Saturday, Jan 27, 2007
More dodgy tactics by the banks
Daily Mail: Homeowners can claim £200m over mortgages rip-off
Homeowners are expected to claim compenation totalling around £200million after paying rip-off mortgage charges. The FSA yesterday criticised mortgage lenders for their ‘exit fees’, which have surged over the last two years.
Posted by uncle chris @ 10:45 AM (167 views) Add Comment
4 Comments
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1. financial planner said...
Moneybox has just spent 10 minutes on this. Luvvly jubbly
This will put upward pressure on mortgage rates. Tee Hee...
2. sirgoogle said...
Lesson to all
Read-the-small-print
I am sure that getting the compensation will be like getting blood-out-of-a-stone (just like the misselling of endowments). It will take ages and will probably not be worth the effort or wait.
3. dohousescrashinthewoods said...
I can see financial industry bonuses slipping below the million mark next year
4. paolo88888 said...
For several years now a crazy situation has existed where mortgage rates are actually lower than savings rates. For example, at the moment one Building Society is offering 5.55% on instant access, and mortgages fixed to 2017 at 5.35%. Apparently if you then move onto standard variable rate your APR will be 6.1%. But canny borrowers will remortgage so there will have to be some extra charges if the institution is to be viable! Even suppose that borrowers do pay 6.1%, the gross margin of 0.55% sounds thin to me. Suppose a saver deposits £100k and a borrower takes out a £100k mortgage. Then each year the institution gets £550. This has to cover:
- staff wages
- branch purchase/rental/insurance/maintenance
- ATM networks
- Dividends to shareholders
- Cost of collateral to meet financial strength requirements (Moodys C - so perhaps not too much)
- Advertising
- Other costs of running a business.
I say all this because I think that the FSA may make the costs more transparent, by making institutions publish all-inclusive headline rates. But I am making this comment because I really don't understand the situation. Apparently banks make good profits, but I just can't see how its done.