Turner: Mortgage rates will remain high for a while

Date:Wednesday 25th March 2009
Author: Susanna Kavka

Cheaper mortgage deals are unlikely to appear in the near future, according to one industry practitioner.

In his recent report on the UK's banking sector, Lord Turner, chairman of the Financial Services Authority, said that lenders will be forced to hold more capital in future to prevent another financial crisis.

He added that consumers will bear the cost of this through higher interest rates on their mortgages, the Times reports.

Research conducted by the National Institute of Economic and Social Research found that the fallout from the credit crunch will lead to higher borrowing rates for up to nine years.

Director of macroeconomic research at the institute Ray Barrell said: "Consumers have to choose between lower rates and a safer economy."

Recently, Gordon Pell, deputy chief executive of the Royal Bank of Scotland, spoke out against the practice of providing consumers with mortgages worth 100 per cent of the value of their properties, describing it as "immoral".