According to Moneyfacts, borrowers opting for unsecured lending face rising rates as the bank base rate becomes even more disjointed. And those who want a fixed-rate mortgage are having to pay over the odds.
Commenting, Michelle Slade, spokesperson for Moneyfacts.co.uk, said: "Competition has returned to the mortgage market, but while rates are at their lowest levels in seven years the margins taken by lenders continues to increase.
"The mortgage market remains disjointed from the swap rate market, which has traditionally been the barometer of fixed rate mortgages.
"Many providers continue to raise on balance sheet funding through premium priced longer term bonds.
"As lenders look to reduce mortgage rates further, savers end up paying the price through lower savings rates.
"If lenders truly want to tempt borrowers off record low standard variable rates, they need to reduce rates further and sacrifice margins.
"Mortgage approvals remain at record lows and it seems that only a bank base rate rise will kick start the remortgage market.
"Despite the UK economy moving out of recession, a number of market indicators and sentiments remain subdued for unsecured lending.
"Recent announcements by the Government point towards large scale public sector job losses, which will continue to have an adverse impact on lenders' appetite to lend.
"Customers successfully applying for unsecured credit are paying a heavy price as the increase risk is passed on through increased margins.
"Until banks and building societies repair their balance sheets, it’s highly likely these increased margins are here to stay."
