Kate Hughes: Lenders come up with new tricks
Saturday 19 April 2008
If the banks thought they would stave off accusations of mortgage profiteering by reducing a couple of standard variable rates in line with the latest rate cut, they are mistaken.
This month they grudgingly decided to cut interest rates after being severely criticised for ignoring the bank's previous 0.25 per cent drop and failing to pass on savings to their customers at a time when homeowners need all the help they can get. (In fact, Northern Rock didn't even do that this time around, dropping their rate by just 0.1 per cent, which is pathetic regardless of who is pulling the strings.)
But that doesn't mean customers will now get a fair deal, it simply means mortgage lenders come up with other dirty tricks. The fees and conditions that you may now have to kowtow to are increasingly crippling, and the worst part is that this could be the thin end of the wedge.
The latest survey on mortgage fees has found they have doubled in just 12 months. The best two-year fixed-rate deals now come with average fees of £1,478, up from £999 says mform.co.uk. The best three deals were just £578 last year, but you will now have to fork out £1,132. And banks have quietly edged up interest rates on fixed rates, making announcements at the last minute, and at odd times in a bid to get away without having to come clean about their price hikes. Nationwide, for example, chose last Thursday – when all eyes were on the Bank's decision to drop rates – to increase their fixed interest rates by up to 0.32 per cent.
The Bank of England has cut rates three times in five months, but unsurprisingly, banks are not playing ball on fixed rates interest rates either, mform found. Last October – when the Bank's rate was 5.75 per cent, and the average interest rate of the top five two-year fixed-rate mortgages was 5.67 per cent. Today, the Bank's rate is 0.75 per cent lower, but the average rate for the best two year deals has only come down to 5.59 per cent. Three year fixes have seen a similar tiny reduction with the average rate of the top five deals moving from 5.83 per cent to 5.66 per cent.
But lenders are increasingly imaginative in their profit building. One of the most worrying moves has to be the One Account's decision to make all new mortgage customers pay their salary into a One Account current account. So not only does that mean they earn the interest on your mortgage, they also get to play with your salary. Meanwhile, First Direct has decreed that they will now only lend to their own customers.
If other lenders decide that this is a good idea, we could soon find there are more boxes we have to tick just for the honour of being allowed to pay a lender their extortionate interest rate, and the whole thing becomes impossibly complicated.
We could easily end up with all our financial products with one bank, simply because no one else wants to know regardless of risk, if we don't jump through a mindless number of hoops. If that occurs, the interest rates we pay become a free for all, and I can't shake the image of bank bosses salivating at the thought of millions of us stuck like fish in a barrel.
Forget Brown's gimmicks, if we become trapped by T&Cs, lenders can charge us whatever they like for their mortgages and bestow as little as they like for our savings. Profiteering? Absolutely.
Donald MacInnes: Who would want to be a Barbie girl in a non-Barbie world?
Mark Dampier: How to get an income now that savings are past the 'use by' date
Thousands of UK investors could lose out following collapse of Secured Energy Bonds
Bargain Hunter: Fly off for a winter break in France or Portugal for well under £100
Millions in line for compensation after being sold unnecessary credit card cover
- 1 Stephen Fry explains what he would say if he was 'confronted by God'
- 2 City traders pay £200 for a quick hangover cure
- 3 Venezuela Expo Tattoo 2015: Extreme body art from 'Vampire Woman' to 109mm earlobes
- 4 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 5 Ball pool for adults opens in London
Stephen Fry explains what he would say if he was 'confronted by God'
9 reasons Greece's experiment with the radical left is doomed to failure
Have we reached 'peak food'? Shortages loom as global production rates slow
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Liberal Democrat minister defends comments suggesting immigration causes pub closures
President Putin is a dangerous psychopath - reason is not going to work with him
iJobs Money & Business
£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...
£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...
£13000 per annum: Recruitment Genius: This Pension Specialist was established ...
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...
Day In a Page
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion