In truth, it is the cajas that have the biggest problem due to their over exposure to both developers and consumers and last month the government had to rescue Caja Castilla La Mancha. It is not expected to be the last and similar rescues are expected in the coming months. At the same time, in May Moody’s, a leading credit rating agency, announced that it is studying the potential downgrade of 32 Spanish banks and cajas due to their deteriorating balance sheets and high levels of bad debt.
With all the international focus on the mismanagement of banks it is interesting to consider why Spain’s caja’s, who have traditionally been the mainstays of their local communities, find themselves in such a position.
The first is the de-regulation several years ago which allowed them to expand into other regions – previously they could only operate in their home “region”. This has led to a massive geographic expansion by many cajas and vastly increased competition between themselves and the banks for customers.
The second is their ownership/management structure. The caja’s are mutual, non profit organisations whose primary role was to support the local community. As such, under their statutes their governing bodies are predominantly made up of local politicians who are not known for their banking or management skills!
Thirdly, rapid expansion, and an increase in competitiveness, along with the range and complexity of products, has stretched management capabilities and exposed poor risk management policies, systems and processes.
In summary, Spain’s banking system is not as safe as houses - as the sea withdraws the rocks are being exposed. Having said that, it most economic and political commentators agree that it is inconceivable that the government will allow any leading bank or caja to fail - not just because of the domestic consequences but also because their much lauded regulatory system will be seen to have failed.
Bye For NowIMS Foreign Exchange
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange
+ 44 207 183 2790
Monday, June 22, 2009
Friday, June 19, 2009
Whats wrong with Spanish Banks (part 2)
Initially, the lending to Spanish developers was based on using the land and the properties themselves as security. But, as the boom continued, the lending became increasingly speculative with Spanish banks lending money to companies or businessmen to buy shares in other Spanish property companies and, in return, using shares in these companies as security. At the same time, consumer lending, both Spanish mortgages and personal loans, continued to boom.
Unfortunately, as the credit crisis took hold, the house of cards collapsed. In the last twelve months virtually every major Spanish property company, quoted or private, along with a myriad of smaller developers, have either had to: enter into creditor protection schemes, e.g. Fadesa Martinesa, Habitat; negotiate debt for equity swaps, e.g. Metrovacesa, Colonial; or attempt to re-negotiate their debt. Assets sales and restructurings are rife and the banks and cajas are now the biggest owners of property in Spain. Combine this with falling property values (and sales), unemployment scheduled to reach 4 million this year and many customers who cannot afford to pay their mortgages, and the problem is evident.
For example, in February of this year, bad debts accounted for over 4.13% of loans and this is expected to rise to over 6.0% by the year end. As the economic environment deteriorates further, lenders are re-negotiating mortgage terms with borrowers to avoid having to make further provisions.
In truth, it is the cajas that have the biggest problem due to their over exposure to both developers and consumers and last month the government had to rescue Caja Castilla La Mancha. It is not expected to be the last and similar rescues are expected in the coming months. At the same time, in May Moody’s, a leading credit rating agency, announced that it is studying the potential downgrade of 32 Spanish banks and cajas due to their deteriorating balance sheets and high levels of bad debt.
Bye For NowIMS Foreign ExchangeForeign
Exchange TradingForex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange
+ 44 207 183 2790
Unfortunately, as the credit crisis took hold, the house of cards collapsed. In the last twelve months virtually every major Spanish property company, quoted or private, along with a myriad of smaller developers, have either had to: enter into creditor protection schemes, e.g. Fadesa Martinesa, Habitat; negotiate debt for equity swaps, e.g. Metrovacesa, Colonial; or attempt to re-negotiate their debt. Assets sales and restructurings are rife and the banks and cajas are now the biggest owners of property in Spain. Combine this with falling property values (and sales), unemployment scheduled to reach 4 million this year and many customers who cannot afford to pay their mortgages, and the problem is evident.
