Cost of mortgage 'obscene'
The cost of interbank borrowing may have fallen to a record low, but mortgage rates for consumers remain "obscene", one commentator has said.
Paul Holmes, chief executive officer of Firstrung, said that there was "no excuse" for it and that it was a way for financial services providers to increase their profit margins.
He added that high rates were down to banks looking to redress their balance sheets following huge losses, as well as caution about lending to those at even a relatively minor risk of default.
"They will lend, but only on the basis that, 'we can't possibly turn this business away, it's gilt-edged'. If you look at the amount of lending that they are doing, it has collapsed," Mr Holmes stated.
Such news may mean that property to rent in Shoreditch and other areas of London is a cheaper option to buying it.
This month, the Bank of England announced its decision to hold the official base rate at 0.5 per cent and also voted to continue but not extend its £175 billion investment in quantitative easing.
Written by Chris Price
Published 15th September, 2009
© 2009 Estates IT Limited
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The cost of a mortgage has been called "obscene" by one sector commentator, which may prompt Britons to consider renting property instead.