All the news surrounding the big lenders recently seems to be of the same variety. Lenders are upping rates constantly, the latest figures showing that fixed rates are unlikely to drop below 6%.

The big banks have also started to dual price their products making it more difficult for consumers to warrant using an IFA to secure a mortgage. Looking at the bigger picture it is clear that the actions taken by the banks to preserve themselves is adding to the soaring UK repossession toll. Consumers coming out of fixed deals will find themselves with a mortgage they can no longer afford; something the Banks will say is an effect of the credit crunch which has forced them to raise rates.

However, there are a number of people that believe that these rate increases are actually just benefitting the banks as they are reducing their lending book and reassuring their shareholders that they are making steps to preserve themselves from the credit squeeze. Properties that are inevitably repossessed because of rate increases will mean that lenders retrieve the money they are owed in a way that is best for them.
A concerned broker felt moved to write to us, he said: “These larger companies are totally responsible for the credit crunch as they initiated this by lending irresponsibly. They have a lot to answer for.”

In the same way that the crunch occurred through selfish and irresponsible lending, there could be a case to say that such cautious lending is again at detriment to the wider economy and in its self exacerbates the crunch.

Lucy Trueick