Invest & Fund blasts banks for keeping savings rates low
Invest & Fund has criticised banks for increasing interest rates on mortgages while not passing on similarly-sized increases to savers.
The peer-to-peer development lender said that P2P lending backed by residential property development is a great opportunity for people looking to expand their portfolios in the current market as savings rates fail to keep up with mortgage rates.
“Arguably, selling inflation-decayed-loss-making products out of one window whilst raising rates on debt products being sold out of the other hatch is unfair profiteering, but it’s somehow embedded in the rules of capitalism, but it’s a difficult argument to make given the times we are living through,” the firm said in a blog post on its website.
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UK bank bosses were summoned to meet with the Financial Conduct Authority today to justify why their savings rates on offer are widely different to mortgage rates.
The Bank of England raised the base rate to five per cent in its last meeting, while the average rate of a two-year fixed mortgage is 6.47 per cent, according to Moneyfacts data cited by Invest & Fund.
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Invest & Fund said there are three factors the banks may use as a defence – market conditions where mortgage bond yields are spiking; inflation; and the rising costs of origination.
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“Whilst this is argued through the system, we see a great opportunity here for the people looking to expand their portfolios to include P2P backed by residential property development,” said Invest & Fund, noting the “solid, stable returns on offer now”.