Thrifty Loans

More accusations of profiteering have been levelled against Britain’s mortgage lenders as they have put up the rates on tracker mortgages since the base rate was reduced in early February.

Cheltenham & Gloucester has announced that it has raised its rates on new two-year trackers by 0.2%. Comparable products at Lloyds TSB (part of the same group as C&G) are also expected to rise in a similar way very soon.

These rises follow an increase in tracker rates by Halifax on 22 of its products for new customers – again by 0.2%.

More lenders are expected to follow the examples of these big lenders, which flies in the face of requests by Prime Minister Gordon Brown and Chancellor Alistair Darling to pass on the recent bank of England rate cut.

Banks and Building Societies claim they have to raise rates as money has become more expensive for them since the credit crunch took a grip. However, they have been accused of protecting their profit margins as other revenue streams have dropped.

Eddie Weatherill, chairman of the Independent Banking Advisory Service campaign group, said: “The banks are greedily trying to retain their profit margins. They are all going to do this, because they can all get away with it. The FSA isn’t going to do anything, because banks have been through a traumatic time in the last six months. But it’s now impacting on customers in a very, very serious way.”

Last week the Financial Services Authority warned that 1.4m homeowners coming off cheap mortgage deals this year will be at risk of defaulting as they will face steep rises in their repayments, just at a time when other household bills are on the increase.

Mr Weatherill added: “Banks have been profiteering right up to the credit crunch, and now customers are faced with picking up the pieces. We have a market sector that’s almost allowed to get away with murder, profiteering to a ridiculous extent.”