Will your lender raise its standard variable rate?

The bank rate was kept on hold this week, but despite that some lenders have increased the cost of mortgages

Moves by Halifax, RBS, the Bank of Ireland and, yesterday, Yorkshire Bank to increase mortgage rates for some have panicked borrowers.

But, depending on your current deal, it could be a mistake to rush to fix your mortgage to avoid a hike in the standard variable rate (SVR).

Experts say that the wave of SVR increases in the past week won't spread across the market.

"I don't think that these recent moves will necessarily result in a wave of copycats," said David Hollingworth of London & Country Mortgages.

"Most borrowers on SVR are unlikely to be hit with a rise this year," said Ray Boulger of John Charcol.

But he warned that those borrowers with lenders who no longer offer new mortgages are at the greatest risk of an increase.

"Bank of Ireland highlights the risk for borrowers with lenders which are no longer active," he said.

Bank of Ireland withdrew from new mortgage lending in the UK under its own brand and the Bristol & West brand in January 2009.

But more than 100,000 homeowners still with the lender now face a huge increase in their mortgage payments after the bank this week announced an increase in its SVR from 2.99 per cent to 4.49 per cent.

The rate hike will be introduced in two parts, climbing 1 per cent in June and 0.5 per cent in September. But the move will mean anyone with a £150,000, 25-year repayment mortgage will have to find an extra £122 per month to cover their mortgage payments.

"Many who were very happy to stay with Bank of Ireland while they were paying only 2.99 per cent will now look to remortgage," said Mr Boulger.

However, only those with at least 15 per cent equity in their home are likely to find a cheaper fixed rate for up to five years or a variable rate.

Last week Halifax increased its SVR from 3.5 per cent to 3.99 per cent, hitting some 800,000 customers. RBS and NatWest, meanwhile, raised the SVR for its offset mortgage customers by 0.25 per cent to 4 per cent. Yorkshire and Clydesdale Banks will raise SVR for 30,000 borrowers to 4.95 per cent from 4.59 per cent.

"Some borrowers... who want to continue on interest-only will have become mortgage prisoners," said Mr Boulger.

What about other lenders?

Santander said: "We have no plans to change our Santander or Alliance & Leicester standard variable rates in the immediate future."

The Nationwide has promised that its base mortgage rate would be no more than 2 per cent above base rate.

"We have honoured that promise, and will continue to do so," a spokeswoman said this week.

But Mr Hollingworth said borrowers need to be aware of the potential for increases in rates.

"It would be naive to think there won't be any other lenders keeping their position under review when a lender as significant as Halifax takes the step of hiking its variable rate, despite no change in the base rate."

It was kept on hold this week at 0.5 per cent by the Bank of England.

"Borrowers only really know how their rate will behave if it is directly pegged to the base rate or is locked into a fixed deal," he said.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Suggested Topics
News
peopleHowards' Way actress, and former mistress of Jeffrey Archer, was 60
Sport
Romelu Lukaku puts pen to paper
sport
News
Robyn Lawley
people
Arts and Entertainment
Unhappy days: Resistance spy turned Nobel prize winner Samuel Beckett
books
PROMOTED VIDEO
News
people
Life and Style
Troy Baker and Ashley Johnson voice the show’s heroes
gamingOnce stilted and melodramatic, Hollywood is giving acting in video games a makeover
News
i100
Life and Style
Phones will be able to monitor your health, from blood pressure to heart rate, and even book a doctor’s appointment for you
techCould our smartphones soon be diagnosing diseases via Health Kit and Google Fit?
News
people
Extras
indybest
Travel
Ryan taming: the Celtic Tiger carrier has been trying to improve its image
travelRyanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?
Sport
Usain Bolt confirms he will run in both the heats and the finals of the men's relay at the Commonwealth Games
commonwealth games
Life and Style
Slim pickings: Spanx premium denim collection
fashionBillionaire founder of Spanx launches range of jeans that offers 'thigh-trimming construction'
News
Sabina Altynbekova has said she wants to be famous for playing volleyball, not her looks
people
News
i100
Life and Style
tech'World's first man-made leaves' could use photosynthesis to help astronauts breathe
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 Investment Accounting Change Manager

    £600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

    BA/PM,EMIR/Dodd-Frank,London,£450-650P/D

    £450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...

    Senior Analyst - ALM Data - Banking - Halifax

    £350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...

    Java developer - Banking - London - Up to £600/day

    £500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...

    Day In a Page

    Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

    The day America’s love of backyard tigers led to a horrific bloodbath

    With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
    Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

    How Samuel Beckett became a French Resistance spy

    As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
    We will remember them: relatives still honour those who fought in the Great War

    We will remember them

    Relatives still honour those who fought in the Great War
    Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

    Kodak's last-ditch bid to keep celluloid alive

    Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
    Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

    Acting in video games gets a makeover

    David Crookes meets two of the genre's most popular voices
    Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

    Could smartphones soon be diagnosing diseases?

    Health Kit and Google Fit have been described as "the beginning of a health revolution"
    Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

    Can we learn to love Ryanair again?

    Four recent travellers give their verdicts on the carrier's improved customer service
    Billionaire founder of Spanx launches range of jeans that offers

    Spanx launches range of jeans

    The jeans come in two styles, multiple cuts and three washes and will go on sale in the UK in October
    10 best over-ear headphones

    Aural pleasure: 10 best over-ear headphones

    Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
    Commonwealth Games 2014: David Millar ready to serve up gold for his beloved Scotland in the end

    Commonwealth Games

    David Millar ready to serve up gold for his beloved Scotland in the end
    UCI Mountain Bike World Cup 2014: Downhill all the way to the top for the Atherton siblings

    UCI Mountain Bike World Cup

    Downhill all the way to the top for the Atherton siblings
    Save the tiger: The animals bred for bones on China’s tiger farms

    The animals bred for bones on China’s tiger farms

    The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
    A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

    A former custard factory, a Midlands bog and a Leeds cemetery

    Introducing the top 50 hidden spots in Britain
    Ebola epidemic: Plagued by fear

    Ebola epidemic: Plagued by fear

    How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
    Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

    From 'Parks and Recreation' to 'Guardians of the Galaxy'

    He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star