Mortgage providers 'taking significant profit margins'

Date:Tuesday 20th July 2010
Author: Susanna Kavka has suggested mortgage providers are taking large profit margins when they lend out money to consumers.

Spokesperson for the website Michelle Slade predicted that this situation may continue for some time, as banks and building societies attempt to repair their balance sheets.

"Competition has returned to the mortgage market, but while rates are at their lowest level in seven years, the margins being taken by lenders continue to increase," she said

Ms Slade claimed that mortgage approvals are currently at record lows and one of the only ways providers are reducing interest rates on home finance deals is by cutting savings rates.

In her opinion, mortgage providers need to sacrifice their profit margins if they want to tempt customers to change from a standard variable rate arrangement to a fixed-rate contract.

This month, representative Darren Cook noted that savings rates have been falling, with instant access accounts at "rock bottom".