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Upside down mortgage world


Christian Fegler

Svenska Dagbladet

20 June 2013


To read the full article in Swedish, click here


Christian Fegler, PA banking and insurance expert, has been quoted in an article about the growing pressure on Swedish banks to disclose the profit margins on their mortgages.

The article reveals how the FSA, FI, and the Competition Authority have turned up the pressure on banks to voluntarily disclose their borrowing costs for mortgages, before they are forced to do so. This has raised questions across the sector as to why banks should have to declare their margins when this is not required by any other company.

Exploring the situation from a different angle, Christian explains that customers are unlikely to care about the profit margins on mortgages – and will be more concerned with the cost of borrowing for them: “If the milk is cheaper at a particular supermarket, I go there. I don’t care whether they have purchased a larger supply of milk for a lower price, as long as it costs me less to buy it,” he says.

However, it explains, the banks with the lowest borrowing costs don’t necessarily offer customers the lowest rates – and, in fact, the opposite is sometimes true. The article then looks at the results of a survey by the Competition Authority, which suggests that banks’ gross margins for mortgages has increased and that the borrowers' bargaining position has deteriorated. Forcing banks to disclose their margins, the article concludes, will improve transparency and increase competitiveness – which will be better for consumers overall.

Christian Fegler is a banking and insurance expert at PA Consulting Group

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