The great mortgage con

As the Bank of England (BoE) mulls over raising interest rates, all the personal finance journalists warn us that even a small rise in interest rates will mean much more expensive mortgages. But aren’t they forgetting something? The main mortgage lenders have tripled their profit margins on mortgages since the 2007 crash, making mortgages eyewateringly profitable for them.

When asked why mortgage rates keep increasing while the BoE has kept interest rates at 0.5%, the lenders claim that as the money they borrow on the open markets is becoming more expensive, they have to raise mortgage rates. Yet you can be sure that as soon as the BoE does raise rates, the lenders will suddenly claim that they have to follow suit. This is a lie. They are making historically record profits on mortgages. Even if the BoE put interest rates up to 1%, lenders would still be making massive profits without raising mortgage rates. But one thing you can be sure of, if the BoE moves, our mortgage payments will shoot up – after all, there are all those big bankers’ bonuses to pay.