Only 12 months ago, prime minister Gordon Brown tried to persuade more people to take out 25-year fixed rates ‘as a matter of course’. Any borrower who listened and locked in at a rate of around 6% will have felt as sick as the proverbial parrot this week, after the Bank of England slashed base rate to a 53-year low of 3%. Still, 20/20 hindsight is a wonderful thing.
Having fortunately been ignored on the subject of long-term fixed rates, Gordon Brown is reportedly hopping mad that mortgage lenders are also ignoring him by refusing to pass on base rate cuts in full. He has been shouting about it for some time, but most lenders have carried on their own merry way regardless. Ironically, state-owned Northern Rock is the worst culprit when it comes to bucking the rate trend.
Lloyds TSB/C&G has been playing nicely with the Government since it backed the HBOS takeover, and was the first to announce that it would pass on the full reduction to SVR and tracker mortgage customers – but not before it withdrew many of its trackers for new customers.
More than 30 lenders have so far followed suit and pulled tracker deals, but signally failed to announce how much, if any, of the rate reduction they would pass on to borrowers.
So what can our illustrious leaders do to ensure that lenders reduce rates and increase the availability of mortgages to borrowers? Perhaps they could commission David Miles, a handsomely-rewarded consultant, to spend a year compiling a report on the mortgage market at the taxpayer’s expense. Oh no, that’s been done before. And the conclusion was… borrowers should take out 25-year fixed rate mortgage deals to ensure the stability of the market. n
