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July 26, 2007

Mortgage lenders benefiting from the housing boom

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by Elaine Frei

Mortgage lenders benefiting from the housing boom

According to Fool.co.uk, the independent finance website, millions of homeowners have been taken advantage of by British mortgage lenders since the start of the century.

Their research suggests that the Halifax, UK’s largest lender, has benefited from previously low interest rates by pushing up their margins to extremely attractive and near-record levels.

Fool.co.uk commented that many lenders have followed in the footsteps of the Halifax. Other lenders have secretly profited on the low Bank of England base rate in order to make record profits for their shareholders.

Although the data is only a snapshot of interest rates over the past 12 years, the ongoing trend is obvious. When the housing market was at a low point, mortgage lenders lived with lower interest margins in order to keep monthly repayments affordable and reduce bad debts.

However, in the housing boom of the last few years, mortgage lenders have exploited the low base rate by raising their interest margins and making record profits at the expense of homeowners.


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