Customers facing rate rises are those who have had mortgage deals which have now ended and reverted to the lenders “Standard Variable Rate” (SVR).
Halifax has increased their SVR from 3.5% to 3.99% – affecting 850,000 customers.
RBS offset mortgage customers rates rise from 3.75% to 4% and Clydesdale and Yorkshire Banks have announced plans to raise their rates from 4.59% to 4.95%, affecting 30,000 residential mortgage customers – and it is feared now the ball is rolling many other lenders will follow by putting up their standard variable rates.
The SVR rate is the standard rate which a large number of borrowers revert to after their tracker deal or fixed rates have expired. With the historically low interest rates many mortgage customers have been happy to remain on the lenders SVR rates, until now as lenders announce rate rises in their SVR rates despite the Bank of England Base Rate remaining unchanged.
“With so many people leaving their mortgage on the lenders SVR rate when their fixed rates came to an end we are likely to see huge demand on mortgage brokers, as mortgages customers rush to secure the best deals to avoid the SVR rate rises”
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Remortgaging to avoid mortgage SVR increases
A lot of borrowers have reacted angrily towards the rate rises as interest rates are at their lowest they have been for three years, and there is no movement there, but the cost of borrowing has gone up and the banks want to pass that cost on to their customers, typically any SVR rises will also effect buy to let mortgages, which will have a knock on effect on rental property prices.
An RBS spokesman said the rises were down to the higher costs they were incurring borrowing money, which they had absorbed for some time before opting to pass it on to some of their customers.
The news come as families are facing ever-increasing costs of living, and any rise in mortgage payments could lend to an increase in payment problems and arrears, mortgage customers with high ltv mortgages (e.g. 90% Mortgages, 95% Mortgages) will find this increase particularly difficult. Worried mortgage customers can speak to a reputable mortgage broker such as Ascot Mortgages who will be able to make sure you are getting the best mortgage deals available to help make your repayments more affordable. Rate rises do not affect customers who have a fixed rate mortgage, as the rate remains unchanged during the fixed rate period, eg 5 year fixed rate mortgages.