Consumer mortgage rates “obscene”

Mortgage rates for the average consumer have been dubbed as “obscene” by an industry expert – suggesting that those intending to take out loans for the first time could suffer from unfair pricings and take on more debt than is necessary.

Paul Holmes, chief executive of Firstrung – a company specialising in dealing with first-time buyers – noted that banks are unwilling to lend “unless it’s absolutely in their favour” and that to charge people ten or 12 times the Bank of England base rate of half a per cent “seems obscene”.

That said however, Mr Holmes also observed that – despite figures from the Council of Mortgage Lenders stating that borrowing is on the rise – banks are not lending to people as much as they once were.

His comments follow a report published by Countrywide Mortgage Services, which revealed that the most popular product applied for across the UK in August required a ten per cent deposit at an interest rate of 6.49 per cent.

By Sarah Adie