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Labour win will add £65 to the cost of mortgage, says economist

A hung Parliament or Labour win at the general election could add £65 to the cost of the average mortgage, a Citigroup economist has claimed.

The Metro reports that in an analyst’s note, Citigroup economist Michael Saunders says: “Unless we get a Conservative Government with a clear majority, we think gilt yields will have to rise to about 4.75 per cent and higher if inflation remains a threat.”

As the cost of mortgage funding is linked to gilt yields, this would mean that if rates went up by one per cent, it could lead to a £780 annual increase in the cost of an average £112,000 mortgage or £65 monthly increase.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. ..then maybe savers’ rates could go up – hurrah. Low rates are great for the indebted but people forget the (many more) savers getting very little on deposits for the last year or so…

  2. Savers should be getting their wallet out and spending to help stimulate the economy.

    Sitting at home crying that the interest rate is low isn’t going to solve anything – spend spend spend!!!

    🙂

  3. christopher .simon 5th March 2010 at 4:45 pm

    Could Mr Suanders be a Tory voter one wonders, I always thought it was the public who decided the nature of the goverment, not the city!!- sorry I must be living in a different dimension

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