For example, in February of this year, bad debts accounted for over 4.13% of loans and this is expected to rise to over 6.0% by the year end. As the economic environment deteriorates further, lenders are re-negotiating mortgage terms with borrowers to avoid having to make further provisions.
In truth, it is the cajas that have the biggest problem due to their over exposure to both developers and consumers and last month the government had to rescue Caja Castilla La Mancha. It is not expected to be the last and similar rescues are expected in the coming months. At the same time, in May Moody’s, a leading credit rating agency, announced that it is studying the potential downgrade of 32 Spanish banks and cajas due to their deteriorating balance sheets and high levels of bad debt.
Bye For NowIMS Foreign ExchangeForeign
Exchange TradingForex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange
+ 44 207 183 2790
Wednesday, June 17, 2009
What's wrong with Spanish Banks? (part 1)
Spain’s world class and much lauded banking system begins to crack. Why?
After 18 months of insisting that Spain’s banking system is one of the best in the world, superbly regulated, well provisioned and with no exposure to toxic debt, the truth is out – they need help!
So what has happened? Well, while the regulators did indeed successfully manage to limit Spanish banks’ exposure to the US sub-prime market, and other forms of international “toxic” debt, they failed to adequately regulate their banks’ domestic lending, thus creating their very own sub-prime crisis.
Spain, like the UK 15-20 years ago, has a two tier retail banking system: traditional banks and regionally based mutual savings banks (“cajas”), i.e. building societies. It is with the latter where the biggest problems now arise.
The problems are twofold – liquidity and credit risk. On the first point, Spanish banks and cajas have traditionally issued long term mortgage backed securities “titulaciones” to finance their mortgage lending. However, as the domestic property and credit boom gathered pace they also relied increasingly on the short term wholesale money markets to finance their long term loan and mortgage portfolios – shades of Northern Rock!
The advent of the euro made access to these markets easier while cheap money fuelled a consumer led boom. The credit crisis effectively closed both sources of funding and it is a fact that over the last eighteen months Spanish financial institutions have been the biggest users of the European Central Bank liquidity window, regularly borrowing more than €40bn. The Spanish government has also been guaranteeing the bond issues of a number of banks and cajas – an action that seems to contradict re-assurances that the Spanish banking system is in rude health.
However, while the liquidity crisis may finally be easing, the emphasis has now shifted to the asset side of the balance sheet. The Spanish banks and cajas fuelled the country’s property boom by lending vast sums of money to property developers – recent estimates put the sum at €318bn, and then to consumers to buy their finished products.
Bye For NowIMS Foreign Exchange
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange
+ 44 207 183 2790
After 18 months of insisting that Spain’s banking system is one of the best in the world, superbly regulated, well provisioned and with no exposure to toxic debt, the truth is out – they need help!
So what has happened? Well, while the regulators did indeed successfully manage to limit Spanish banks’ exposure to the US sub-prime market, and other forms of international “toxic” debt, they failed to adequately regulate their banks’ domestic lending, thus creating their very own sub-prime crisis.
Spain, like the UK 15-20 years ago, has a two tier retail banking system: traditional banks and regionally based mutual savings banks (“cajas”), i.e. building societies. It is with the latter where the biggest problems now arise.
The problems are twofold – liquidity and credit risk. On the first point, Spanish banks and cajas have traditionally issued long term mortgage backed securities “titulaciones” to finance their mortgage lending. However, as the domestic property and credit boom gathered pace they also relied increasingly on the short term wholesale money markets to finance their long term loan and mortgage portfolios – shades of Northern Rock!
The advent of the euro made access to these markets easier while cheap money fuelled a consumer led boom. The credit crisis effectively closed both sources of funding and it is a fact that over the last eighteen months Spanish financial institutions have been the biggest users of the European Central Bank liquidity window, regularly borrowing more than €40bn. The Spanish government has also been guaranteeing the bond issues of a number of banks and cajas – an action that seems to contradict re-assurances that the Spanish banking system is in rude health.
