Banks in the UK are adding to the financial burden of households by having record level high interest rates on borrowing. The banks are charging record amounts of interest on credit cards, overdrafts and mortgages even though the Bank of England’s 0.5% base rate of interest is at an all time low.
The Bank of England’s figures show that the difference between the interest charged on mortgages and the bank’s base rate are at the highest level since records began.
Credit card borrowers don’t fare much better with the average interest rate being 17.3% which is the highest for 11 years, bringing accusations from experts that the banks are profiteering at a time when lending should be much more affordable.
The former chairman of the Treasure Select Lord McFall of Alcuith said that trust in the banking sector is being lost. He said “This inverse relationship between low interest rates and increasing charges by the financial community makes the public feel at a loss in terms of getting a fair deal.”
The BBA, which represents British banks, said that increased gap between the base rate and rates that banks charge borrowers does not mean that their profit margins are increasing.