Squeezing the poor until the pips squeak

When Gordon Brown urges the bank to “pass on” the interest rate cut, why doesn’t he lead by example with his very own state-owned mortgage company, Northern Rock? Because NR is up to no good – and the Financial Services Authority has given us a rare glimpse into exactly what its game is. It released a banking report (here, note 9.47) which confirmed that NR’s loyalty is to the state: that is to say, it must “focus on repaying its government loan”. Deplorably, it is doing this by deliberately overcharging those too poor to get a better deal.

Here’s now it works. Many millions (including myself) took up NR’s low fixed-term rates. But when this ends, you’re whacked on to the NR Standard Variable Rate which is priced, again according to the FSA, “around 75-90bps higher than the average fixed rate deal”.