Turmoil from the euro-zone may raise mortgage interest rates.
Lenders wholesale funding costs appear to have spiked on the back of increased stresses in the interbank market resulting from the euro-zone crisis.
Cooper Associates comment:-
The euro-zone crisis has dominated the financial news in October, and of particular scrutiny has been its impact on world stock markets, but what hasn’t been widely reported is its effect on the mortgage market.
Lenders wholesale funding costs have begun to increase in response to the euro-zone crisis, and consequently, mortgage interest rates could soon start to rise (not the official Bank of England rate, but the rate at which mortgage lenders lend).
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