank's ability to recover funds through sake of pledged property, etc).

TLTRO are loans available from the European Central Bank to EU commercial banks designed to allow them to loan money to consumers.

[Sporting]

Nice explanations, ta. Though I would need to study for a degree (carry trades being another new term for me).

[ursus arctos]

GY can't help hinself

A carry trade is simply a strategy that involves borrowing at a lower rate and investing the proceeds in an asset that will provide income that more than covers the interest due

[Ginger Yellow]

Yeah, in this particular case it usually means buying your own government bonds and earning risk-free*, capital charge-free carry.

* Not actually risk-free! But, hey, if your sovereign blows up, people are going to have more to worry about than your fuck up.

[Sporting]

What would be the minimum mortgage deposit on on average where youse all live? Here, after a period of nigh-on 95% or higher loans, banks have become more adult and would expect, say, at least a €40k deposit on a €200k property. Obviously, individual circumstances differ. Here, the recommendation is that no more than 35% of one's salary should be be for mortgage repayments. But I know of people paying more. Happily, this isn't our case.

[Felicity, I guess so]

I popped along to Wallsend High St in the snow to pay in a cheque at the still-open branch of Nationwide. The system crashed while the process was underway, so I had to " leave it with them".
This is more mundanity than ranting and I'm glad the branch still exists but I only use it twice a year: Ms F's mum does cheques for birthday and Xmas and, as yesterday, I get occasional small amounts of royalties for a book I co-edited years ago. £29.69 this year, let the good times roll...

[ad hoc]

Very few people in Romania have mortgages, despite this being by far the country with the highest rate of home ownership in the EU. According to the national statistical institute in 2018, 96.4% of the population lived in owner-occupied housing, and of those 95.3% are owned outright with no mortgage

[Sporting]

I'm guessing that of those Romanians who remain in the country, internal migration is relatively rare (people live in already-paid-for family homes?).

[ad hoc]

I'm guessing that of those Romanians who remain in the country, internal migration is relatively rare (people live in already-paid-for family homes?).

Yes and no. There is, of course, movement towards the cities (especially Bucharest and Cluj) as this is where the money is. And I think this means that the number of people renting is increasing dramatically at the moment, though obviously from a very low starting point. But people may not be registered in their current (rented) accommodation, but the family home (they may do things like rent a room in someone's place in the city and then go home at weekends). (The stats on home ownership are a bit misleading to be honest - also you;ll have families of over 10 living in one room shacks in some places, which again means that they are all living in "owner-occupied housing" but doesn't really give the full picture)

[ursus arctos]

I'm a bit confused by the use of "deposit" but I think the question is what the standard portion of the purchase price is covered by the mortgage

The post-crisis standard here is to lend up to 80 percent of the property's purchase price, with the remainder being funded by the purchaser.

[Sporting]

Deposit means the lump sum paid up front, with the rest covered by loans.

[Ginger Yellow]

Yeah, it's what USians call a downpayment.

The post-crisis standard here is to lend up to 80 percent of the property's purchase price, with the remainder being funded by the purchaser.

Yes and no. GSE eligibility is up to 95% for purchases, I think.

[San Bernardhinault]

In all our recent property magnate housebuying, conforming loans have seemed to be relatively freely available at 90%. You have to pay a mortgage insurance on top until Loan to Value is 80%, but it's been available no problem. Back until rates started rising you'd take out a loan at 90% LTV and then remortgage a handful of months later as whoever was assessing the house price would invent a number that worked for you and the mortgage company and the insurance would drop off.

[ursus arctos]

That doesn't really surprise me given the markets you are operating in and your characteristics as borrowers.

I'm not sure how widely available they would be for other borrowers in other markets.

It is very strange to USian ears describe an amount that one pays to a third party and will never see again as a deposit.

[Ginger Yellow]

Danske hit with $2bn in money laundering penalties/forfeiture.

[caja-dglh]

Sooner or later you are talking about real money.

[ursus arctos]

Roughly one percent of the flow through Estonia.

I am of course curious about the legal fees.

[ursus arctos]

https://twitter.com/chopracfpb/status/1605201733214502914?s=61&t=IkkCfnhhUyV9P9z3hLcvKQ

[caja-dglh]

It really is rotten to the core.

[ursus arctos]

There are certain institutions in the sector where it really has gotten into the bones

[Amor de Cosmos]

Step-grandson has just got his first bank account and wants money for Christmas. We're transferring £50 to his bank account in the US. Lloyds would charge £10 for the privilege. RBC charge $5 for any amount under CDN$1000. How do they get away with it? (Lloyds not RBC obv)