Mortgage lenders fail to pass on savings

The vast majority of lenders failed to fully pass on cuts in the base rate to their Standard Variable Rate SVR mortgage customers, it has been revealed.

New research from Which? found that 95 per cent of lenders did not pass on saving they incurred when the base rate dropped between October 2008 and March 2009 when it hit the record low of 0.5 per cent, those seeking cheap mortgages were told.

The consumer champion has warned that a rise in the base rate by just one per cent on a 20-year mortgage of £200,000 could see homeowners paying an extra £50 a month.

On the average SVR, banks are now charging mortgage rates of 3.48 per cent above the base rate, compared with 1.95 per cent in September 2008, with only Cheltenham & Gloucester and Lloyds TSB Scotland passing the savings on in full.

The Council of Mortgage Lenders told those looking for cheap mortgages that the market has fundamentally changed since 2008, with operating costs increasing significantly.

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2011-06-22 13:12:31 © Moneyextra.com