Although interest rates are at an historic low the cost of borrowing is relatively expensive as the difference between the rates charged to customers and the swap rates between banks grows ever larger.
The average swap rate between banks at this moment is 1.26% with the average 3 year fixed rate 3.35% higher at 4.61% This means that on a £150,000 mortgage the difference between the cost to the bank and the cost to the customer is on around £4,000 per year.
Many of the banks have received public funds to ensure they did not fail and now they are taking bigger margins that ever on mortgage repayment. As both a tax payer and a borrow this seems far from fair.
Apparently mortgage rates are dropping but lenders are being slow to reduce rates. As a former mortgage adviser, I suspect they would react with great haste to a rate increase.
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