Independent Scotland Mortgage Rates Will Soar

Independent Scotland Mortgage Rates Will Soar.

Member of the Scottish Parliament, Johann Lamont MSP and leader of the Scottish Labour Party has issued a warning that an independent Scotland could lead to a significant increase in Mortgage interest rates and monthly mortgage payments.

We have to agree.

Debate rages regarding Scotland keeping the pound. All the major UK political parties has said that Scotland will not be allowed to keep the pound. The UK via the Bank of England is not prepared to underwrite the financial position of Scotland and any Scottish Debt. Alex Salmon, leader of the Scottish National Party, has said that Scotland will keep the pound. This is still up for debate with no “plan b” on the table. Europe has said it will not allow Scotland to join the Euro as rules do not allow countries to join the Euro until they have complied with economic and monetary stability for a number of a years.

So what will Scotland have? A Scottish pound, groat, shillings, denarii? Who knows?

What we do no though, it the costs of borrowing for any Scottish central (state) bank would be higher than the UK. This means that Scottish Banks, would borrow from a Scottish central bank at higher rates which would mean mortgage payments would be higher.

Johann Lamont MSP has suggested that this could cost the average homeowner in Scotland an extra £1500 per year.

Comment

There are still so many unanswered questions. If the Scottish people vote yes, then the work really starts. Many large brands that are based in Scotland, such as Lloyds Bank, Standard Life and Prudential have already expressed that they may relocate to the UK with a “yes” vote given that the majority of the client base is in what would remain of the UK and being outside the UK would present trading restrictions.