Mortgage Interest Rates

The continuing justifiction for raising mortgage interest rates to curtail borrowing is becoming more transparent by the day. The banks and building society lenders seem unable to say NO and resort to raising rates for those who already have a mortagage. This is supposed to deter new borrowing. Those that already 'enjoy' a mortgage have no need for another (usually), but are being compelled to subsidise the new business.

This reasoning gets very thin when compulsion is invoked. It's fascinating that inter-bank lending goes up and mortgage rates increase. Reasons spill out, but are not particularly difficult to understand when at the end of the chain the customer must always pay. Any bad business decision that results in financial loss to that business will be paid for by those customers of the business who have no choice. The difficulty in acquiring a mortgage is that this inter-bank lending has become a really obvious commercial problem that can no longer be hidden.

Northern Rock (October 2007)
Northern Rock - Update 1 (November 2007)
Northern Rock - Update 2 (March 2009)
Northern Rock - Update 3 (Feb 2010)
Northern Rock - Lending Policy (January 2009)
Northern Rock - The Depression (March 2009)
Northern Rock - £724 Million Losses (Aug 2009)


Northern Rock was credited with failing by borrowing money in the money markets to lend at a higher rate to home-buyers fixed in the concept of the property ladder. Fixed-mortgages that come to an end and cannot be refinanced result in the possibility of repossession. Money could not be purchased to lend to borrowers and savings from customers/clients was never enough to cover this virtual money. It all went 'belly-up'.

Adam Applegarth
Winners And Losers

It's a major contributing reason for inflation. The illusory 'creation' of money. Resources are absolutely finite and if the 'value' of money relies on gold reserves, which are traded, then the nett global wealth is also finite. Global debt will increase, but the concept of 'growth' remains just a concept. The carrot that is dangled on a stick and shown to the people. It continually moves away and so the illusion of growth is perpetrated. Just chasing the end of the rainbow and the treasure that can never be reached. But attention fixed on the leading edge of the curtain as it is drawn, ensures the trailing edge is rarely seen.


Banks: win-win
Customers: lose-lose