Mortgage lenders are “profiteering” at the expense of borrowers by imposing high standard variable rates, according to MoneySavingExpert.com founder Martin Lewis.
Speaking in an interview with The Guardian this weekend, Lewis said he had “huge worries” about the mortgage market and urged borrowers to consider remortgaging now to avoid an interest rate hike that could send monthly payments soaring.
Lewis says: “I have huge worries about the mortgage market. My concern – and I’ve raised it with George Osborne – is that mortgages are the most expensive they have ever been. Yes, the Bank of England base rate is 0.5 per cent, but the standard variable rate at lots of lenders is 3, 4 or even 5 per cent above base rate.
“If base rate goes back anywhere near to where it was before the crisis, you could see people on 9 per cent. Partly it’s because [lenders] have new capital requirements. But some of it is plain profiteering.”
Earlier this month, brokers slammed lenders for “cashing in” through rising SVRs and suggested firms are attempting to compensate for falling headline mortgage rates.
Experts predict SVR hikes could eventually end the current remortgage slump as borrowers are pushed to address their financial circumstances before interest rates start to rise.