Lenders Ignore Calls to Cut Their Rates
All but two banks ignored government calls to cut their interest rates
for new customers and on top of this, more than 20 lenders withdrew deals that would have reduced the amount of monthly mortgage repayments that borrower’s were making. These withdrawals have meant that most of the lenders in the UK have stopped offering tracker mortgages as the rates for these types of mortgages move up and down with the base rate. As a result of this, many brokers fear that all tracker mortgages could disappear by the weekend. Banks are expected to launch new tracker deals, perhaps even as soon as next week, however, these new deals are expected to charge above the base rate and may then continue to charge customers with large arrangement fees in an attempt to offset rate cuts. Only two well-known high street banks agreed to pass on the government’s rate cuts on their standard variable rates to their new customers. Other banks refused to do the same even in spite of the building political pressure for the government to use the 100 per cent taxpayer stakes and expected future stakes in some banks to try and force lenders to pass on the Bank of England rate cuts in full. The government has said that they believe banks should pass on the advantage of reduced interest rates to customers and businesses. However, a spokesman for the Council of Mortgage Lenders has said that lenders do understand the important political context but that it was important that every decision was made for each individual lender rather than on a whole. It was also said that there has always been a bit of an unwritten rule where base rates and mortgage rates have always followed the same path, but after the credit crunch this rule no longer really applies. There was some beneficial news for those who already have a variable mortgage, as a £100,000 repayment mortgage to be re-paid over 25 years will see a cut of around £85 a month. This is definitely welcome news after all of the reports coming out about people being forced to remortgage their house due to the financial crisis.
Many lenders have withdrawn deals that would reduce the amount of monthly mortgage repayments that a lender had to make and these cuts have meant that many lenders have been withdrawing tracker mortgages from their options. Some beneficial news for those who already have a variable mortgage is that they will be able to save money each month. This news is very welcome after all of the reports of people having to remortgage their home due to financial difficulty.
Tags: Mortgage, Mortgages, Remortgage
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