Mortgagestrategy: Cheap money era is over, warns BBA

The British Bankers’ Association has warned that the extra capital requirements being placed on banks will lead to the end of the cheap money era and increase mortgage costs.The Basel Committee on Banking Supervision has agreed that banks will require a minimum core Tier 1 capital ratio of 7%, up from the current 2%. Under the Basel III rules banks will have to increase their core Tier 1 capital rartio to 4.5% by 2015...“All the changes are good from a stability perspective but add billions to the fixed operating cost of a bank. “The consequence is that inevitably the cost of credit - the price the borrower pays for money - will rise. The cheap money era is over.”