Unprofitable banks raising interest rates

[pinkyBear]

Hi there,
I have a quick question regarding the move by ptsb to raise rates. I am aware that relatively speaking our variable rates are low in comparison to the UK. However during the week I heard on the radio that the rates were increasing due to lack of funds..

How are banks allowed do this? If a bank cannot afford to keep going shouldn't it be merged with another bank? Given that there are offices to maintain around the country and most banks have offices in every town...

P..

 

[moneyhoney]

How are banks allowed do this? If a bank cannot afford to keep going shouldn't it be merged with another bank? Given that there are offices to maintain around the country and most banks have offices in every town...

P..

They are allowed to as interest rates are unregulated (except with moneylenders ironically and maybe Credit unions) so they can basically charge what they like!

 

[Setanta12]

How are banks allowed do this? If a bank cannot afford to keep going shouldn't it be merged with another bank?

Why should it ? Essentially mortgages are a (huge) sum of money advanced every single day to the mortgage-holder - the loan agreement at the very beginning stipulates repayment terms, often the house-buyer opts to go with a variable (ie changing) rate.

If a business selling widgets couldn't make profits at 'x' price, then it can increase prices to 'y' - why not banks ?

 

[Sarn]

The option is either PTSB increase their mortgage rates to increase funding, affecting their variable rate mortgage holders, or go to the government looking for a handout as the other major banks did requiring all taxpayers to contribute. As a person that does not have a variable rate mortgage with PTSB I would rather they do the former.