|
Campaigners are claiming that Britain's six million home owners on fixed-rate mortgages are being "ripped off" as their lenders fail to pass on recent cuts in interest rates in their new offerings. These figures are a further disappointment for all mortgage holders after the Bank failed to cut rates this week, despite the apparent need for one. Consumers are it seems being forced to pick up the bill for the losses the banks have experienced during the global credit crunch.
Data published by the Bank of England shows that in January the average fixed-rate mortgage, paid by new and existing customers, rose from 5.36 to 5.39 per cent, which is the highest rate for seven years, this despite the Bank cutting its base rate in December.
Fixed-rate deals are becoming increasingly popular these recent years, with more than half of Britain's homeowners, nearly six million households in all, being on a fixed mortgage deal.
As most fixed rate deals only last for two or three years, the increase in the rates being asked for by lenders will hit some 1.4 million home owners whose mortgage deals come to an end during the next few months. All these borrowers will be forced to find a new deal, and pay a much higher rate than they would have a year ago, even though the Bank base rate is exactly the same at 5.25 per cent.
There has been a increase of about £30 a month on average in the last year ago according to Moneyfacts, equating to over £380 a year.
This week many lenders also increased their tracker rates, another increasingly popular mortgage with many borrowers, Halifax, Abbey and Chelsea all increasing their tracker deals. Eddie Weatherill, the chairman of the campaign group Independent Banking Advisory Service, has been recorded as saying: "Consumers will feel very ripped off by the end of this year".
The credit crunch has made it increasingly expensive for banks and building societies to raise money from other banks, the biggest banks recently announcing substantial slumps in profits. As a result mostlenders, keen to protect their bottom lines, have withdrawn their best deals, thus hitting the consumer yet again. |
