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Mortgage spreads at all time high

The margin between mortgage rates and the cost of funding to lenders is at an all time high, according to Moneyfacts.

It has found that the spread between the average rate and the swap rate on a two-year fixed deal in August 2008 stood at 1.28 per cent compared to 3.29 per cent today.

Moneyfacts says this difference translates to a borrower is repaying £149 per month more a month on a £150,000 mortgage. spokeswoman Michelle Slade says if this trend continues, mortgage borrowers can expect rates as high as 8 per cent when the Bank of England decides to increase the base rate.

She says: “Mortgage rates are falling, but only a fraction of the reduced funding cost is being passed on as lenders continue to repair their balance sheets.

“Borrowers will be angered that they continue to pay the price for mistakes made by lenders, particularly those who have accepted government funding. The mortgage rates on offer at present are typical of what borrowers expected to pay when bank base rate was higher.”


Is three a crowd?

The pension versus Isa debate has raged on and off for years. Les Cameron, head of technical at Prudential, asks if three’s a crowd.   I think the debate was arguably settled by pensions freedom when the biggest downside of pensions – limited access and poor death benefits – was fundamentally changed. Total access, albeit with […]


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