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Banks profit due to high mortgage margins


A new report has shown that banks have increased there profit margins on mortgages since last year.

According to, the variation between the Bank of England’s standard rate of interest and an average tracker mortgage has increased from 1.18 per cent to 3.20 per cent since April last year.

Borrowers who are already on a tracker mortgage will benefit from the decrease in interest rates which have been on an all time low of 0.5 per cent. On the other hand, new borrowers will be affected badly.

Spokesman for Coreco mortgage brokers, Andrew Montlake commented: "Banks are taking the opportunity to widen their margins to claw back of the profits that they've lost during the credit crisis. Every time they launch a new range of deals, the margins seem to be even bigger, specifically on tracker rate deals."

According to further research, the average interest rate on a 2 year fixed mortgage is 4.64 per cent and a 2 year tracker mortgage is 3.70 per cent.

Michelle Slade from has commented: "Since base rate started falling in October 2008, mortgage lenders have continued to increase their margins. While existing tracker customers have benefited, anyone looking for a new tracker deal has seen the margin over base continue to increase. The vast majority of providers have passed much bigger cuts to their savings rates, when compared to their standard variable rate as once again they increase their margins."

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