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Tabloid tales about stealth mortgages are out of date

I see the The Mail on Sunday’s personal finance section has been having a rant at lenders that have widened the margin between their SVR and base rate.

The headline message, reinforced in red print, warned of the ‘stealth mortgage’ with which these lenders are penalising their borrowers. Oh dear, what are the journos on? And where have they been?

With media scrutiny of every move lenders make – particularly in the tracking of interest rate movements – who’s left to be surprised by this revelation?

Borrowers have never been so well informed about mortgages and I doubt there’s a home buyer around who doesn’t understand the principle of shopping between lenders to find a better deal.

And even if they’ve missed all the advice on this subject available from consumer protection programmes, their intermediary’s advances or the morass of mortgage-related magazines, lenders themselves have been banging loudly on the drum for years.

In my view, far more reprehensible and a much more deserving target than a bit of rate widening – which can usually be avoided – is the fact that some lenders, notably Halifax and Abbey, are still denying existing customers the right to transfer to the better deals they offer to attract new customers. Can you believe that in the 21st century this is a sustainable position? No, of course you can’t because it’s morally indefensible.

Coincidentally, I’ve just received a letter from my lender reminding me that a couple of my own fixed rate deals revert to SVR next month.

The letter also quotes monthly instalments which, unsurprisingly, are significantly higher than my current repayment. Unless they’ve assumed that, like current school-leavers my education has left me short of reading skills, how stealthy is this?

OK, the letter didn’t conform to RNIB guidelines for big print. But even though advancing years are causing other bits of my body to drop off or malfunction, my eyesight can still cope quite adequately with an Ariel typeface in a size 10 font.

I certainly wasn’t happy to pay more but just one telephone call to the local branch – not call centre – ensured I wouldn’t have to. Within 24 hours, stealthy old C&G had confirmed its best deals available to me and we’d started the process for me to obtain one of them.

Simple, painless and I’ve saved myself a couple of hundred quid a month.

And guess what? The lender does this for all its borrowers, not just former employees. And if this isn’t enough good news for one day, I’m reliably informed that the majority of other lenders do the same. Really sneaky, eh?

I accept that borrowers still need to remain alert but is this unreasonable? And yes, mortgages with lock-ins will incur a base rate overhang period made more costly by SVR widening.

But with so much upfront detail accompanying mortgage loans these days, I’d be hard pressed to conclude there was much stealth attached even to these.

peter mounty

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