eshing1

Time To Short the British Pound?

The Nationwide move is a reflection of the fact that even as a mutually-owned building society (i.e. no shareholders as such), it still lends out more than it gets in savers deposits, and funds the difference with funds borrowed on the wholesale market. This money has become very very expensive looking at interbank interest rates of 6%, so they have decided to raise mortgage interest rates iin order to reflect this higher marginal cost of funding, and also because all other mortgage lenders have already done this - if they didn't, the Nationwide would end up potentially with 100% of the new mortgage business in the UK! Edmund