Borrowers warned over SVR complacency

Published:

23/11/2009

Topic:

Press Release,Money,Mortgages

The average SVR deal is now 4.2 per cent above the Bank of England Base Rate compared to 2.68 per cent 12 months ago.
moneysupermarket.com warns those sitting on SVRs not to be complacent

Analysis from moneysupermarket.com* shows that Standard Variable Rate (SVR) mortgage deals are now charging on average, 4.7 per cent interest; a reduction of just 0.98 per cent in twelve months compared to a 2.5 per cent fall in Base Rate over the same period. In short, some lenders have increased their profit margins on SVR deals in the space of twelve months by not passing on the full Base Rate cuts or subsequently increasing their rates.

moneysupermarket.com is warning the growing band of borrowers sitting on SVR deals, that they might not be reaping the full benefit of the record low Base Rate.

Hannah-Mercedes Skenfield, mortgages channel manager at moneysupermarket.com, said: "Unfortunately it should come as no surprise to anyone that we have seen a steady increase in SVRs since the Bank of England Base Rate was cut earlier this year.

"Traffic through moneysupermarket.com has shown fewer and fewer people each month are looking for remortgage products, and one of the main reasons for this is the growing number of people happy to revert to their current lender's SVR offering.

"Borrowers need to be aware that lenders are free to price their SVR as they please, and therefore an SVR deal might not be the best way to get the most benefit from the low Base Rate environment. We have seen some of the smaller building societies increasing their SVRs so don't be surprised if we see increases elsewhere.

"For those who have built up at least 20 per cent equity in their home, it is likely that you will be able to find a better rate on a three year fixed deal, at which point the only real drawback from fixing is the arrangement fee, which can be anything from around £1,000 to nothing at all. Those with little equity in their home are in a more difficult position and need to shop around to see what fixed and variable rate deals are available to them."

- Ends -

Notes to editors:

* Average SVR (12.11.2009) - 4.70%
Difference from Base Rate - 4.20%
 
Average SVR (05.03.2009) - 4.51%
Difference from Base Rate - 4.01%
 
Average SVR (06.11.2008) - 5.68%
Difference from Base Rate - 2.68%

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