The Great Debate UK
Michael Saunders will get no thanks from his employers at Citicorp for pointing out how UK interest rates have swung dramatically against the borrower over the last two years.
Bank Rate has plunged by 5.25 percent since July 2007, and two-year swap rates have fallen by 4.1 percent, but surprise surprise, the only rates that have come down anything like as far are those paid to the hapless retail depositor. For many of those wanting to borrow, the price has gone in the opposite direction - if they can get the money at all, that is.
Put another way, the price of a 5,000 pound personal loan has risen by more than 9 percent relative to Bank rate. This process of price gouging is called "rebuilding bank balance sheets."