It’s a shame to hear that the banks are making huge profits from the difference from the borrowing and the lending rate, particularly for fixed rate mortgages. Although the credit crunch was two years ago we are now suffering more than ever with high mortgage rates despite the historical low interest rates.
Understandably the banks need to boost their balance sheets but they are taking it to far and trying to take higher profits so they can give themselves better cash flow and reinvest at the expense of consumers. I understand that they have to compete and the banks in better shape have done well out of the credit crunch with significant gains in market share but offer fair deals to customers.
After the billions of pounds they have been given to allow them to trade again they should be playing their part by lowering their borrowing costs and certainly not increasing them. It is not only consumers that have higher mortgage costs but businesses too which are looking to keep their costs low in the current climate.
A search for a two year deal will show that the average two-year fixed rate deal is now around 4.5 per cent and a five year deal 5.8 per cent. That is around four to five tenths higher than six months ago when the base rate was higher.
Banks are businesses though and they are more interested in profits and keeping shareholders happy over customers. Fixed rate mortgages is where banks are making the most profit as they are charging a full 2 percentage points on fixed rate mortgages compared to just 0.1 per cent two years ago.
Fixed rate mortgages prices have risen and have been taken up by many as they want to lock in with a low-ish interest rate before rates start rising. However the good news is that there are mortgage deals that will likely work out cheaper than fixed rate deals over the next year or possibly two.
It is said that this recession will probably take longer to recover than first though with interest rates staying low since inflation will remain low. Therefore going with a tracker mortgage will probably mean the lowest monthly repayments in the short term. Seek advice from an independent mortgage broker to get personalised advice.
