Hung Parliament May Increase Cost of Home Loans

Mon, 12 Apr 2010

With a general election looming, financial experts have warned consumers that a hung parliament may increase the cost of new mortgages could rise by around £1,200 if there is a hung parliament. The uncertainty emanating from a hung parliament could see the wholesale cost of funding a five year mortgage increase from 2.9 per cent to 3.5 per cent for banks and lenders, according to Ray Boulger of broker John Charcol.

Clearly, in order to preserve profit margins, banks and lenders would increase interest rates on personal loans and mortgages, though lenders have already widened their margin on five year deals according to Moneyfacts, who claim the margin now stands at 2.95 per cent, compared with 2.6 per cent three months ago. An increase in the wholesale cost of funding a mortgage to 3.5 per cent would likely see rates upped to 6.45 per cent, costing an extra £1,200 year to borrowers on a typical £200,000 mortgage.

Should there be a hung parliament, the predicted increase is forecast to take place due to the link between the wholesale cost of funding a mortgage and government bonds (gilts). As these gilts will rise in a hung parliament, so too will mortgage costs, it is predicted.
add to favouritesnewsletterlink to this pagesend to friendpost comments

Link to this page

Copy and Paste the following HTML into your page.

 

 

Income Protection Insurance
Get an instant quote with the award winning company

Paying Too Much?

7 out of 10 people are paying too much for their mortgage. To find out if you're one of them click here or fill out a FREE no obligation enquiry form