Woolwich to raise interest rates

Published: November 05, 2008

Business Development Managers for Woolwich (Barclays) have been contacting mortgage brokers today to provide advance warning of an increase to their tracker rates of up to 0.3%.

With market commentators and others clearly expecting a rate cut of between 0.5% and 1% when the MPC meets tomorrow, there is growing disenchantment amongst mortgage advisers and others in the industry, that the banks are now using the rate cuts to help balance their books by increasing margins.

The Association of Mortgage Intermediaries (AMI) today called for the MPC to cut rates by 1% to help the economy as a whole, and the mortgage industry in particular, with Chris Cummings, AMI director general, saying: “While there has been significant activity to maintain our banking system, the actions have yet to work their way into the mortgage market. As a start, we urge the Bank of England to cut interest rates by 1%.”

Jerry Figueroa-Lee, Operations Director at The Mortgage Warehouse commented, “The move advised to us by Barclays today, that they will be increasing their margins on tracker rate products in advance of the Bank of England announcement tomorrow is nothing more than profiteering at the expense of the consumer.”

He further added, “When we questioned Barclays about this move, there was no real justification other than they need to control lending volumes and can’t afford to find themselves at the top being too competitive. In our mind this is nothing more than profiteering. A lifetime tracker rate in September was 0.69% over the Bank base rate giving a pay rate of 5.69%. The same lifetime tracker rate this month has been 1.29% above the bank base rate with the expectation now that the margin will move to 1.59% above the Bank base rate. In light of this we would challenge Barclays to justify this proposed move”.