Mortgage rates 'becoming less affordable'

03/06/2009

Britain's mortgage lenders have failed to pass Bank of England rate cuts onto customers, new figures from Moneysupermarket.com have revealed.

The typical Standard Variable Rate (SVR) offered by the firms was found to have fallen by 0.36 per cent to 4.56 per cent since February.
This is over four per cent above the Bank of England's base rate, which stands at an all-time low of 0.5 per cent.

The Bank of England has cut its rate because it wants to boost lending flows to customers, keeping credit cheaper and limiting repossessions numbers.

However, the gap between the base rate and the average SVR was found by Moneysupermarket.com to have increased by 0.64 per cent since February.

Louise Cuming, head of mortgages at moneysupermarket.com, said: "There is an increasing gulf between the lowest rate SVRs on the market and the highest as providers try to claw back profits.

"People must pick their mortgage carefully and take the default SVR at the end of the deal into consideration."

Figures from mortgage lenders showed that UK repossessions rose by around 40 per cent to hit 40,000 in 2008.

The total is expected to rise to around 75,000 this year as the recession drags on.

Tags; Housing Debt and Bills, Young Family Finances,

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