Lenders 'should give customers a break'

Posted: 28 Oct 2008 13:11:24 GMT

Mortgage lenders should "wake up" to the current economic situation and pass on interest rate decreases to their customers.

That was the advice issued recently by the Homeowners Advice Centre, which said that the coming months are about consolidation of finances rather than "exploitation and profit chasing".

Al Elliot, an advisor at the centre, urged lenders to help homeowners by passing on base rate cuts immediately and also by offering them a lower standard variable rate on their mortgage.

He said that the government and the Bank of England's monetary policy committee (MPC) were helping homeowners struggling to make repayments by keeping interest rates low and increasing stamp duty land tax bands.

However, Mr Elliot predicted a rise in the number of repossessions this year, adding: "With lenders' stakeholders pressuring the banks to offset the massive losses from their sub-prime portfolio, I can't see them passing up profit opportunities."

At the beginning of October, the MPC voted to reduce interest rates by 50 basis points to 4.5 per cent, however this did not stop the Council for Mortgage Lenders predicting this month that some 45,000 homes will be repossessed in 2008.

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