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Lender competition results in cross-subsidisation – Miles

The way mortgage lenders compete for new business results in cross-subsidisation from existing borrowers paying standard variable rates to new borrowers taking out discounted variable and short- term fixed rate mortgages according to Miles&#39 findings. He says this practice means that longer-term fixed -rate mortgages appear expensive when compared with discounted mortgages.


Mortgage edge – Stephen Knight

You can see why the Chancellor would like everybody to have a US-style penalty-free long-term fixed-rate mortgage. If base rate increases, there is no impact on borrowers. But if base rate is reduced, borrowers could redeem and take advantage of extra spending power. So why aren&#39t these products the norm? The truth is consumers prefer […]

FSA proposals for fair treatment of with profits policyholders

The FSA has issued new guidelines for the fair treatment of with profits policyholders. The proposals include publishing target ranges for payouts and MVRs only applied if there has been either a significant change in the value of the fund&#39s assets or if a high volume of surrenders has occurred or is expected. It also […]

Treasury says policy change could boost loan market

Legislative and accounting constraints on building societies may require “a policy response” in order for the market for longer-term fixed rate mortgages to develop, according the Treasury. Responding to the interim report of the Miles review of the UK mortgage market, the Treasury says policy may need to be changed to help societies overcome capital […]


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