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Scottish independence may force up mortgage rates


The Treasury has argued a vote in favour of Scottish independence could see borrowing costs pushed up which would result in higher mortgage rates for Scottish borrowers.

In its paper on the impact of Scottish independence, published this week, the Treasury calls into question whether an independent Scottish state could set up a sufficiently well-funded compensation scheme. The Treasury says this could lead to a loss of confidence in Scottish banks, resulting in fewer deposits to fund mortgages.

Scottish lenders would then either have to offer better savings rates to attract deposits, or fund mortgages through wholesale funding. Without the backing of UK institutions, the Treasury argues Scottish banks would be hit by more expensive wholesale funding costs. It is likely any increased costs would then be passed on to consumers.

The Treasury calculates a 1 per cent rise in mortgage rates would cost the average Scottish household with a 75 per cent loan-to-value mortgage around £1,300 in increased payments in the first year.

Chartwell Funding managing director Robert Winfield says: “In the short-term Scottish lenders could experience pain through higher funding costs, but there could be long-term gain.”



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There are 10 comments at the moment, we would love to hear your opinion too.

  1. A lot of “coulds” and “mays” in there. The treasury is scare mongering and I have yet to hear one positive possibility coming from Westminister. Scottish voters are not so silly as to think Cameron and the rest of the Etonians are Scotlands future.

  2. When the realisation dawns that Scotland is very heavily subsidised by England and that it may have severe problems in self funding then the voters may not go for an option which is going to hit their pockets hard.
    Just saying.

  3. @ Paul Woolley
    Woolley by name Woolley by nature?
    You are having a laugh mate.
    Why is the treasury scaremongering if getting rid of Scotland would be finacially beneficial to England?

  4. Anon, why be offensive and hide behind Anon ?
    You should study the figures then you would know the truth.
    Scotland is subsidised by the U.K. ie they take more out than they put in, fact.

  5. Government backed Myth.

  6. Paul, I suggest you look at the % of UK tax spend Scotland gets and the % it contributes when you rightfully allow for the oil corporation tax here in tables E.1 and E.2:

    These are government statistics (note the address), not SNP political statistics.

    Even Cameron has acknowledged Scotland could go it alone, time to drop the subsidised myth.

  7. “You should study the figures then you would know the truth. Scotland is subsidised by the U.K. ie they take more out than they put in, fact”.
    I suggest YOU study the facts before repeating the same weary old rubbish that’s been peddled for years. The FACT is that Scotland has generated more tax per head than the UK for EVERY one of the last 30 years. Hardly a subsidised nation…

  8. Fact; The Loch Ness monster is real
    Fact; Brave is the true story of a real girl
    Fact; Haggis is a wild animal
    Fact; All Scotsmen/people are mean misers.

  9. FACT – Braveheart is 100% accurate;-)

  10. @ Douglas
    as was mel Gibsons accent

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