‘Bank margins currently at record levels’
August 5, 2010 at 1:32 pm
The same week that the new Business Secretary, Vince Cable, announced his intention to take on banks in order to create “a more competitive system where the customers are not ripped off”, research has emerged from Moneyfacts.co.uk which shows that bank margins are at record levels.
Recent figures revealed by Moneyfacts.co.uk show that the average rate of interest charged on personal loans is now 12.6%, 12.1% over the Bank of England’s base rate, with credit cards charging an average interest rate of 18.3% above base rate
Despite lenders being forced to try anything they can to cut rates on fixed rate mortgages in an attempt to encourage borrowers to move away from record low variable deals, banks have increased rates on unsecured lending, with lenders taking record margins.
Michelle Slade, spokesperson for Moneyfacts.co.uk, has suggested that “customers successfully applying for unsecured credit are paying a heavy price as the increased risk is passed on through increased margins”. Slade continued to state that “until banks and building societies repair their balance sheets, it’s highly likely these increased margins are here to stay”.
As banks continue to pay out bonuses to staff, it appears that customers are once again bearing the brunt of costs. The research by Moneyfacts.co.uk suggests that unless the current government is able to force banks to change their practices, something that Mr Cable has identified as a key test for the coalition, customers will continue to ‘ripped off’ by banks using them to pay for their mistakes.
