The Government is being urged to ensure lenders do not use the recent Bank of England (BoE) interest rate cut to boost profits at the expense of borrowers on standard variable rate (SVR) mortgages.
LegalTech firm, ME Group, suggested that when the bank took similar action after the 2008 global financial crisis, lenders had failed to cut rates for SVR mortgage holders by an equivalent amount.
This, the LegalTech firm has argued, was intended to shore up their profits and protect themselves from the huge drop in people taking our new mortgages.
ME Group CEO, Rob Cooper, commented: “Overcharging could happen again during the Covid-19 crisis, especially as the Government has now stepped in to temporarily close down the housing market. This means new business for lenders will be almost non-existent.
“It is vital that regulators closely scrutinise the interest rate decisions taken by lenders and step in to stop any financial profiteering, which is subject to fairness tests of EU consumer law.”
Cooper also noted that even now, there are “hundreds of thousands” of homeowners currently paying more than they should for their mortgage.
He continued: “What’s even more worrying is that many of these are mortgage prisoners who have been prevented by lenders from switching provider. They will be stuck with punitively high interest payments with no means of moving their mortgage to another lender.”
Cooper revealed ME Group had assessed mortgages for tens of thousands of customers – many of whom it classed as “financially vulnerable” and owed billions of pounds by lenders – and highlighted FCA figures from 2018 that estimated 150,000 people were mortgage prisoners.
“We have made the Financial Ombudsman Service and the Financial Services Compensation Scheme aware of the scandal, but the wheels move very slowly and it could be many months before these cases are attended to,” Cooper added.
“What is vital is that borrowers are protected this time around so we don’t have another generation ripped off by greedy lenders.”
Latest News
NEW BUILD IN FOCUS - NEW EPISODE OF THE MORTGAGE INSIDER PODCAST, OUT NOW
Figures from the National House-Building Council saw Q1 2025 register a 36% increase in new homes built across the UK compared with the same period last year, representing a striking development for the first-time buyer market. But with the higher cost of building, ongoing planning challenges and new and changing regulations, how sustainable is this growth? And what does it mean for brokers?
The role of the bridging market and technology usage in the industry
Content editor, Dan McGrath, sat down with chief operating officer at Black & White Bridging, Damien Druce, and head of development finance at Empire Global Finance, Pete Williams, to explore the role of the bridging sector, the role of AI across the industry and how the property market has fared in the Labour Government’s first year in office.
Does the North-South divide still exist in the UK housing market?
What do the most expensive parts of the country reveal about shifting demand? And why is the Manchester housing market now outperforming many southern counterparts?
In this episode of the Barclays Mortgage Insider Podcast, host Phil Spencer is joined by Lucian Cook, Head of Research at Savills, and Ross Jones, founder of Home Financial and Evolve Commercial Finance, to explore how regional trends are redefining the UK housing, mortgage and buy-to-let markets.
In this episode of the Barclays Mortgage Insider Podcast, host Phil Spencer is joined by Lucian Cook, Head of Research at Savills, and Ross Jones, founder of Home Financial and Evolve Commercial Finance, to explore how regional trends are redefining the UK housing, mortgage and buy-to-let markets.
The new episode of The Mortgage Insider podcast, out now
Regional housing markets now matter more than ever. While London and the Southeast still tend to dominate the headlines from a house price and affordability perspective, much of the growth in rental yields and buyer demand is coming from other parts of the UK.
In this episode of the Barclays Mortgage Insider Podcast, host Phil Spencer is joined by Lucian Cook, Head of Research at Savills, and Ross Jones, founder of Home Financial and Evolve Commercial Finance.
In this episode of the Barclays Mortgage Insider Podcast, host Phil Spencer is joined by Lucian Cook, Head of Research at Savills, and Ross Jones, founder of Home Financial and Evolve Commercial Finance.
© 2019 Perspective Publishing Privacy & Cookies
Recent Stories