Mortgages -
Don't Blame banks for expensive mortgages - 15/04/2008
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Alistair Darling would like us to believe that banks are to blame for mortgage costs. But are the banks to blame? Is there even a crisis for mortgage holders at the moment? David Prosser thinks not.
Banks are an easy target when looking for someone to blame. We have all had some grievance with our banks. Whether we’ve been kept on hold talking to a foreign call centre, or been the victim of unfair overdraft charges, everyone has had some dispute with their bank.
As a nation we readily blame large corporations at any opportunity, so if Alistair Darling was looking for a scapegoat in blaming the banks he chose well. His point is that the bank of England has cut rates 3 times since December, but costs for the mortgage holder keep on rising.
However, it turns out that most banks are in fact passing on low rates. The exception? Northern Rock, a financial institution now under government control.
So, let us take a look at the figures. Half of all mortgage borrowers are benefiting from the low Bank of England Rates. That’s almost 6million people who are reaping the benefits of low base rates.
These people benefiting are made up of 30% with tracker mortgages where what they pay moves up and down with base rates. The other 20% who are benefiting from the low rates are paying less as they pay the lenders standard variable rate.
The remaining 50% who are apparently suffering from high costs imposed by the banks seem to be largely unaffected. Those with fixed rate deals are by definition unaffected as their rates do not change.
The only mortgage holders suffering are those whose fixed rate deals are coming to an end. They are in a position where they need to find the lowest possible new deal and many of the mortgages available at the moment are not offering particularly low rates
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