"It is vital that regulators closely scrutinise the interest rate decisions taken by lenders and step in to stop any financial profiteering"
The Group has called for the government to ensure that lenders do not use the recent cuts to Bank Rate to profit financially at the expense of borrowers on SVR mortgages.
ME Group's CEO, Rob Cooper, said that when the Bank took similar action after the 2008 global financial crisis, lenders failed to cut rates for SVR mortgage holders by an equivalent amount. This, he said, was intended to increase profits and protect themselves from the huge drop in people taking out new mortgages.
Cooper said: “Overcharging could happen again during the Covid-19 crisis, especially as the government has now stepped in to temporarily close down the housing market. This means new business for lenders will be almost non-existent.
“It is vital that regulators closely scrutinise the interest rate decisions taken by lenders and step in to stop any financial profiteering, which is subject to fairness tests of EU consumer law.
“What’s even more worrying is that many of these are mortgage prisoners who have been prevented by lenders from switching provider. They will be stuck with punitively high interest payments with no means of moving their mortgage to another lender."
