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Bank funding interest rates

5starpool · 2018-09-06 09:39:50

I'm currently on a 3 year fixed rate with BOI (just under halfway through) at 3.1% and have been offered (after asking) a 5 year fixed rate of 2.8% which is obviously better. I have a question over the figures they are using to calculate the breaking fee though, which I'm sure is right, but still want to verify more…

06-09-2018 10:39am

#1

5starpool

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I'm currently on a 3 year fixed rate with BOI (just under halfway through) at 3.1% and have been offered (after asking) a 5 year fixed rate of 2.8% which is obviously better.

I have a question over the figures they are using to calculate the breaking fee though, which I'm sure is right, but still want to verify more myself.

I have their formula for calculating this but the figures they have provided for the interest rates are:

Cost of funding at time of taking the current product (May '17) = -0.08%
Cost of funding now = -0.22%

I'm just wondering what these figures actually are? I would have thought they were the interbank rates, but they don't seem to be that. Can anyone shed any light on this for me? It still makes sense to go ahead with the change anyhow, even with a ~650 fee, but it is higher than I would have expected given that the interbank funding rates I see here were lower in mid 2017 than they are now, so obviously these are not the figures they use.

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