Billions to be made on loans and mortgages by high street banks
18/11/08
High Street banks are due to make billions of pounds on lending charges from loans and mortgages. Over the next year, UK’s Bank’s are due to make back this money by increasing their charges on financial products such as loans, overdrafts, mortgages, credit cards, etc.
Just on mortgages Bank’s are due to make £1.5 billion extra according to figures from moneysupermarket.com.
Despite the drop in the Bank of England’s base rate, rates being charged have risen massively in the last year by an average of 1.24 percentage points. This will mean an extra £1.84 on an average loan balance of £1,824.
Gordon Brown said, “I think we have got to bring the credit card industry in to talk to them to join with us in establishing clear principles to apply to the costs people face on their existing debts.”
“Just as consumers are feeling the pinch, so too are banks, but unlike the average person who has to somehow trim costs from their everyday budget, banks can and clearly have been sneakily upping interest rates by 0.25 per cent here, 0.5 per cent there, in order to claw back some of their lost revenues,” said Tim Moss head of loans and debt at moneysupermarket.com.
“Whereas people can perhaps save £20 or £30 a week by being savvy spenders, our figures show banks creaming £3.9 billion more than we would hope and expect from their loyal customers who are saddled with a mortgage, credit card debt or loan.”