However, while the liquidity crisis may finally be easing, the emphasis has now shifted to the asset side of the balance sheet. The Spanish banks and cajas fuelled the country’s property boom by lending vast sums of money to property developers – recent estimates put the sum at €318bn, and then to consumers to buy their finished products.
Bye For NowIMS Foreign Exchange
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange
+ 44 207 183 2790
Tuesday, May 19, 2009
US demand up
WASHINGTON, May 4 (Reuters) - Demand for prime mortgages rose in the first quarter for the first time since early 2007, even as banks tightened standards for home loans, the Federal Reserve said in a survey of loan officers released on Monday.
About 35 percent of U.S. banks saw stronger demand for top quality home loans in the quarter, a "substantial" change from the 10 percent that reported weaker demand in the January survey, the Fed said in its April Senior Loan Officers Survey on bank lending practices.
Only two banks said they were making subprime loans -- loans to borrowers with blemished credit that played a major part in the credit crisis that has caused the worst financial meltdown since the Great Depression.
In a sign some of the strains from the worst financial crisis since the Great Depression may be fading, U.S. banks eased standards for business lending. Terms had tightened on loans to large and middle-market firms in each of the eight previous quarters and to small firms for 10 straight quarters.
The Fed said banks eased standards for consumer loans other than credit cards as well.
While the proportion of banks reporting such tightening is large, the April survey marked the first time since January 2008 that the share fell below 50 percent, the Fed said.
The share of respondents who had tightened standards for home equity lines of credit was down, and demand for home equity lines of credit was lower, the Fed said.
Domestic banks left their standards for credit card loans unchanged, the Fed said.
Demand for other types of loans fell in the quarter.
Banks said credit quality is likely to deteriorate for the rest of the year if consensus forecasts for the economy prove on target.
Banks providing trade credit said they had tightened standards over the previous six months.
Banks that tightened standards or terms for international trade finance cited the uncertain economic outlook in the United States and abroad, higher country risk, and worsening industry-specific problems as reasons.
The Fed polled 53 domestic banks and 23 branches of foreign parents for the survey. (Reporting by Mark Felsenthal, Editing by Chizu Nomiyama)
Bye For NowIMS Foreign Exchange
Foreign Exchange TradingForex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange
+ 44 207 183 2790
About 35 percent of U.S. banks saw stronger demand for top quality home loans in the quarter, a "substantial" change from the 10 percent that reported weaker demand in the January survey, the Fed said in its April Senior Loan Officers Survey on bank lending practices.
Only two banks said they were making subprime loans -- loans to borrowers with blemished credit that played a major part in the credit crisis that has caused the worst financial meltdown since the Great Depression.
In a sign some of the strains from the worst financial crisis since the Great Depression may be fading, U.S. banks eased standards for business lending. Terms had tightened on loans to large and middle-market firms in each of the eight previous quarters and to small firms for 10 straight quarters.
The Fed said banks eased standards for consumer loans other than credit cards as well.
While the proportion of banks reporting such tightening is large, the April survey marked the first time since January 2008 that the share fell below 50 percent, the Fed said.
The share of respondents who had tightened standards for home equity lines of credit was down, and demand for home equity lines of credit was lower, the Fed said.
Domestic banks left their standards for credit card loans unchanged, the Fed said.
Demand for other types of loans fell in the quarter.
Banks said credit quality is likely to deteriorate for the rest of the year if consensus forecasts for the economy prove on target.
Banks providing trade credit said they had tightened standards over the previous six months.
Banks that tightened standards or terms for international trade finance cited the uncertain economic outlook in the United States and abroad, higher country risk, and worsening industry-specific problems as reasons.
