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"Bank of Ireland highlights the risk for borrowers with lenders which are no longer active," he said.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
PROMOTED VIDEO
Extras
indybest
Arts and Entertainment
tv
Arts and Entertainment
Judi Dench appeared at the Hay Festival to perform excerpts from Shakespearean plays
tvJudi Dench and Hugh Bonneville join Benedict Cumberbatch in BBC Shakespeare adaptations
Arts and Entertainment
Exhibition at the Centre Pompidou in Metz - 23 May 2012
art
Sport
Is this how Mario Balotelli will cruise into Liverpool?
football
News
Ronahi Serhat, a PKK fighter, in the Qandil Mountains in Iraqi Kurdistan
i100
Arts and Entertainment
Poet’s corner: Philip Larkin at the venetian window of his home in 1958
booksOr caring, playful man who lived for others? A new book has the answer
News
Matthew McConaughey and his son Levi at the game between the Boston Red Sox and the Houston Astros at Fenway Park on August 17, 2014 in Boston, Massachusetts.
advertisingOscar-winner’s Lincoln deal is latest in a lucrative ad production line
Arts and Entertainment
Alfred Molina, left, and John Lithgow in a scene from 'Love Is Strange'
film
News
A model of a Neanderthal man on display at the National Museum of Prehistory in Dordogne, France
science
News
i100
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

    Junior Quant Analyst - C++, Boost, Data Mining

    £25000 - £35000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...

    Service Desk Analyst- (Desktop Support, Help desk)

    £25000 - £35000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...

    Junior Quant Analyst (Machine Learning, SQL, Brokerage)

    £30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst (Machine Lea...

    UNIX Application Support Analyst- Support, UNIX, London

    £45000 - £55000 per annum: Harrington Starr: UNIX Application Support Analyst-...

    Day In a Page

    Air strikes? Talk of God? Obama is following the jihadists’ script

    Air strikes? Talk of God? Obama is following the jihadists’ script

    The President came the nearest he has come yet to rivalling George W Bush’s gormless reaction to 9/11 , says Robert Fisk
    Ebola outbreak: Billy Graham’s son declares righteous war on the virus

    Billy Graham’s son declares righteous war on Ebola

    A Christian charity’s efforts to save missionaries trapped in Africa by the crisis have been justifiably praised. But doubts remain about its evangelical motives
    Jeremy Clarkson 'does not see a problem' with his racist language on Top Gear, says BBC

    Not even Jeremy Clarkson is bigger than the BBC, says TV boss

    Corporation’s head of television confirms ‘Top Gear’ host was warned about racist language
    Nick Clegg the movie: Channel 4 to air Coalition drama showing Lib Dem leader's rise

    Nick Clegg the movie

    Channel 4 to air Coalition drama showing Lib Dem leader's rise
    Philip Larkin: Misogynist, racist, miserable? Or caring, playful man who lived for others?

    Philip Larkin: What will survive of him?

    Larkin's reputation has taken a knocking. But a new book by James Booth argues that the poet was affectionate, witty, entertaining and kind, as hitherto unseen letters, sketches and 'selfies' reveal
    Texas forensic astronomer finally pinpoints the exact birth of impressionism

    Revealed (to the minute)

    The precise time when impressionism was born
    10 best men's skincare products

    Face it: 10 best men's skincare products

    Oscar Quine cleanses, tones and moisturises to find skin-savers blokes will be proud to display on the bathroom shelf
    Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

    We know all too much about the cruelty of Isis – but all too little about who they are

    Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
    Neanderthals lived alongside humans for centuries, latest study shows

    Final resting place of our Neanderthal neighbours revealed

    Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
    Scottish independence: The new Scots who hold fate of the UK in their hands

    The new Scots who hold fate of the UK in their hands

    Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
    Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

    Blight club: Britain's ugliest buildings

    Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape
    eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

    eBay's enduring appeal

    The online auction site is still the UK's most popular e-commerce site
    Culture Minister Ed Vaizey: ‘lack of ethnic minority and black faces on TV is weird’

    'Lack of ethnic minority and black faces on TV is weird'

    Culture Minister Ed Vaizey calls for immediate action to address the problem
    Artist Olafur Eliasson's latest large-scale works are inspired by the paintings of JMW Turner

    Magic circles: Artist Olafur Eliasson

    Eliasson's works will go alongside a new exhibition of JMW Turner at Tate Britain. He tells Jay Merrick why the paintings of his hero are ripe for reinvention
    Josephine Dickinson: 'A cochlear implant helped me to discover a new world of sound'

    Josephine Dickinson: 'How I discovered a new world of sound'

    After going deaf as a child, musician and poet Josephine Dickinson made do with a hearing aid for five decades. Then she had a cochlear implant - and everything changed