This week interest rates were dropped by 0.5%, which you’d hope would give some reprieve to hard-pushed mortgage repayers. While we have seen some banks drop their standard variable rates, meaning some customers will be helped, I just received this e-mail from a mortgage broker (who has given me permission to publish it):
“We are a small company of mortgage advisers based in Essex, we have just received an e-mail from Abbey advising that as of midnight tonight, they are withdrawing all their Flexible & tracker mortgages, so we rang our contacts within the Abbey and were told that the new tracker & flexible deals will in fact be 0.5% higher than they are currently.
So, the Bank of England cuts rates by 0.5%, and the Abbey withdraw their trackers and replace them with new products 0.5% higher: so much for passing on the cuts to the consumer.
The money offered to the banks from the government was supposed to help them start lending again, yet it seems that all they are doing is increasing their profits.
We would be interested for you and your team to look at this further, we want to help our clients but it seems some of the lenders do not.
I think Frank’s e-mail says it all. This is a strange marketplace, and it’s slightly frustrating that lenders don’t help themselves by leaving some crumbs in the market at the moment.
Then again, with base rates dropping the profits on trackers drop strongly. Thankfully, there are some signs of fixed rates coming down, so it’s likely they’ll get relatively more appealing compared to discounts.