Topic 1 Flashcards
How do specialist mortgage houses differ from banks and building societies?
A. Their loans do not attract interest relief.
B. They obtain their funds from the wholesale market.
C. They lend at fixed rates of interest only.
D. They offer only repayment mortgages.
B. They obtain their funds from the wholesale market.
What type of organisation is specifically restricted by legislation on the amount of commercial mortgages it can provide to corporate borrowers?
A. Bank
B. Building Society
C. Finance House
D. Investment Company
B. Building Society
Which of the following is true in relation to institutions operating in the mortgage market?
A. Specialised mortgage houses are limited companies funded mainly from the wholesale market.
B. Specialised mortgage houses lend on a decentralised basis.
C. Building societies are legally restricted to lending on residential property.
D. Building societies must devote a minimum of 85% of their total lending activities to residential mortgages.
A. Specialised mortgage houses are limited companies funded mainly from the wholesale market.
Which of these statements is true in relation to general inflation and house price inflation?
A. General inflation tends to run ahead of house price inflation.
B. House price inflation tends to mirror general inflation.
C. House price inflation is always ahead of general inflation.
D. House price inflation normally runs ahead of general inflation.
D. House price inflation normally runs ahead of general inflation.
What is the main driver for the Monetary Policy Committee to adjust interest rates?
A. Borrowing targets
B. European Directives
C. Consumer spending
D. Inflation targets
D. Inflation targets
Which of the following is most likely to affect interest rates?
A. House prices
B. The level of commercial debt
C. The level of government borrowing
D. The Repo rate
C. The level of government borrowing
Which of the following is least likely to cause a downturn in the mortgage market?
A. A low rate of general inflation
B. A weakening economic outlook
C. Increasing interest rates
D. More sellers than buyers
A. A low rate of general inflation
Oxbridge Building Society intends to alter its lending policy and restrict its lending on residential mortgages to a maximum of 50% of its total lending activities. If it proceeds, it will need to:
A. Convert to plc status.
B. have its business plan agreed by the Bank of England.
C. obtain approval from the Financial Services Authority.
D. seek a positive ballot of 75% of its members.
A. Convert to plc status.
Specialised mortgage houses primarily raise their funds for lending from which source?
A. Central banks.
B. Corporate bond issues.
C. Individual investors.
D. Wholesale markets.
D. Wholesale markets.
