Kate Hughes: Lenders come up with new tricks

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.

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