Consumer Action Group brands interest hikes shocking - as Co-op become the next bank to raise SVR
For those who have been watching the news on interest rate hikes in the hope that their mortgage will stay affordable, Co-op has made the possibility of any banks remaining steady with their current interest rates seem unlikely, by becoming the next in a long line of lenders to push up their interest rates, and thus pushing up the monthly price of their SVR mortgages.
Co-op have moved their interest rates up 0.5% to 4.74%, joining Halifax, Bank of Ireland, Clydesdale and Yorkshire banks who have already pushed their interest rates up. Experts predict that many more banks and lenders will follow suit over the next couple of months, meaning anyone currently on an SVR mortgage will be nervously waiting to find out what the outcome will be on their own mortgage repayments.
The Consumer Action Group, speaking out about the move, branded this trend as ‘shocking’, taking into account how weak the economy is at this time and how many homeowners are already struggling with their monthly repayments, the group insists that trends such as these are bound to lead to serious problems within the mortgage market as homeowners become mortgage prisoners, and are unable to move from a mortgage that they nonetheless cannot afford. This could mean that in the long run, neither banks nor customers win out, as the borrowers are unable to keep up with payments and face losing their homes, but even if the banks do reclaim properties from customers who have defaulted on their mortgage there is no guarantee that they will be able to recoup their money. In the current climate, property prices are falling and many homeowners are already facing the fear that their home will go into negative equity. If this happens and the homeowner cannot pay back the loan, the bank may still not be able to make back their money on the sale of the home, leaving them out of pocket as well.
Banks insist that this move is following the current financial trends, and is based on the changing conditions in the mortgage market as well as the increased costs of funding. As the Bank of England base rate has not moved for three years and does not look likely to rise from its historically low current point of 0.5%, banks insist that pushing up their own rates is the only way to recoup money they have lost over the past few months.
Article by: Taj Kang, Associate Director at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager.
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