Brokers and financial experts lambast Liberal Democrats mortgage research

Brokers and financial advisers have lambasted research by the Liberal Democrats suggesting lenders are treating mortgage holders as a “cash cow”, saying the party has failed to understand even the basics of financial markets.

One said: “It’s concerning when senior politicians accuse banks of profiteering without grasping how mortgage rates are set.” Another added: ”We are all too familiar with the ineptitude of those currently running our country but this shows the ineptitude of those who want to run our country in the future."

Earlier this month, House of Commons Library research commissioned by the Liberal Democrats party revealed mortgage rates have fallen at a significantly slower rate than the fall in the Bank of England base rate over the past year, costing homeowners over £1,000 a year.

The analysis found that between July 2024 and July 2025 the Bank of England base rate has fallen by 19%, from 5.25% to 4.25%. Yet, over that period mortgage rates offered by banks have fallen at a far slower pace, by 13% for 2 year fixed rates and just 4% for 5 year fixed rates.

The research said that for new mortgages the estimated average monthly payment has fallen by just £90 a month to £1,189 from £1,279 for two year fixed rates and by only £26 a month from £1,204 to £1,178 for five year fixed rates.

The Library’s research revealed that if, instead, two and five-year fixed mortgage rates had fallen by 19%, in line with the base rate, then homeowners would be paying a further £41 and £87 a month less respectively. It means that mortgage holders would be saving £492 a year on a two year fixed rate and £1,044 a year on a five year fixed rate mortgage.

Liberal Democrat Treasury spokesperson, Daisy Cooper MP, said: “Mortgage lenders have used homeowners as a cash cow in the midst of a cost of living crisis. By failing to cut mortgage rates in line with interest rates they are leaving millions of families out of pocket and worried about how they will keep a roof over their head.

“The Chancellor needs to get a grip, call in lenders to explain to them that many homeowners are already on the brink and struggling to keep the roof over their heads. Reeves also needs to reverse the Conservatives’ tax cuts for the big banks as they rake in billions in profit with these sky high mortgage rates."

Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, said the research by the Liberal Democrats shows a total lack of understanding of mortgage market basics: "This review of mortgage pricing over the past 12 months shows exactly how little the latest generation of politicians understands the fundamental mechanics of the financial markets. The vast majority of mortgage products are priced on Swap rates, so the expected cost of money in the future, rather than the Bank of England base rate, which only benefits those on tracker or variable mortgage deals. 

“As a great example of this, whilst the base rate was cut on earlier this month, Swap rates actually increased following the comments from Andrew Bailey, given the prospect of further rate cuts was more limited than previously thought. So, mortgage rates may increase even if the base rate is cut. We are all too familiar with the ineptitude of those currently running our country but this shows the ineptitude of those who want to run our country in the future.”

David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth added: “This really does highlight how dizzyingly disconnected some of our policiticans are from reality. This shows a lack of any basic understanding of how interest rates are calculated and how banks make their margins from swap rates, not what the Bank of England does. The sentiment is good in calling for the government to help beleaguered Brits, but the reality is that world events also affect our economy, and those events are beyond our control.”

Scott Gallacher, Director at Leicester-based Rowley Turton, said: “It’s concerning when senior politicians accuse banks of profiteering without grasping how mortgage rates are set. Yes, the base rate has dropped, but lenders also factor in funding costs, risk premiums and market expectations, which may move in the opposite direction. Politicians need a thorough understanding of these financial mechanics, or risk misleading the public.”

Samuel Mather-Holgate, Independent Financial Adviser at Swindon-based Mather and Murray Financial, was withering: "This kind of misinformation could be tolerated if it were the incompetence of a junior politican or a rallying cry from a less mainstream party, but for a leading MP to not understand the fundamentals of how mortgages affect the working family is inexplicable."

Craig Fish, Director at London-based Lodestone, was lost for words, adding: “Politicians and financial markets? Chalk and cheese.”

The Lib Dems were approached for comment.