You would have thought the banking fraternity would want to do UK tax payers a good turn after the bail outs we’ve done for them, but alas it seems the greed machine is hard at work.
The banks are starting to open up on fixed rate mortgage deals and as you can imagine there are probably a number of us looking to grab a good deal while rates are low. But, is the deal as good as it looks? The amount you pay is dependent on the current LTV (Loan To Value) so the higher the LTV, the higher the cost to borrow. However, now it seems lenders are adding a large premium to people that fall out of the 75% LTV mark.
What this means is that for people who have suffered a loss in property value (let’s be honest, who hasn’t), the cost of borrowing an extra 10% is now going to be a great deal more, not only on the standard interest side of things but also with regards to interest loading for the higher LTV mortgage, which (on a Nationwide product) proves to be an approximately £107.19 per month.
Well done guys we’re glad to see you working on giving something back! 
Lenders are also abstracting the Michael on their SVRs (Standard Variable Rates).
As ever, the banks are not passing down cuts that can make things that little bit easier for their customers. Nothing new there I hear you say! Well they are now also increasing their SVRs. In or around the second quarter of 2008 the average mortgage SVR was 1.9%: now the average is a massive 4.66%. Just an increase of 407%. It’s unprecedented. SVRs are not normally more than one or two percent above the base rate; some today are as high as 5.99%.
So – not only do the banks move like lightning to cut savings rates to an average of 0.58% but they make a tidy profit from those unfortunate homeowners who fail to qualify for a new product once their initial rate expires.
You would have thought the banks could give the general public some respect instead of treating us like cash machines. I think there is a small but obvious gap here for some honest, ethical, banking….any takers?
