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Fury as interest rates are cut but mortgages still go up
BECKY BARROW
Daily Mail
April 13, 2008
Mortgage lenders were yesterday accused of cashing in on the credit crunch by raising the cost of home loans hours before the Bank of England cut interest rates.
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In an attempt to boost the ailing economy, the Bank yesterday reduced the base rate from 5.25 per cent to 5 per cent.
But the move came after two of the biggest lenders revealed plans to move in the opposite direction and raise their mortgage rates today.
One of these is Alliance & Leicester, which will have increased its rates twice in less than a week.
The firm raised its fixed-rate mortgage deals on Tuesday then just 72 hours later today.
On Monday, customers could take out a two-year fixed rate mortgage of 4.99 per cent. Today, the rate will be 5.74 per cent.
This means a customer who takes out the average loan of £158,100 with the bank today will need to find about £850 more in repayments this year than a customer who took one out on Monday.
The country’s biggest building society, Nationwide, will today also increase its prices for a sixth time since the beginning of the year.
With rates soaring despite the Bank’s base rate falling, homeowners are paying the price for the credit crunch.
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