What do you associate with 1 May? Springtime? Maypoles? Flowers? Workers’ rights? Well this year more than a million consumers will be marking May Day as the day their mortgage payments went up.
Do you have a mortgage with Halifax, The One account, Clydesdale and Yorkshire bank or the Co-operative?
If so you’ll spot (and should have been forewarned) that the standard variable or variable rates increase today.
With Britain back in recession, it’s not exactly reassuring news for mortgage borrowers. Which? research found that 70% of mortgage-holders are concerned about an increase in interest rates and many have aired concerns that these rises can not be justified.
When Halifax announced its increases, Which? Convo commenter Karl declared his concerns:
‘This is a bank that has been saved by the tax payer and yet feels the need to extort more revenue from its customers. Many of its customers have lower real incomes, higher food, fuel and petrol costs and real job insecurity.’
Banks set to benefit from mortgage rate blossom
These mortgage providers aren’t the first and are unlikely to be the last to bump up their prices. If you’re an RBS/Natwest customer, and have an offset mortgage, you will have already been hit with an increase in rate.
And Bank of Ireland customers are due a whopping 1.5% increase on its standard variable rate spread into two chunks with 1% applied on 1 June and 0.5% on 1 September.
Altogether, we estimate that these changes will increase yearly mortgage payments by £300m across the mortgage market.
Three quarters of mortgage holders told us that they would be affected if their repayments increased by £50 per month. To meet these payments, 41% said they would need to cut back on regular spending, 20% reduce savings and 11% would not have enough money to buy food and other daily essentials.
Mortgage prisoners behind interest rate bars
Sadly some of you may find you’ve become a ‘mortgage prisoner’ unable to move lender to get a better deal. And there may be little that you can do to protect yourself against further rises. Are you a ‘mortgage prisoner’ unable to switch lender?
We want to see lenders and the Financial Conduct Authority (the subject of our Watchdog not Lapdog campaign) do more to protect consumers against unjustified interest rate rises and ensure that consumers are offered the ability to fix their payments at a reasonable level.
Are you affected by the rate rises? Have you approached your lender about moving to a fixed-rate deal – did they offer a competitive deal or has it tempted you to move?
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