Despite the Bank base rate being held at 0.5%, lenders are increasing average contractor mortgage rates, widening the margin above the Libor, according to Moneysupermarket.
The firm said the widening gap showed that the Bank of England (BoE) was ‘increasingly toothless’ when regulating the cost of mortgages, with lenders increasing profit margins at the expense of their customers.
Louise Cuming, head of mortgages at Moneysupermarket, says: “In the last few weeks we have seen the margin between average mortgage rates and the Libor rate gradually creep up, despite the static Bank of England Base Rate.
“Lenders are benefiting from the fact that demand for mortgages outstrips the supply of mortgage deals and, as with any market, when supply is limited it causes prices to rise.
“Despite the Government’s best intentions to ease the mortgage market, borrowers are still suffering as providers use every sneaky trick in the book to claw back profit.”
There are now high street lenders providing contractor mortgages based on assessing contract annual earnings alone. The mortgage loan can be as much as 5 times your contract rate.
