Home owners pay £1,700 a year more for fixed-rate mortgage deals

[AtW]

Home owners are paying £1,700 a year more for fixed-rate mortgages as banks enjoy record profit margins.

Despite receiving billions of pounds in taxpayer support during the credit crisis, high street lenders are refusing to pass on the full benefit of historically low interest rates to customers, figures show.

Instead, they have used the cheap cost of borrowing to drastically increase their profit margins.

Two years ago, the difference between the rate at which banks themselves borrowed money and the rate they offered to customers for fixed-rate mortgages stood at 1.28 per cent.

Today it has risen to 3.29 per cent for a two-year fixed-rate deal, the highest gap since records began 21 years ago, according to Moneyfacts, the personal finance website.

The increase — which has taken place despite the Bank of England rate remaining unchanged at 0.5 per cent since January 2009 — means that on a £150,000 mortgage, the banks have taken an extra £149 a month for themselves, rather than share the benefit with customers.

This is equivalent to an additional profit of £1,778 in a year and £3,576 over the two-year term

More: Home owners pay

[SupremeSpod]

Yeah, who would've thought that interest rates may actually go the "other" way?

Non story. That's the gamble of a fixed rate mortgage.

[TimberWolf]

4% is still relatively low though, especially when inflation is 3% [and the rest]. It's savers who are picking up the tab ultimately.

[Mich the Tester]

Yeah, who would've thought that interest rates may actually go the "other" way?

Non story. That's the gamble of a fixed rate mortgage.

whs

I have a Dutch mortgage, interest fixed at 5.6% for 20 years. I could have got 5.2% fixed for 10 years or 4.5% not fixed at all. I pay extra for knowing exactly how much I have to pay; sometimes I end up paying a bit more than others, sometimes a bit less, but always the same amount each month.

It's one of the few services offered by the financial industry that I consider truly useful.

[lilelvis2000]

Banks are grabbing profits in other areas as well. I've just got a letter that nationwide is raising the commissions and charges for using debit cards abroad. They also have dropped the interest rate on current accounts to 0% and "rebalanced" their charges in other areas. As well as forcing people withdrawing money to use the cash machine.

And this is Nationwide which I thought was a respectable building society.

My biggest peeve with the British banking system is the ease with which they merge or buy each other out. hardly makes for a "competitive" environment.

And then there's the "national" bank - northern rock. 100% nationalised and still ripping customers off.