Homeowners hit by mortgage lenders

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by Kay Murchie

Homeowners are being hit by Mortgage lenders with rate increases greater than the recent 0.25% Bank of England rise. Many building societies and banks didn’t proceed with the recent base rate rise in May, but a small number have charged more, with a few increasing by up to 0.35%.

The Mortgage Business and Bank of Scotland Intelligence Finance (which are all part of HBOS) increased their rates by 0.35%. The Catholic Building Society and Nottingham Building Society also decided to proceed with an increase of 0.30% to their customers on standard variable rates.

Independent Banking Advisory Service’s Eddy Weatherill commented that what the banks are doing is not illegal but it is profiteering. When the base rate changes, the banks manipulate the rate to suit themselves. It is this manipulating that enables the banks to profit substantially.

The head of mortgages at moneysupermarket.com, Louise Cuming said that she could not see any justification in increasing standard variable rates by more than the base rate increase. She suggested that loyal customers are being taken advantage of.

A HBOS spokesman highlighted the fact that the majority of borrowers are on the fixed rate or tracker deals with their respective lenders, therefore the standard variable rate is not as relevant. The rates reflect the market within which each brand operates.