The Fed polled 53 domestic banks and 23 branches of foreign parents for the survey. (Reporting by Mark Felsenthal, Editing by Chizu Nomiyama)
Bye For NowIMS Foreign Exchange
Foreign Exchange TradingForex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange
+ 44 207 183 2790
Spanish slowdown eases
MADRID, May 12 (Reuters) - Spanish house sales fell at the slowest pace in 11 months during March, the National Statistics Institute reported on Tuesday, marking the latest data to suggest Spain's severe recession may be easing.
Home sales fell 24.3 percent to 34,895 in March in what was the 13th straight month of decline, but well below rates of 37.5 percent in February and 38.6 percent in January, INE reported.
The March result was the slowest rate of decline since April 2008 and followed Bank of Spain data showing banks lent 7 billion euros in March for mortgages, the most since July 2008.
Economists expected the sales trend to continue as real estate firms and banks repossess homes due to soaring debt defaults and put them on the market at ever lower prices.
"It's not that things are improving, there's just less deterioration," said economist Carlos Maravall at the AFI consultancy. "We've had a very sharp fall in terms of house sale numbers and what remains to be seen is a price fall."
March housing results were flattered by the statistical impact of a sharp, 39 percent fall in March 2008 sales and the fact Easter fell in March last year.
But they mirrored data showing a slowdown in the rate of decline in April service and manufacturing sector activity, as measured by the Markit Economics Purchasing Managers' Index.
Spain's Socialist government last week said it saw green shoots of economic recovery after Spanish consumer confidence hit a year high in April as new jobless claims rose at their slowest pace in nine months.
The International Monetary Fund expects Spanish house prices to fall 30 percent from peak to trough and estimates Spain is around half way through that process. (Reporting by Andrew Hay; Editing by Chris Pizzey)
Bye For NowIMS Foreign Exchange
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange
+ 44 207 183 2790
Home sales fell 24.3 percent to 34,895 in March in what was the 13th straight month of decline, but well below rates of 37.5 percent in February and 38.6 percent in January, INE reported.
The March result was the slowest rate of decline since April 2008 and followed Bank of Spain data showing banks lent 7 billion euros in March for mortgages, the most since July 2008.
Economists expected the sales trend to continue as real estate firms and banks repossess homes due to soaring debt defaults and put them on the market at ever lower prices.
"It's not that things are improving, there's just less deterioration," said economist Carlos Maravall at the AFI consultancy. "We've had a very sharp fall in terms of house sale numbers and what remains to be seen is a price fall."
March housing results were flattered by the statistical impact of a sharp, 39 percent fall in March 2008 sales and the fact Easter fell in March last year.
But they mirrored data showing a slowdown in the rate of decline in April service and manufacturing sector activity, as measured by the Markit Economics Purchasing Managers' Index.
Spain's Socialist government last week said it saw green shoots of economic recovery after Spanish consumer confidence hit a year high in April as new jobless claims rose at their slowest pace in nine months.
The International Monetary Fund expects Spanish house prices to fall 30 percent from peak to trough and estimates Spain is around half way through that process. (Reporting by Andrew Hay; Editing by Chris Pizzey)
Bye For NowIMS Foreign Exchange
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange
+ 44 207 183 2790
Wednesday, April 15, 2009
Green Shoots?
Telegraph - Economists hail first green shoots in housing market
The first "green shoots" of recovery in the housing market have been hailed by economists after figures showed an increase in the number of mortgages being taken out and property sales increased for the first time since 2007.
It comes as the number of new homebuyer enquiries rose for five consecutive months, with evidence showing that this is beginning to feed through to sales, according to the Royal Institution of Chartered Surveyors.
It said the number of new buyer enquiries increased at the fastest pace since September 2003 while the number of properties actually being sold by estate agents increased for the first time since November 2007.
Howard Archer, economist at Global Insight, said: "There are increasing signs that the housing market activity may have passed its worst point."
Ian Perry, RICS spokesperson, said: "The market is still in a fragile state but with demand continuing to pick up, there may be more signs of stabilisation in the coming months."
At the same time, the number of mortgages approved for those buying a new home also rose in February, according to the Council of Mortgage Lenders.
