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State banks cost the borrower
BRITAIN’S state-controlled banks have been blamed for keeping mortgage rates artificially high.
Margins across the mortgage market have increased over the past 12 months, with the state banks the worst offenders, according to analysis by the Moneyfacts data firm for The Sunday Times. They account for about a third of all new mortgage lending, Lloyds Banking Group, 43% owned by the taxpayer, has the largest margin over the cost of funding on its two-year fixed-rate deals at 3.47%. Meanwhile Lloyds, RBS (84% owned by the taxpayer) and Halifax (part of the Lloyds Banking Group) charge the widest margins on five-year deals at 3.31% , 3.25% and 2.89%.
By contrast, HSBC, which received no taxpayer bailout, has the lowest margin at 2.71% for two-year deals and 2.56% for five-year deals.
Brokers said they would offer better rates if the state banks dominating the market had narrower margins.
Lloyds and RBS account for about 37% of all new mortgage lending, according to the Council of Mortgage Lenders. The average margin on rates has been at 0.37% since 1987, according to Capital Economics, the consultancy — so margins today look big on most measures.
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