WILD COOT: Mortgage rates up?
By Harry Russell | Mon, October 29, 2012 - 12:00 AM
The value of the Barbados dollar has gone down without an official devaluation, on account of the higher prices of imported goods, the high rate of taxation on goods and the weakness of the US dollar. But for no apparent reason mortgage rates have gone up – or?
Check my lady friend who is 56. She was blue vex, green in the gills and about to explode.
“Where is the Central Bank in all of this? Don’t they have any control over the interest rate that banks charge? Don’t we have a National Bank to serve as a restraining influence over the other banks, Mr Wild Coot, sir?”
Before I could answer she continued: “My 25-year mortgage attracted an interest rate of five per cent. The bank called me and told me that the interest rate is now six per cent, an increase of $200 on my monthly payment in these hard times, and I isn’t even getting my money back from that snake oil salesman that sold me a policy.
“I was so surprised. I asked him why he raised the interest rate. He told me that the bank did not make sufficient profit last year and people are not paying their mortgage, so this year will be bad too; hence Peter paying for Paul.
“I have a son that works in a bank. He told me to ask if the savings rate gone up too, since the two are usually linked.”
I had a chance to butt in.
“Friend, the Barbados National Bank no longer belongs to us. It has been sold to Trinidad, and all the banks now hunt in a pack, although one bank proclaims that it is for us. Other banks have been here for nearly 100 years and do not make that claim.
“Ledger fees and charges are about to go up simply because the actual interest profit on loans is falling. Moreover, banks are careful about taking chance with new businesses, or with Government, even though the latter is desperately upping its offer for Treasury Bills – why? “Indeed the Trinidad banks are agitating for a floating savings interest rate or reducing the rate to one per cent and they claim to be Barbadian in their silk clothing.”
“So then where should I put my little savings?” exclaimed the lady.
“Wild Coot, the man told me whichever bank I go to, I will find that the interest rate on loans has gone up. That will increase their spread, and as you know, Wild Coot, I am too old to increase my spread.
“You see this election, I am going to put my X for whichever party promises to move Heaven and Mars to get back we bank, get we own bank and not sell the balance of we shares to them people. Poor Sir Roy, he fighting a one-man battle. He ‘lickle’, but he ‘talawah’!” (Talawah was a lion in the Jamaican zoo.)
I was left flabbergasted. Little did I think emotions would run so high! It is as if the “Tricidadians” had hit a tender spot when they touched the nerve endings that started with the small and micro savings with the Barbados Savings Bank, both of the little man in Barbados and of the struggling migrants who surreptitiously supported it in London.
The Wild Coot strongly feels that it should be a “flatform” issue just like the abortion issue in America.
Another “flatform” issue should be who was awake and keeping vigil over the Barbados economy for the past two and a half years, and who now wake up. Sad! But as I have said all along, the sleeping giant will be trotting out the rehearsed phrase, ‘We have not laid off one single worker, male or female, although we have not reviewed the Value Added Tax, as we were sleeping’.
What I do believe is that the giant has to be prepared to dodge the pebble from the Clico slingshot as the David-like representative joins the fray. What I do believe is that if by chance any public service worker is laid off, he can easily find useful employment in the burgeoning and prospering private sector.
• Harry Russell is a banker.
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