Mortgage lenders need to set aside their desire for “profit opportunities” and begin to pass on the interest rate cut to consumers, according to the Homeowners Advice Centre.
Al Elliot, advisor for the firm, has called for lenders to “wake up” and realise their profit margins are going to be lower over the coming 12 months, while at the same time increasing mortgage options available to customers.
“All lenders [need] to undertake to pass on interest rate decreases straight away, allowing borrowers to benefit from the lower standard variable rate,” he explained.
However, Mr Elliot warned that this may be unlikely due to pressure on banks from stakeholders to offset subprime portfolio losses, adding that repossession rates over the coming year could increase as a result.
Abbey has revealed it is in discussions with the Consumer Credit Counselling Service to offer customers facing repossession debt advice on how to meet their mortgage payments.
By Tom Musk