Householders pay the price as SVR mortgages soar

Climbing home loan costs mean that it's essential to check the rate you're paying and check out better deals.

An estimated million people were hit by higher mortgage payments this week, when their lenders increased standard variable rates (SVRs).

Banks hiking rates from the beginning of the month were Co-operative, Halifax and Yorkshire, along with the RBS-owned One Account.

Meanwhile, Bank of Ireland borrowers will start to experience rate hike pain from next month as it increases its SVR in two stages, on 1 June and 1 September, to leave borrowers paying an extra 1.5 per cent.

Halifax – part of Lloyds Banking Group which is currently 39 per cent owned by the taxpayer – has hit the most people by increasing its SVR from 3.5 per cent to 3.99 per cent. The move has put some 850,000 borrowers in a worse financial position.

The increase will force a family with a £150,000 loan to find an extra £480 a year, while anyone with a £200,000 mortgage will be £660 worse off.

It's entirely possible other lenders will soon follow suit, which will send a warning to the estimated six million borrowers currently on SVRs.

"While we don't expect wholesale rising of SVRs by other lenders, borrowers should remain vigilant and check what their lender is charging," said Adrian Anderson, of broker Anderson Harris. "Lenders can raise SVRs on a whim so borrowers have no protection and should not take it for granted that rates won't rise."

The SVR increases already made are a sign that the mortgage market is out of control, according to Which? chief executive Peter Vicary-Smith.

"These SVR rises are the consequence of the lack of competition in the market and the failure of the Government to take action to promote competition," he said. "This is why the new financial regulator needs to be a watchdog not a lapdog."

The existing Financial Services Authority will be replaced the Financial Conduct Authority next year.

"It must stand up for consumers and stand up to the banks," said Mr Vicary-Smith.

But even if the new regulator does do a better job of controlling lenders, that won't help those borrowers trying to cope with increased mortgage costs now.

"Anyone on SVR, whether an increase has been announced or not, should check whether they would get a better deal by remortgaging," advised Mark Harris, of mortgage broker SPF Private Clients.

Being able to find a better deal may not be easy. It depends on what equity you have in your home and the interest rate you are being charged. Borrowers paying just 2.5 per cent on SVRs with Nationwide and Lloyds, for instance, will struggle to find anything cheaper.

"If you have little or no equity, then remortgaging to another lender will be tricky so speak to your existing lender to see whether it will offer you one of its fixed or tracker rates," said Mr Harris.

Remaining with your existing lender could actually save you a heap. You won't have to pay a fee and you shouldn't be tied in with early repayment charges.

If you remortgage you may have to pay your lender an exit fee of £250, plus arrangement fees to the new lender of up to £2,000.

News
peopleFrankie Boyle responds to referendum result in characteristically offensive style
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvHe is only remaining member of original cast
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
News
news
PROMOTED VIDEO
New Articles
i100
Life and Style
Couples have been having sex less in 2014, according to a new survey
life
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior BA - Motor and Home Insurance

    £400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

    Market Risk & Control Manager

    Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

    SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

    £320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Head of Audit

    To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

    Day In a Page

    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits
    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam