Cost of mortgages is still 'obscene'

16/09/2009

The cost of borrowing to purchase a home remains at an 'obscene' level, despite the fact that the base rate of interest is currently at an historic low, it has been claimed.

While the Bank of England recently moved to hold interest rates at just 0.5 per cent, Firstrung has argued that getting onto the property ladder is simply not an option right now for many people.

According to the company, competitive mortgages rates are only available to first-time buyers able to put down a deposit of around 40 per cent, while lenders offering mortgages of 95 per cent of a home's value are now levying rates of over six per cent, far above the base rate of interest.

Commenting on the attitude of UK lenders, Paul Holmes, chief executive of Firstrung, said: "It's not right and there's no excuse for it other than they now have to now make profit, they to make a lot of profit to pay back the loans and try to extricate themselves from government ownership."

"They basically don't want to lend unless it's absolutely in their favour," he added.

Tags; Housing Debt and Bills,

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