What is this man blithering about?
Asked yesterday whether the scandal may have contributed to people having their homes repossessed, Mr Shapps said: “All the research into homelessness proves that there are a lot of different causes, of which the Libor rate may have [been] a contributory factor, if indeed it transpires that mortgage rates have been adjusted as a result.”
It\’s incredibly difficult to work out how this could be true.
The first set of manipulations, helping traders to suit their books, could have been up or down, would have been by a basis point or two and would have been entirely transient. Lasting a day or perhaps two.
Even if we assume that someone did take out a Libor based mortgage when it was manipulated up by 1 bps, this works out to an extra £10 a year interest on £100,000 or mortgage. And since they are usually reset every three months, more probably £2.50.
Yes, yes, I know everything happens at the margin but I do seriously doubt that this sort of sum has had a decisive effect on anyone\’s mortgage at all.
And the second set of manipulations, the systemic ones, made rates lower for borrowers.
So this is toss I\’m afraid.