Mortgage lenders 'are not passing on savings'

Date:Tuesday 25th August 2009
Author: Susanna Kavka has claimed that mortgage lenders are not passing on the savings they are making from the reduced costs on the swap rates market.

Michelle Slade, a spokesperson for the financial advice website, said that she believes lenders are making up for funds they have lost in the past by keeping mortgage rates high.

She commented that borrowers looking for a new mortgage deal now appear to be suffering these high interest rates because of the mistakes that lenders had made in the past.

"Lenders have always been quicker to pass on increases rather than decreases, but many seem to be reluctant to pass on any decrease in the current climate," she said. pointed out that the cost of funding on the swap rates market had gone down by 30 basis points, meaning the 3.14 per cent margin between the average two-year fixed rate mortgage and the two-year swap rate is the widest ever recorded.

Earlier this month, the website reported that the average deposit needed for a mortgage deal on a £150,000 house had nearly tripled since August 2007, from £13,500 to £39,500.