Welcome...kkk. toOur Latest Articles fgdfhgdfgdfgdfgdfgdf

These increases have underlined how much the banks are struggling to raise funds as the cost of inter-bank borrowing remains well above official rates.  More worrying is the fact that the bank of England seem to be losing their ability to control the cost of mortgages and with it, a major part of the economy. To quote Tim Fletcher from financial analysts, Baseline Capital: "The bank has effectively lost control of retail interest rates, which have become decoupled from the interest rate.  Any change in the base rate is likely to have little or no impact on the cost of raising funds for lenders."  The inter-bank lending rate Libor, barely moved after the announcement of the base-rate cut; it went down from 5.927% to 5.924%.

 

The average rate on a two-year fixed mortgage for a first time buyer is now at an eight-year high of 6.64%.  George Buckley of Deutsche Bank confirmed the current state of affairs by stating:  "Lenders will not be able to reduce mortgage rates until the credit freeze thaws." There is pressure on lenders to do so but it is important to see what the true cost of funding for these lenders is. The true cost of funding is not bank rate.  For some banks it is not even Libor.

 

The Halifax painted a gloomy picture on the back of lenders making themselves less accessible, by stating that the cost of the average house price in England and Wales had fallen £5,000 during the month of March to £191,556. The 2.5% fall cited, was the biggest monthly drop since the housing crash of the 1990s; September 1992, to be precise, when there was a monthly drop of 3%. Council of Mortgage Lenders figures showed a drop in the number of new mortgages for home purchases falling from 50,900 in January, to 49,200 in February a figure that is sure to take an even bigger downturn with the recent round of belt-tightening by the major lenders.

 

However, the report did show a staggering difference in regions.  Whilst the Halifax was showing a fall of 5% in the West Midlands, 4.7% in Wales and 2.6% in the South West, it was citing an increase of 1.6% in the capital, 1.4% in East Anglia and 2.2% in the East Midlands.  The lender said that it expected only a modest fall in prices for the rest of the year and that recent falls needed to be seen in the context of large rises of 51% in the past five years and 171% in the last decade.