Homeowners face “shocking” rise in SVRs from major lenders

Last Updated: 04-10-2024

Reading Time: 2 minutes

These are testing times for freelancers and contractors coming to the end of their discounted rate mortgage period. Several High Street lenders have recently raised their SVRs.

These increases are making homeowners across the spectrum justifiably nervous about their repayments. So, who are the guilty parties, and what can you do about it?

Halifax lead the way: bad news for contractors

ginger woman having meltdown at laptopThe Halifax was amongst the first to raised its base interest rate.

As the Halifax is the de facto mortgage lender for contractors, that’s a concern from the outset.

Now, the Co-operative Bank has made the decision to follow suit. Its standard variable rate is set to rise to 4.74% at the beginning of May.

The increased variable rates will affect around 54,000 mortgage holders.

What does this mean in numbers?

The jump will make the average monthly repayments about £15 more for anyone not tied into a fixed deal. The average borrower has an outstanding balance of £48,000, with another 11½ years remaining on their mortgage.

Based on those figures, the average monthly repayment will jump from £440 to £455. That’s the average; it will be more or less, depending on what action your lender decides to take.

The Consumer Action Group has branded the increases as “shocking”. When you consider that the Bank of England has kept the base rate at 0.5% for more than three years, their outrage seems warranted.

What the lenders have to say

A spokesperson for the Co-op acknowledged that people with a high LTV mortgage may be concerned about the increase. As an alternative option, Co-op will offer those homeowners the option of taking out a 5-year fixed rate mortgage at their current interest rate.

That said, Co-op’s variable rate will still be less than those charged by the Clydesdale and Yorkshire group. They’re increasing their rate to 4.95% on May 1st.

RBS is increasing the rates on its One Account and Offset mortgage to 4%. Meanwhile, Halifax customers will see their SVR increase to 3.99% at the beginning of next month.

The Bank of Ireland is also increasing its variable rates, but in its case the rise will be implemented in two stages. More on that when we have the full info.

Update, October 2024: Don’t wait until you’re on your lender’s SVR before taking action

You don’t have to wait until your current fixed rate deal comes to an end before taking out a remortgage. As of October 2024, Freelancer Financials is offering a rate-monitoring service.

It’s simple: lock in the best rate for your circumstances up to six months before your current fixed deal ends. Whatever happens to interest rates, that’s the most you’ll pay.

But if ‘like’ rates go down, their brokers will automatically switch you to that lower rate. You could end up paying a lot less than you thought. You’ll certainly pay a lot less than your lender’s SVR.

The sooner you start the conversation, the sooner you can lock in your next rate. Having six months to play with is great for contractors, who have an idea what they need from their next contract.

Head on over to Freelancer Financials rate-monitoring service. Sign up for the service, and let their brokers do the rest.

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Author: John Yerou

John Yerou is a pioneer of contractor mortgages and owner and founder of Freelancer Financials, Contractor Mortgages®, C&F Mortgages and Self Employed Mortgages, trading styles and brands of the award-winning Mortgage Quest Ltd.

Posted by John Yerou

on April 13th, 2012 06:00am in John’s Blog.


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