Consumer press titles cited research by Moneyfacts.co.uk on how lenders reacted to Base Rate changes from November 2003 to December 2006. It highlighted the differences between rate rises in savings and mortgages, claiming savers were being short-changed, while mortgage borrowers were being overcharged.
However, Sally Lauder, spokeswoman for Alliance & Leicester, said: “We are certainly not ripping customers off and you can see that by the number of products we have available. Some lenders follow the Base Rate and some don’t and if customers feel they are not on a particularly good deal then it’s an ideal opportunity to get professional advice.”
Colin Snowdon, chief executive of Freedom Lending, stated that lenders were merely reacting to the Base Rate changes rather than looking to profit from them. He explained: “We price our products on the Base Rate, but fund them on LIBOR, which is constantly ahead and has been in a relentless upward cycle.”
Julie Gaskin, corporate relations manager for GMAC-RFC, added: “Some of what the national media comes out with can be quite dangerous. There had to be some changes in lenders’ rates and this makes people more cautious in the marketplace.”
Ashley Clarke, director of Need An Adviser.com, backed the lenders. He said: “For far too long, the British consumer has had it easy and not paid for their banking facilities. Yet, how do they expect financial institutions to make money? Banks are there to make money for their shareholders and consumers can always vote with their feet if they don’t like it.”
