Rates lowering but mortgage costs still high, says John Charcol
Mon, 14 Sep 2009
One of the mortgage markets most prominent firms, John Charcol, has recently said that despite cuts to mortgage headline rates, mortgage borrowers are having to pay increasingly more for their borrowings.
The independent mortgage broker believes lenders are tenaciously trying to increase their profit margins, despite the Monetary Policy Committee holding base rates steady at 0.5% for the 7th consecutive month.
These increased profits are achieved by selectively applying low rates to mortgage products that require ‘fringe spending’, such as a arrangement fees or larger deposits that cut the lenders borrowing costs.
Some lenders are bucking the trend however, such as HSBC's current 3.89 per cent, 90 per cent loan-to-value deal.
Mr Boulger reportedly commented: "Despite some lower mortgage rates, lenders' average gross margins have widened further over the last month."
The Council of Mortgage Lenders has recently said many commentators give too much weight to the base rate when discussing the setting of mortgage rates and too little weight to other considerations.