Market News
Labour win will add £65 to the cost of mortgage, says economist
05/03/2010
A hung Parliament or Labour win at the general election could add £65 to the cost of the average mortgage, a Citigroup economist has claimed.
The Metro reports that in an analyst’s note, Citigroup economist Michael Saunders says: “Unless we get a Conservative Government with a clear majority, we think gilt yields will have to rise to about 4.75 per cent and higher if inflation remains a threat.”
As the cost of mortgage funding is linked to gilt yields, this would mean that if rates went up by one per cent, it could lead to a £780 annual increase in the cost of an average £112,000 mortgage or £65 monthly increase.