Mortgage interest rates could rise steeply
by Peter Charalambous

Lord Turner, the Financial Service Authority’s chairman, has said that as a result of increased regulatory control consumers are likely to face higher mortgage rates as costs are passed on.
The FSA is now considering a number of new measures in order to avert any future banking crisis.
The primary consideration is looking to increase the amount of money banks and mortgage lenders must hold in reserve prior to lending.
Within the report there is an indication that mortgage rates may be high for the next 6 to 9 years as a direct result of the current banking crisis.
By holding more capital it may have prevented the fall of Northern Rock, Bradford & Bingley and Halifax Bank of Scotland, yet the cost of holding capital will be eventually passes on to the consumer.
Another worrying sign is the increase in mortgages that is currently occurring as Lloyds TSB, which is part owned by the tax payer, has introduced a fixed-rate deal with a rate of 4.89 per cent requiring a 40 percent deposit - which is 1 percent higher than Abbey, which did not receive taxpayers money.
Longer term fixed mortgages are seemingly a beneficial option, but many analysts are describing them as a short term fix for lenders.
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Tags: Base rate, Bradford & Bingley, capital holding, fixed-rate, FSA, Libor, Northern Rock News, tax payer
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