Recent press comment that lenders are profiteering from the large spreads between mortgage interest rates and Bank Rate may be further evidence of the low esteem in which the financial services sector is now held. But it misses two key points. First, after a period in which lenders systematically underpriced risk, a rise in the relative cost of mortgages was both inevitable and desirable. Second, with mortgage interest rates at an all-time low, it is access to credit rather than its cost which is the more important factor in explaining the low level of housing market activity.
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