View more on these topics

Labour slams lenders for ‘sneaky’ SVR rises

Chris Leslie

Shadow Treasury financial secretary Chris Leslie has hit out at mortgage lenders for “sneaky” standard variable rate rises and called on them to do more to warn customers of potential rate rises.

Speaking at a fringe meeting on debt at the Labour autumn conference in Manchester yesterday, Leslie said it is “amazing” that rates are going up when funding is so cheap.

In August, Santander hiked its SVR by 0.5 per cent and earlier this year Halifax, Clydesdale and Yorkshire and the Co-operative Bank increased their rates. Which? estimates the rises will cost consumers more than £300m.

Leslie said: “Some of these decisions on SVRs are quite sneaky. I am very worried because there is the Funding for Lending scheme reducing their costs and they can even go to the European Central Bank to get great chunks of free money but, amazingly, customers’ costs are going up.

“I am worried we have come out of an era where the taxpayer was bearing the burden of recapitalisation of the banking system to an era where the customer will bear the burden.

“One area that won’t bear the burden is what they call compensation. If you look at how much of bank’s revenues go towards management remuneration it is vast, more than 50 per cent. It is very rarely squeezed but you can be sure the banks will say ‘we have to charge these fees to cover the costs of retail’ or ‘we need to charge for in-credit banking’. You watch them come after some of these areas but they will not go after the compensation and it is one reason we need transparency.”

Leslie says he is concerned about what will happen to mortgage holders when the Bank of England base rate begins to rise and interest rates increase.

He said: “What are we doing now to prepare people? It is no good telling people about various scenarios when they took out a loan 12 years ago. Lenders must remind people year on year. They should point out what could happen to them with interest rates and be aware of situations. So a mortgage rate forewarning is something we have been floating.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. “I am worried we have come out of an era where the taxpayer was bearing the burden of recapitalisation of the banking system to an era where the customer will bear the burden.”

    As a taxpayer, I certainly don’t worry about this happening. I don’t get a say in what taxes I pay-borrowers can look around and choose.

  2. Politicians accusing someone else of being “Sneaky”?

    Get a grip and take a long hard look at yourself, This is not a slant on the party in question it goes to ALL of you politicians.

    I am sick to the back teeth of funding monkeys to ruin our economy. Blantant lies to get into power then never follow through on their “promises” (LOOSEST terms possible)

    Go sort out the rest of the countries financial woes and leave moaning about SVR hikes to the professionals like us and the Joe Bloggs on the street who it will really affect, another expense to go along with your no doubt bloated, inflated, positively fruit-less and undeserved salary along with your cronies.

    Shut the door behind you.

  3. Farrell McManus 3rd October 2012 at 4:58 pm

    As Base rate dropped, the margin above Base charged on trackers widened. Lenders beware!

    Whilst I may have had to put clients into these “big margin” rates during this recession, as soon as base rises and the margins get trimmed(maybe) I will be shopping around for a better deal for clients.

    Lenders are taking advantage of the situation where under-pressure borrowers aren’t able to remortgage away from their elevating SVRs due to affordability, LTV or negative equity constraints, not to mention the draconian, revised lending criteria that has them in a straight jacket!

  4. @ Anonymous – Your last paragraph perfectly illustrates the attitude that will lead to a further demise of an already on its knees mortgage market –

    With the lenders standing by helplessly watching the money disappear from the previously laden pockets as a result of their stupidity and ‘eyes are bigger than the belly’ stance of taking advantage of people when their own furtures are out of their own hands.

Leave a comment