Consumer group Which slams banks over profiteering from Mortgage Prisoners

Generali

The trouble is if you're in negative equity then you are the subbiest of sub prime. The reason is because if the bank repossesses they will almost certainly lose money.

Banks will never give people in negative equity a special deal and nor should they.

noodle_doodle

If the base rate mattered, then SVRs wouldn't already be about 4% above that. Of course, there is no doubt the banks'd take a rate rise as an excuse to raise their rates, but they'd probably take a cut as an excuse to do that too. The banks don't give a scooby's, they just want to gouge their customers.

pinkteapot

nicko33 wrote: »

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

No, but people should think about the fact that when they take out a mortgage they are signing a long-term contract, often 20 or 25 years.

A lot of deals have an introductory rate and then an SVR. People need to look at this as a bonus offer for the first few years, followed by the 'normal price'.

Over the last five years or so there have been an increasing number of posts on the Mortgages board from people saying "My mortgage expires next month. What do I need to do?" They seem to genuinely think that at the end of their 2 year fix, they have to find themselves a new deal. Not want to; have to because it's over.

Alarming that people can sign such a significant financial contract with such a limited understanding of what it is. Maybe an overhaul of the Key Facts document is needed - words of one syllable and some accompanying drawings perhaps.

Re the statistic cited that around 45% of mortgages are on SVRs. These aren't all 'trapped' customers with very little equity. It will also include people who don't shop around and just carry on with their existing mortgage product (like the people who renew with the same car and home insurer every year).