Numbers rose from 23,400 loans in January to 24,300 loans in February, a 4 per cent increase.
The number of loans approved to first-time buyers also increased by 7 per cent to 9,400 in February.
Michael Coogan, director general at the CML, said: "There are some positive signs for later in the year."
However, the lack of affordable mortgages remains "a barrier" to most first-time buyers who typically had to find a deposit of 25 per cent, a record amount, the CML explained.
But there was positive news for those looking to buy their first home as falling house prices meant first-time buyers borrowed less. The average first-time buyer loan was £95,000 in February, down from £97,000 in January and £114,000 in February last year.
The CML also highlighted a shift away from tracker mortgages towards fixed rate deals as borrowers looked to lock into historically low interest rates of just 0.5 per cent.
House prices fell last month by 2.3 per cent, wiping out the 2 per cent rise in January, bringing the average cost of a home to £160,327, according to Halifax.
RICS said the number of properties being sold by estate agents rose from 9.6 properties during the three months to February to 9.7 properties during the three months to March.
David Hawke, a RICS member based in Nottinghamshire, said: "There are some signs of "green shoots" but mortgage money is still tight."
And Benson Beard, a RICS member based in London, said: "The last month has definitely seen an increased in buyer numbers and agreed sales.
"We can all look forward to a tough year but one that in hindsight may yet signal the bottom of the market."
Bye For Now
IMS Foreign Exchange
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange
+ 44 207 183 2790
The first "green shoots" of recovery in the housing market have been hailed by economists after figures showed an increase in the number of mortgages being taken out and property sales increased for the first time since 2007.
It comes as the number of new homebuyer enquiries rose for five consecutive months, with evidence showing that this is beginning to feed through to sales, according to the Royal Institution of Chartered Surveyors.
It said the number of new buyer enquiries increased at the fastest pace since September 2003 while the number of properties actually being sold by estate agents increased for the first time since November 2007.
Howard Archer, economist at Global Insight, said: "There are increasing signs that the housing market activity may have passed its worst point."
Ian Perry, RICS spokesperson, said: "The market is still in a fragile state but with demand continuing to pick up, there may be more signs of stabilisation in the coming months."
At the same time, the number of mortgages approved for those buying a new home also rose in February, according to the Council of Mortgage Lenders.
Numbers rose from 23,400 loans in January to 24,300 loans in February, a 4 per cent increase.
The number of loans approved to first-time buyers also increased by 7 per cent to 9,400 in February.
Michael Coogan, director general at the CML, said: "There are some positive signs for later in the year."
However, the lack of affordable mortgages remains "a barrier" to most first-time buyers who typically had to find a deposit of 25 per cent, a record amount, the CML explained.
But there was positive news for those looking to buy their first home as falling house prices meant first-time buyers borrowed less. The average first-time buyer loan was £95,000 in February, down from £97,000 in January and £114,000 in February last year.
The CML also highlighted a shift away from tracker mortgages towards fixed rate deals as borrowers looked to lock into historically low interest rates of just 0.5 per cent.
House prices fell last month by 2.3 per cent, wiping out the 2 per cent rise in January, bringing the average cost of a home to £160,327, according to Halifax.
RICS said the number of properties being sold by estate agents rose from 9.6 properties during the three months to February to 9.7 properties during the three months to March.
David Hawke, a RICS member based in Nottinghamshire, said: "There are some signs of "green shoots" but mortgage money is still tight."
And Benson Beard, a RICS member based in London, said: "The last month has definitely seen an increased in buyer numbers and agreed sales.
"We can all look forward to a tough year but one that in hindsight may yet signal the bottom of the market."
Bye For Now
IMS Foreign Exchange
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange
+ 44 207 183 2790
Are banks profiteering?
