A recent report has claimed that lenders are being accused to pushing customers onto expensive fixed rate mortgage deals that could see the amount that they owe go up by thousands of pounds.

Lenders are being accused to encouraging customers to come off standard variable rates, which at present are the best option due to the all time low base rate, and persuading them to opt for the more costly fixed rate mortgage option. This is despite the fact that many industry experts expect the base rate to remain low for quite some time yet.

Banks and building societies are also being accused of trying to get customers that are coming to the end of current deals to switch to more expensive deals rather than allowing them to revert to the standard variable rate.

Some are even being accused of failing to let customers know that they have the option of reverting to the SVR at the end of their current deal, making them think that they have to take out another deal that is more expensive than reverting to the SVR.

One industry expert stated: “Lenders appear to be encouraging borrowers on their cheap SVRs to switch to fixes; it is far from clear that this is the best advice. Borrowers may find that they are buying themselves security when there is little need to do so. When they come to the end of the deal, interest rates may be rising, and they will find themselves on a variable rate looking for another fix, which will inevitably be priced higher.”

There has also been controversy over the failure of banks to explain why it is a good idea for customers to pay a fee to switch to another deal, and an offiial from the Financial Ombudsman Service said: “We expect lenders to fully explain why it would be a good idea to get borrowers to pay a fee to switch deals. It is not enough simply to say ‘we don’t give advice’. If a customer feels that he or she is getting advice and it was not made clear that it was not advice, we will investigate.”

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