Money News

Mortgage lenders hike standard variable rates

Lenders are increasing the rates that borrowers revert to after their deal period ends, to encourage them to shop around for a new mortgage deal.

Many borrowers have been sitting on their lender’s standard variable rate (SVR) in order to benefit from low rates, but this could change soon.

Since April 2009, eight mortgage providers have increased their standard variable rates (SVRs), according to financial information company Moneyfacts (www.moneyfacts.co.uk).

This is despite the fact that the Bank of England base rate has been kept on hold at 0.5% since 5 March 2009.

Darren Cook, spokesperson for Moneyfacts, said: “The momentum to increase SVRs appears to be gathering pace and now that a few lenders have taken the step, it is highly possible others will follow.”

Lots of borrowers have seen their mortgages revert to SVRs as low as 2.5% and as a result remortgaging activity is very low, which is bad news for lenders.

Cook explained: “By increasing the SVR, lenders are actively trying to encourage borrowers to find a new mortgage deal.”

However, he predicted that many people won’t switch to a new mortgage deal until a significant base rate increase looks more likely.

Chesham Building Society currently has the highest SVR at 6.45%.

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