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Scottish independence: Alexander warning over mortgage rise Scottish independence: Alexander warning over mortgage rise
(35 minutes later)
Homeowners could face annual increases of up to £5,200 in an independent Scotland, the chief secretary to the Treasury has said.Homeowners could face annual increases of up to £5,200 in an independent Scotland, the chief secretary to the Treasury has said.
Danny Alexander told MSPs that doubt over Scotland's share of UK debt would have a "huge effect" on mortgages.Danny Alexander told MSPs that doubt over Scotland's share of UK debt would have a "huge effect" on mortgages.
Deputy First Minister Nicola Sturgeon said there was no evidence for the claim.Deputy First Minister Nicola Sturgeon said there was no evidence for the claim.
Scottish ministers have suggested they may not take a share of UK debt with no post-independence currency union.Scottish ministers have suggested they may not take a share of UK debt with no post-independence currency union.
The chief secretary to the Treasury was addressing a Scottish Parliament committee examining Scotland's economic future, ahead of the 18 September independence referendum.The chief secretary to the Treasury was addressing a Scottish Parliament committee examining Scotland's economic future, ahead of the 18 September independence referendum.
Scottish government ministers said keeping the pound under a formal currency union - or "sterling zone" - was in the interests of both Scotland and the rest of the UK in the event of a "Yes" vote.Scottish government ministers said keeping the pound under a formal currency union - or "sterling zone" - was in the interests of both Scotland and the rest of the UK in the event of a "Yes" vote.
UK Chancellor George Osborne has ruled out a currency union, a position backed by Labour and the Liberal Democrats.UK Chancellor George Osborne has ruled out a currency union, a position backed by Labour and the Liberal Democrats.
Mr Alexander told Holyrood's economy committee the "likely volatility" of a new Scottish currency would lead to higher interest rates.Mr Alexander told Holyrood's economy committee the "likely volatility" of a new Scottish currency would lead to higher interest rates.
He added that if Scotland refused a share of UK debt post-independence, it would lead to higher international borrowing costs.He added that if Scotland refused a share of UK debt post-independence, it would lead to higher international borrowing costs.
"In the event of a default, or a refusal to accept debt, one bank, Jefferies investment bank, has done the only detailed estimate out there - they have suggested that under those circumstances there would be a premium of more like five percentage points in that default scenario," he said."In the event of a default, or a refusal to accept debt, one bank, Jefferies investment bank, has done the only detailed estimate out there - they have suggested that under those circumstances there would be a premium of more like five percentage points in that default scenario," he said.
"Assuming a 75% pass through from bond rates to mortgage rates, that would be an extra cost of about £5,200 on an average mortgage cost in Scotland.""Assuming a 75% pass through from bond rates to mortgage rates, that would be an extra cost of about £5,200 on an average mortgage cost in Scotland."
Mr Alexander claimed this could have "a huge effect on mortgages and businesses".Mr Alexander claimed this could have "a huge effect on mortgages and businesses".
The UK government has warned that, even if a new Scottish state accepted its share of UK debt, it would have to pay an "independence premium" to borrow from the markets, leading to an extra £1,700 a year for the average mortgage-payer.The UK government has warned that, even if a new Scottish state accepted its share of UK debt, it would have to pay an "independence premium" to borrow from the markets, leading to an extra £1,700 a year for the average mortgage-payer.
Ms Sturgeon told the same committee there was "not a scrap of evidence" that borrowing costs would be higher, and that Scotland would continue to benefit from an "integrated financial services market, one of the reasons we propose remaining in a currency zone".Ms Sturgeon told the same committee there was "not a scrap of evidence" that borrowing costs would be higher, and that Scotland would continue to benefit from an "integrated financial services market, one of the reasons we propose remaining in a currency zone".
She added: "There are examples of other small European countries that have lower mortgage costs than people in Scotland as part of the UK right now."She added: "There are examples of other small European countries that have lower mortgage costs than people in Scotland as part of the UK right now."
Also appearing at the committee, Scottish Finance Secretary John Swinney said Scottish ministers, "have not said we want to refuse to take on our share of the debt".Also appearing at the committee, Scottish Finance Secretary John Swinney said Scottish ministers, "have not said we want to refuse to take on our share of the debt".
But he said the UK government had been "characterising the UK as a continuing state", which would mean the UK and not Scotland would be legally responsible for the deficit. He said failure to agree a deal with an independent Scotland on the division of liabilities and assets - including the pound - could result in the remainder of the UK having to pay up to £5.5bn more a year in debt servicing costs.
That, the Scottish finance secretary added, would be the equivalent of increasing income tax by one penny for people in the rest of the UK.
Mr Swinney also said the UK government had been "characterising the UK as a continuing state", which would mean the UK and not Scotland would be legally responsible for the deficit.