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Swop?

Vincenzo
Vincenzo Posts: 526 Forumite
in Mortgages & endowments
I keep hearing talk of SWOP rates going up. From what I can gather it is to do with the money markets and the rate at which banks can borrow...?

If anyone could put me in the picture I would really appreciate it.

Thanks.

Comments

  • TangentMan
    TangentMan Posts: 204 Forumite
    Essentially your understanding is correct. The Banks borrow money at these swap rates and lend it out again. So, if the cost of the raw material (the money) goes up then the cost of the finished product (the mortgage) is also likely to go up.

    And in fact will do, since mortgages are low margin products so there isn't any room to absorb raw material costs in the same way there is with a car or a TV.
  • Vincenzo
    Vincenzo Posts: 526 Forumite
    Thanks TangentMan - is it SWOP or SWAP? I have seen people use both on this forum.
This discussion has been closed.
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