Consumer group Which slams banks over profiteering from Mortgage Prisoners

Graham_Devon

Nearly one million homeowners are trapped in mortgage deals where, despite a background of falling interest rates, borrowing costs have recently increased or are about to.

These are ‘mortgage prisoners’ because they have less than ten per cent equity in their homes, the typical minimum required for them to remortgage elsewhere.

Critics say some lenders, most of which are mainstream and include large banks such as Santander, are increasing mortgage rates knowing that a high proportion of their customers are powerless to move elsewhere.


Most of the victims are younger homeowners who bought or remortgaged recently. They tend to have larger loans, reflecting the higher house prices of recent years.

Consumer group Which? has slammed the banks for hitting the most vulnerable customers at a time when the Government is supposedly helping reduce the cost of their access to funds.

‘The banks are profiting from mortgage prisoners, while giving better deals to new customers with larger chunks of equity in their property,’ says Peter Vicary-Smith, chief executive of Which?

Basically the article is saying that people having bought recently who revert to SVR's have little chance of switching to a better product, and are therefore prisoners on the SVR, while lenders have hiked the SVR's or imposed caps on how low the interest rates will go.

The banks refuse to publish the amount of borrowers on SVR, but it's estimated to be 45% of the total market, and rising.

My thoughts is that this will make any increase in interedt rates even less likely, as it grows more and more damaging as each month passes.

http://www.thisismoney.co.uk/money/mortgageshome/article-2196767/Plight-homeowners-locked-loan-prison.html

HAMISH_MCTAVISH

Graham_Devon wrote: »

this will make any increase in interedt rates even less likely, as it grows more and more damaging as each month passes.

Absolutely correct.

Well done Graham.... You're finally catching on.

CLAPTON

better the BoE use the new 80 billion to lend directly to people and businessess than give cheap money to the banks

Graham_Devon

HAMISH_MCTAVISH wrote: »

Absolutely correct.

Well done Graham.... You're finally catching on.

I actually suggested the longer rates stay low, the harder it will be to increase them around 2 years ago.

I believe you suggested this was nonsense, as people paid higher rates in 2007, so could afford to do so again.

I believe what you don't agree with is this: The longer rates stay low, the bigger the problem gets. All you are interested in rates staying low as long as possible. You are not interested in the side effects.

ILW

I would have thought it just demonstrated how the BoE have totally weakened their position to a point where base is nearly irrelevant. Those with influence have stopped taking much notice of Merves ramblings.

Loughton_Monkey

One million people "trapped" in SVR mortgage deals! Why trapped? Because they could not obtain their reasonably priced mortgage product at any price elsewhere.

The solution is to make mortgage deals like insurance. An annual contract only. Then chuck these whingers out if they don't qualify at next renewal. This might make them cough and splutter and realise how lucky they are!

Don't know why, but I picture you, Graham, going for a walk in the Yorkshire Dales on a very hot day. You take a wrong turning. You lose your map. You walk 15 miles in the wrong direction. You're absolutely dying of thirst. You turn a corner and stumble across a pub. You walk in, tongue hanging out. "A pint of best, please" you say. "That's £3.60" say's the landlord.

You'd be coming here telling us how you were a "prisoner" in a "profiteering" pub, who had the audacity to charge £3.60 when your local only charges £3.50 on a Tuesday!

Did you post this for the simple reason it gives an example of a BTL landlord who believes he is hard done by?

Graham_Devon

You got all that from me posting that article?!

Love your imagination!

Loughton_Monkey

Graham_Devon wrote: »

You got all that from me posting that article?!

Love your imagination!

I think the other 42,590-odd may have come into it a bit.

abaxas

Let me get this right.

People are trapped by something they wanted,asked for, then signed the contract for.

LOL

nicko33

abaxas wrote: »

Let me get this right.

People are trapped by something they wanted,asked for, then signed the contract for.

LOL

Yes, they did it to themselves. Does that make them any less trapped?

JonnyBravo

Graham_Devon wrote: »

My thoughts is that this will make any increase in interedt rates even less likely, as it grows more and more damaging as each month passes.

Agree.
However inflation WILL escape at some point (and yes, with corresponding inflation in wages) which will eventually allow higher rates again.
Years away though.