What politesse! No mortgage lender, it seems, is prepared to stick its neck out ahead of its rivals and offer new home loans at a reasonable margin above the cost of retail funding. The average spread between the rate banks offer on savings deposits and the rate at which they extend typical mortgage loans hit a peak of 2.4 percentage points in February, and it has hardly dropped since (see chart). And there are precious few loans at that: net new mortgage lending fell in July to £1.6 billion, the lowest increase since October 2000.
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