Excellent news

The statistics from Moneyfacts show that the average two-year fixed rate mortgage climbed to 5.18 per cent while swap rates – which lenders use to help price their fixed rate mortgages – stood at 2.04 per cent on Tuesday.

It brings the margin between the cost of bank lending and average fixed rates to 3.14 per cent, the widest since Moneyfacts\’ records began in 1988.

Excellent on two counts.

1) A newspaper is finally using the correct rates to talk about the rates on fixed rate mortgages. What base is matters not: it\’s the cost of two year money which underpins the cost of a two year fixed rate mortgage.

2) Bank profits are rising. We like this, for we most certainly do not like it when they\’re not making profits and are falling over like ninepins.

Indeed, the only way that we\’re going to get back however many trillions it was is if the banks do indeed make good profits and thus have the cash to pay back those trillions.

3 thoughts on “Excellent news”

  1. So, the only way we will get our money back from the banks is if they make more money from us.

    Its a bit circular isn’t it?

    Yes I know the rest of the arguments about needing finicial institutions, I’m just not sure that we aren’t deluding ourselves about the money that was used to rescue them.

  2. This is a not a good post. Profits are not per se good, it depends on how they arise. In a highly competive market high profits are good, as they signal a firm that is attractive to its customers, but it’s nowhere near as obvious in this case as you think.

    I think you are essentially confusing markets being good with capitalism being good.

  3. “In a highly competive market high profits are good, as they signal a firm that is attractive to its customers, but it’s nowhere near as obvious in this case as you think.”

    Bearing in mind we now own most of the banks, I would say it is pretty bloody obvious high profits are good.

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