Lending spreads

The spread between average mortgage rates and the repo rate has fallen over the last 6 months or so. The spread between average lending rates and average mortgage rates has also narrowed. We argued in this paper that the rise in the spread between mortgage rates and the policy rate since the global financial crisis partly reflected a rise in bank funding costs and in this paper that mortgage rates fully reflected changes in the policy rate if one controls for funding costs and offsetting changes in risk and liquidity premia.

Codera Blog Newsletter

Sign up to receive a weekly summary of our blog posts