Eh, mortgage rates.
Bear in mind that I'm suggesting that mortgage rates should be capped, not that lenders should be prevented from offering lower rates to more creditworthy borrowers.
In France mortgage rates are capped at 133% of the average effective rate on all outstanding mortgages in the previous quarter. In the third quarter of 2014, the average effective rate on all outstanding variable rate mortgages stood at 3.4% and therefore the maximum rate that could be charged by a lender on such mortgages in the fourth quarter of 2014 was 4.53%.
Personally I think it would be preferable if any such cap was calculated by reference to the average new lending rate for variable rate mortgages as reported to the ECB by the Central Bank, simply because this is a transparent figure that is calculated in accordance with detailed rules that are harmonised across the Eurozone.
The purpose of such a cap would be simply to provide a degree of protection to borrowers that are not in a position to refinance their loans. If set at an appropriate level, it should have no impact on competition within the mortgage market.
I have never understood the clamour to give an unelected official the power to set mortgage interest rates - why would anybody think such an official would do a better job at setting appropriate rates than the free market? The Governor also clearly articulated the downside risks of this approach from a competition perspective.
Bear in mind that I'm suggesting that mortgage rates should be capped, not that lenders should be prevented from offering lower rates to more creditworthy borrowers.
In France mortgage rates are capped at 133% of the average effective rate on all outstanding mortgages in the previous quarter. In the third quarter of 2014, the average effective rate on all outstanding variable rate mortgages stood at 3.4% and therefore the maximum rate that could be charged by a lender on such mortgages in the fourth quarter of 2014 was 4.53%.
Personally I think it would be preferable if any such cap was calculated by reference to the average new lending rate for variable rate mortgages as reported to the ECB by the Central Bank, simply because this is a transparent figure that is calculated in accordance with detailed rules that are harmonised across the Eurozone.
The purpose of such a cap would be simply to provide a degree of protection to borrowers that are not in a position to refinance their loans. If set at an appropriate level, it should have no impact on competition within the mortgage market.
I have never understood the clamour to give an unelected official the power to set mortgage interest rates - why would anybody think such an official would do a better job at setting appropriate rates than the free market? The Governor also clearly articulated the downside risks of this approach from a competition perspective.