Interest rates cut but mortgages still rise
Mortgage lenders were told they had been profiting from home loans days before the Bank of England brought down interest rates.
The Bank of England reduced the base rate from 5.25 per cent to 5 per cent. Alliance & Leicester were one set of lenders, which increased its rates twice in less than a week. They also raised their fixed-rate mortgage deals on Tuesday.
Director of Propertyfinder.com, Nicholas Leeming, commented: "Banks are nervous and it is mortgage borrowers who are suffering. Lenders are withdrawing from offering mortgages, and the deals which are on offer are extortionate."
A recent investigation carried out this week revealed how banks have started to short-change customers by fading to bring forward on the benefits of interest rate cuts.
Economic adviser, Roger Bootle commented: "The danger is a vicious circle of falling employment, lower house prices and weaker consumer spending."
Many experts fear that house prices could drop up to 20 per cent over the next 2 years. Halifax's monthly survey indicated that prices slumped to 2.5 per cent during March, this the greatest drop since 1992.
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