Teresa Hunter: Hungry hippos in banks leave little for homebuyers

Published on Thursday 19 August 2010 16:45

He thought he saw a Banker's Clerk Descending from the bus: He looked again, and found it was A Hippopotamus. "If this should stay to dine," he said, "There won't be much for us!"

LEWIS Carroll may have written these lines more than a century before the credit crunch, but he'd got banks sussed. Invite them to dine and there's seldom much left for anyone.

According to Moneyfacts, banks have more than doubled their profits from fixed rate mortgages, pushing up mortgage bills for average customers by 1,700 a year.

They have done this at a time when they are funded by taxpayer bail-outs and have been under enormous pressure to be more customer-friendly.

Their response has been to subject honest applicants to an ordeal by fire worthy of the Spanish Inquisition; before, more often than not, sending them away empty-handed. And all the time they wail their cupboard is bare.

Three years ago banks charged fixed-rate borrowers 1.28 per cent above the prevailing bank rate. Today the banks' margin has risen to 3.29 per cent.

To be fair, banks struggle to cover their costs with base rates at 0.5 per cent, and there are still some great floating deals for homebuyers. But consumers like the security of the fix, with nearly half of new borrowers pegging their rate.

Why do regulators and politicians find it so impossible to sort out the banks? On this page we report how attempts to end the scam of payment protection insurance over the past decade have proved largely fruitless.

The conclusion must be that banks are shameless. To quote another hippopotamus song, they don't care how deep in the brown stuff they sink ... as in "Mud, mud, glorious mud, nothing quite like it for cooling the blood, so follow me, follow, down to the hollow, and there let me wallow in glorious mud."

Wedding crasher

HOLIDAY and wedding firms are crashing round our ears. It must be August. SUN4U is the 13th travel firm to fold this year, followed shortly by Kiss Flights stranding thousands of customers abroad.

On the weddings front, the "best day of their life" is now in tatters for 1,100 brides after Confetti, which arranged the whole "dream" package, crashed.

The internet is a wonderful tool, and has revolutionised retail, but it can be a dangerous double-edged sword. A powerful mechanism for pushing down prices, it has also made it easier for anyone to set up in business.

Never has it been more crucial to check out precisely who you are dealing with, to avoid men of straw. It is easy to take money on the promise of providing a service at a certain price at some stage in the future. It is harder to provide those services.

Yes, we have just come out of a brutal recession, but I find the pattern of holiday companies and wedding firms going down, just as they are called upon to deliver, deeply sinister.It's like Christmas clubs collapsing in early December.

How do you protect yourself? With holidays, knowing which "bond" you may be covered by is not easy unless you have booked the whole package with a travel agent who is a member of the Association of British Travel Agents. A few travel insurance policies will cover holiday firm implosions. Always pay by credit card.

Apparently, Confetti collapsed because the days of the 45,000 weddings are over and people are scaling back their plans to instead have intimate low-key celebrations. If that's true, it has to be a good thing.

Whenever shopping, for peace of mind, it may be worth sticking with a reputable firm and paying that little bit extra. The truth is in life you get what you pay for... and maybe not even that.

Married to the bank

BACK to the banks. Apparently they treat us with contempt because we stay with them for longer than our partners, according to a survey from Santander.

I knew I was going wrong somewhere. I change my bank more regularly than my dress size and have to say, on a personal basis, unfailingly receive the very best service. Yet I've stuck faithfully with my one and only, whose devoted attention I couldn't always so firmly attest to.

Time for a transfer? Heavens no, I couldn't cope with the paperwork. Only teasing, dear...