Which? executive director Richard Lloyd said:
“While today’s data shows that some banks are using the Funding for Lending Scheme, it remains unclear whether this cheap finance is being passed on to the people who need it the most.
“There must be more transparency about how this subsidy is being used and clearer rules to ensure more borrowers can benefit, not just those with significant equity in their homes. This scheme should aim to help those who are struggling through no fault of their own, especially mortgage prisoners and first time buyers.”
Which? research found that half the population are worried about mortgage rates and a quarter (26%) of people with mortgages fear having their home repossessed.
Despite the Bank of England base rate remaining unchanged for more than three years, over 1.6 million people have been hit by increases to mortgage Standard Variable Rates since August last year. This means they are now paying about an extra £400 million a year in interest.
Which? is calling for:
- The Government to publish its expectations for the Funding for Lending Scheme and put clearer rules in place to ensure this cheap finance is passed on to mortgage prisoners and first-time buyers.
- Greater transparency from the banks and building societies who should publish details of their mortgage lending using the Funding for Lending Scheme.
- Banks to stop increasing mortgage arrangement fees, which have risen by around 60% in the past eighteen months to an average of £1,472 in August 2012, to bring down the cost of switching mortgage deals.