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Fixed-rate mortgages appear to be financial money spinners

With news that an array of new fixed rate mortgages have hit the high street it looks as though UK banks are taking advantage of consumer concern in relation to interest rates. Figures show that the differential between base rates in the UK and interest rates on mortgages is getting wider as the banks look to make up for losses over the last few months. This is totally at odds with the UK government's understanding of the terms of the rescue package which was supposed to see consumers receive cheaper borrowing terms as interest rates fell.

Quite why the UK mortgage lenders have decided to introduce an array of fixed-rate mortgages which will earn them substantially more income than the variable rate type is a mystery and is sure to grab the attention of the authorities. It is all the more surprising with news that HSBC may well be on the verge of approaching shareholders for up to £10 billion in additional funding in order to shore up its balance sheet. Whether the company will approach the UK government about a potential tax payer funded refinancing package remains to be seen but the situations in the mortgage market is as complicated and as confusing as ever.

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