These are testing times for freelancers and contractors coming to the end of their discounted rate mortgage period. With a number of high street lenders raising their standard variable rates, they are feeling justifiably nervous about their repayments.
First the Halifax raised its interest rates and now the Co-operative Bank has made the decision to follow suit. Around 54,000 mortgage holders are likely to be affected by the increase, which will see the Co-op’s standard variable rate go up to 4.74% at the beginning of May. Average monthly repayments will increase by about £15.
The average borrower has an outstanding balance of £48,000 and another 11.5 years remaining on their mortgage. Their monthly repayments will go up to £455 from £440.
The Consumer Action Group has branded the increases as shocking, especially when you consider that the Bank of England has kept the base rate at a historically low 0.5% for more than three years.
A spokesperson for the Co-op acknowledged that people with a high LTV mortgage may be concerned about the increase and it will offer them an alternative option. They will be offered the opportunity to take out a five-year fixed rate home loan at their current interest rate.
The Co-op’s variable rate will still be less than that charged by the Clydesdale and Yorkshire group who are putting their rate up to 4.95% on May 1st.
RBS is increasing the rates on its One Account and Offset mortgage to 4% and Halifax customers will see their SVR increase to 3.99% at the beginning of next month. The Bank of Ireland is also increasing variable rates, but in its case the rise will be implemented in two stages.
John Yerou is the owner and founder of Contractor Mortgages®; a trading style & trade mark of the award winning Mortgage Quest Ltd. One of the most recognised names in providing mortgages for contractors and freelancers across the UK.
In 2004 John began his career in Financial Services as an independent mortgage adviser and broker. John has been instrumental in negotiating bespoke underwriting for contractors with high street lenders.
His presence in the industry as a go-to expert is growing by the day and he is regularly cited and writes in publications both locally and nationally.