Cheltenham & Gloucester adopts Government style spin
Posted on 9 February 2009 by
Cheltenham & Gloucester emailed us late this afternoon to say that their fixed rates are changing tomorrow. They advised that “These changes follow movement in swap rates which have enabled us to pass on reductions on our shorter-term fixed-rate products. For example, our 2 year fixed rates start at just 3.99%. The increase in swap rates for longer-term borrowing is also reflected in our new range.”
Their 2 and 3 year fixed rates are coming down by 0.1% but the 5 year fixed rates are increasing by 0.2%, with the 7 and 10 year fixes going up by 0.3%.
Since C&G last changed its 5 and 10 year fixed rates on 5/12/08 the yield curve has steepened considerably. On 4/12/08 2 year swaps were 3.03%, 5 year at 3.43% and 10 year at 3.69%, a spread of 0.66% between 2 and 10 years. However, today’s swap rates are 2.18%, 3.11% and 3.87% respectively, making the 2-10 year spread now 1.69%.
Therefore the tone of C&G’s statement about the trend of swap rates is correct, but despite 5 year swaps having edged up from their recent floor they have fallen 0.32% (from 3.43% to 3.11%) since 5/12/08 when C&G last changed the rates offered on their 5 year fix.
If C&G wants to increase its 5 year fixed rates by 0.2%, despite 5 year swaps having fallen by 0.32%, it is of course perfectly entitled to do so. But just because it is now 43% owned by the Government it doesn’t have to adopt the Government’s policy of “you can fool some of the people all of the time and they are the ones to work on.”
Rather more honesty of the reason for rate changes next time please C&G!
Categories: Mortgages, Regulation, Interest rates
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