The Mortgage Advice Bureau has accused the banking industry of flying in the face of treating customers failry (TCF) regulations over its handling of the latest drop in interest rates.
The accusation follows a call from Prime Minister Gordon Brown for banks and mortgage lenders to pass on base rate cuts to hard-pressed borrowers.
The Mortgage Advice Bureau (MAB) says that lenders have been quick to increase their standard variable rates (SVR) over the past five base rate hikes, but have been much slower in passing base rate cuts to consumers.
Brian Murphy, head of lending at the Mortgage Advice Bureau, explains: “The letter of the law regarding mortgage rate changes following base rate directions appears less than consistent to borrowers.
“Over the past five base rate hikes lenders have made increases to their SVR rates almost immediately, however with a decrease they feel justified in staggering any changes – a practice which surely flies in the face of ‘treating customers fairly’.”
MAB says most borrowers are on tracker mortgages or fixed-rate deals and will not be affected, but warns borrowers not to retain their mortgage when their current deals expire as they face paying an inflated SVR rate.
The Bank of England is to announce its latest decision on interest rates later today, with some commentators expecting a rate cut after sales figures for Christmas were particularly poor.
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