Mortgage lenders profit from low base rate

Banks are pocketing extra cash rather than passing on lower interest rates to mortgage customers, a Daily Mail investigation revealed this week.

Homeowners are paying an average of £1,788 per year more than they should be as banks use the historically low base rate of 0.5% to shore up their ailing coffers.

Twelve months ago mortgage rates were just 0.5% above the Bank of England’s base rate. The margin has now increased to 2.61%.

Alistair Darling expressed “concern” at banks charging “more than is absolutely necessary”.

The Chancellor threatened to refer banks to the Competition Commission if they fail to pass on rate cuts soon.

In related news, mortgage lending in June reached its highest level since December, with £12.3 billion in mortgages granted.

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