Bailed out banks not helping mortgage borrowers

Category: Mortgages
Date: 3/8/2010

A number of banks rescued by the taxpayer during the banking crisis are charging higher than average rates on their mortgage products, research from Moneyfacts.co.uk has revealed.

State-backed banks such as Cheltenham & Gloucester, Halifax and Northern Rock all stand accused of being less than supportive to borrowers over the past year, although Royal Bank of Scotland was found to have performed well.

While some of the biggest lenders have increased their competitiveness over the past 12 months, others appear less willing or able to do so.

For a two year fixed rate mortgage at 75% loan to value, the average rate across the whole of market stood at 4.19% at the beginning of March, compared with 4.57% from Cheltenham & Gloucester, 4.37% from Northern Rock and 4.27% from Halifax.

Although the highest average rate was found to be from Nationwide BS, at 4.73%, it is thought that stricter rules for building societies over funding and capital reserves could be hampering its ability to compete.

The best deals were found to be available from Royal Bank of Scotland (at an average rate of 3.84%), HSBC (3.99%), Woolwich from Barclays (4.06%) and Santander (4.14%).

"Many hoped that the state owned banks would be at the front of the queue for unlocking the mortgage market, but this isn't the case," said Michelle Slade, spokesperson for Moneyfacts.co.uk.

"Some state funded banks appear to place a higher priority on getting out of Government ownership, rather than helping with competitive rates the customers who supported them."

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