Sound familiar? The UK is seeing the same situation as the US, that despite rate cuts by the central bank to banks, rates to customers have stayed high. In the US there has been some movement down though nothing in comparison to the rate drops that banks have received. A few stories have popped up in the US media, one of which went as far as to say there really isn't any connection since the rates are out in an open market, blah, blah, blah. That spin reminded me of the administration spinning the oil increases after the invasion of Iraq. In the case of the banks, if the government - meaning us - is lending banks extraordinary sums of money, shouldn't the government - again, that is us - be able to dictate a few terms such as lower rates? But that might make too much sense and go against the long standing tradition of banks screwing customers.
Britain's largest mortgage lenders were last night accused of fattening their profits at the expense of increasingly stretched homeowners as two leading firms ignored the third interest rate cut from the Bank of England in five months and pushed through price increases on some of their most popular home loan offers.
The moves are part of an increasingly rapid withdrawal by lenders from the most competitive mortgage deals as the credit crunch continues to bite and house prices fall. The Bank's three rate cuts since December have failed to halt the retreat.
