According to Moneyextra, banks look to make an extra £20.1 million per month from unsuspecting mortgage customers who are coming off fixed, discounted, tracker and capped rate deals and moving onto standard variable rates. Despite an unprecedented low base rate of 0.5% and an all time low LIBOR, banks are failing to pass on the full benefits to its customers.
While, banks have dramatically cut savings rates to an average rate of 0.58%, the average SVR on mortgages is a whopping 4.66% above base rate, compared to only 1.9% in Q2 2008 – representing a 145% increase in income in just 12 months.
Richard Mason of Moneyextra.com said, “This is blatant profiteering by our banks; they are shoring up their balance sheets by charging huge rates for existing borrowers but offering tiny rates to savers. While a lot of deluded customers have recently taken advantage of a reduction in their monthly mortgage payments, what they fail to understand is that the full benefits of the rate cuts are not being passed to them.”
Recent research carried out by Moneyextra.com reveals that the majority of people believe their mortgage lenders have dropped their SVRs inline with base rate, with homeowners believing that their lenders’ SVR is on average 1.77%. Only 5% of people surveyed guessed that average SVR rates are currently between four and four and a half per cent above base rate.