Telegraph - The difference between the Bank of England's benchmark interest rate and the average rate on a tracker mortgage has risen from 1.18 per cent at the beginning of April last year to 3.20 per cent today, according to personal finance website Moneyfacts.co.uk
The Bank of England has aggressively cut its Bank rate from 5 per cent in October to a historic low of just 0.5 per cent in an attempt to revive the economy.
While existing borrowers with a tracker mortgage will be enjoying the drop in rates, new borrowers are being badly hit. HSBC has announced it is launching a tracker loan charging 4.09 per cent above the Bank rate.
The margins on the average two-year fixed rate deal has risen from 1.19 per cent above the two-year swap rate - which is the rate that lenders use to price their fixed rate mortgages – at the beginning of April last year to 2.41 per cent above the rate today, Moneyfacts said.
Despite two-year swap rates dropping by 3.03 per cent since the beginning of last October, the average two year fixed rate mortgage has been reduced by just 1.64 per cent over the same period, it said.
It comes after billions of pounds of financial support from the Government has been given to the banks during the credit crisis.
Andrew Montlake, of mortgage brokers Coreco, said: "Banks are taking the opportunity to widen their margins to claw back of the profits that they've lost during the credit crisis. Every time they launch a new range of deals, the margins seem to be even bigger, specifically on tracker rate deals."
The average rate charged on a two-year fixed rate deal is currently 4.64 per cent, compared with 3.70 per cent for the average two-year tracker, according to the research.
Michelle Slade, analyst at Moneyfacts.co.uk, said: "Since base rate started falling in October 2008, mortgage lenders have continued to increase their margins.
"While existing tracker customers have benefited, anyone looking for a new tracker deal has seen the margin over base continue to increase. The vast majority of providers have passed much bigger cuts to their savings rates, when compared to their standard variable rate as once again they increase their margins."
An HSBC spokesperson said: "HSBC's tracker mortgages are regularly the lowest in the market. Mortgage interest rates reflect the risk of lending in the market, in the current environment it is not surprising that they are higher than previous years."
Bye For Now
IMS Foreign Exchange
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange
+ 44 207 183 2790
The Bank of England has aggressively cut its Bank rate from 5 per cent in October to a historic low of just 0.5 per cent in an attempt to revive the economy.
While existing borrowers with a tracker mortgage will be enjoying the drop in rates, new borrowers are being badly hit. HSBC has announced it is launching a tracker loan charging 4.09 per cent above the Bank rate.
The margins on the average two-year fixed rate deal has risen from 1.19 per cent above the two-year swap rate - which is the rate that lenders use to price their fixed rate mortgages – at the beginning of April last year to 2.41 per cent above the rate today, Moneyfacts said.
Despite two-year swap rates dropping by 3.03 per cent since the beginning of last October, the average two year fixed rate mortgage has been reduced by just 1.64 per cent over the same period, it said.
It comes after billions of pounds of financial support from the Government has been given to the banks during the credit crisis.
Andrew Montlake, of mortgage brokers Coreco, said: "Banks are taking the opportunity to widen their margins to claw back of the profits that they've lost during the credit crisis. Every time they launch a new range of deals, the margins seem to be even bigger, specifically on tracker rate deals."
The average rate charged on a two-year fixed rate deal is currently 4.64 per cent, compared with 3.70 per cent for the average two-year tracker, according to the research.
Michelle Slade, analyst at Moneyfacts.co.uk, said: "Since base rate started falling in October 2008, mortgage lenders have continued to increase their margins.
"While existing tracker customers have benefited, anyone looking for a new tracker deal has seen the margin over base continue to increase. The vast majority of providers have passed much bigger cuts to their savings rates, when compared to their standard variable rate as once again they increase their margins."
An HSBC spokesperson said: "HSBC's tracker mortgages are regularly the lowest in the market. Mortgage interest rates reflect the risk of lending in the market, in the current environment it is not surprising that they are higher than previous years."
Bye For Now
IMS Foreign Exchange
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange
+ 44 207 183 2790
Subscribe to:
Posts (Atom)