I thought the idea of a "low-interest" fixed rate mortgage deal for the first couple of years was to attract the customer - any perceived 'loss' to the lender would be recouped later in the life of the mortgage. I thought that what happened at the end of the fixed rate is that they would look at the outstanding capital and then set the repayments when reverting to the standard rate to ensure the loan was fully paid off. So any saving in the period of the fixed rate is negated later - the advantage being that (hopefully) pay increases would then make it easier to afford the higher payments.

Isn't that why there are often minimum tie-in periods / penalty clauses to prevent people switching to another lender before they recopu their money?

The key comparison for any deal is how much interest overall you will have to pay over the lifetime of the mortgage - which can only be calculated as a 'spot' figure based on the current mortgage rate.

dave, kent, UK

How can there be a 'shock increase' when coming off a loss leader rate.

When you had the papers, even the Key Facts document it will have clearly stated what the rate would be for the period of the discount, AND what the rate would be after that. In addition there was always that BIG BOLD WARNING that rates can change.

Don't people read anymore, if they did there would be no shock, just a realization that they were foolish in overreaching themselves.

Its the borrowers fault, its not as if they had to take out that big mortgage!

Tony Humphreys, Prestatyn, UK

This is just rubbish. Fixed-term fixed rate mortgages are well known to be a loss leader that draws a borrower to the bank, with the payoff that many will not bother to change to a new scheme when the rate resets. 25 year fixed rate mortgages were available in Britain in 2005, at a rate of under 5% - these have not reset.

I disapprove of these teaser rate mortgages, I think they are a bit like selling risky interest rate derivatives to the public, and I'd support legislation to ban them, but having permitted banks to offer them it's ridiculous to turn on them now. Was no one else aware that these products were not sustainable at the time?

Andrew, Zurich,

Home-owners need to take responsibility for their own finances /mortgage and all the blame should not be put on the mortgage lenders. I cannot understand recent headlines of 'shock mortgage increases' for those who are coming to the end of their fixed-term period. How can this be an unexpected 'shock' to the homeowner? Bottom line is simple
'if you can't afford it, don't buy it'

zoe, london, uk

Sorry, but I don't buy this argument.
Actually homeowners have been equally reckless and the increased cost of mortgages really just represents the market repricing risk back to the right level.

The biggest worry now is inflation which is under reported - base interest rates and the risk premium of loans should in fact be higher than they are today.

mike livingston, Reigate, UK

Back in the 70s and 80s the profession of bank manager was abandoned in favour of expansion and profit, with bank employees given targets for selling insurance and loans. Yuppies took control. They made themselves rich and now we are paying the price.

This year the legal profession is to be opened up to ownership by outsiders. This means ownership by big business, with no professionalism and a regard only for profit,and short term profit at that. At the same time the legal aid system is being dismantled. What price any proper, professional legal advice in 20 years time?

Peter Ryder, Middlewich, UK

You got to be kidding? People who take out 2 year mortgages on their homes are as bright the the homeowners in the US with 6 figure incomes that gave up 30 year affordable fixed mortgages on their homes for short term teaser loans for more then their homes were worth so that they could live a grand lifestyle.

Sometimes you reap what you sow. I paid off my 1987 9% mortgage years ago, so no pity from me.

Al, Earlville, NY, USA

Maybe they are expecting the case on bank charges to go against them and are trying to recover there loses in other ways.

Chris, Leicester, United Kingdom