Moody’s downgraded Lloyds Banking Group, Royal Bank of Scotland, HSBC and Barclays as part of a wide ranging lowering of global banks’ credit rating which it blames on significant exposure to volatility and risk of out sized losses
The consumer champion says the downgraded UK banks could all face higher borrowing costs leading to higher mortgage rates.
Richard Lloyd, executive director at Which?, says added the downgrades will lead to speculation that it will cause a further rise in mortgage rates.’
He says: ‘For too long banks have taken advantage of the lack of competition on the high-street to increase the interest rates charged on mortgages, loans and overdrafts, with over one million consumers seeing their yearly mortgage payments increase by over £300m with SVR rises earlier this year.
“This is why we cautiously welcomed the Chancellor’s recent “funding for lending” scheme. But we want to see strong safeguards in place to ensure that banks pass on this cheap credit to consumers.”