Now that Brown has copied the Tory proposal to underwrite bank loans, what’s the real picture on interest rates? Since the UK debt crisis started, the Bank of England base rates have become woefully detached from the rates charged to real people. This is powerfully summarised by three graphs from Citi, which I reprint here..
Over last year, BoE base rates fell by three points. Only half of this fall was “passed on” by fixed-rate and variable mortgages, while the cost of borrowing money actually rose for overdrafts, credit cards and personal loans. As the graph shows:
The most misery will be felt by those who have unsecured personal loans – ie, the poorest. Just look at how the rate here has soared during the credit crunch, to a rate that will send debtors into the hands of the loan sharks – or bailiffs
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