Borrowers warned as SVRs increase
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Brokers are warning borrowers against remaining on their lenders’ standard variable rates in 2010 as banks and building societies’ default rates rise.
Last week, Marsden Building Society increased its SVR from 5.49 per cent to 5.95 per cent while other lenders such as Accord, Cambridge Building Society and Kent Reliance Building Society have all increased their SVRs, with some as high as 5.99 per cent.
London & Country head of communications David Hollingworth says SVRs of 6 per cent may become the norm in 2010. He says: “A number of SVRs are getting up near 6 per cent and as fixed and tracker rates become more competitive, borrowers will stop assuming that the SVR is a great place to be.”
John Charcol senior technical manager Ray Boulger says many smaller societies will soon be forced to increase their SVRs.
He says: “The longer we go without a change to the base rate, the bigger the risk of societies being forced increase SVRs.”
But Emba Group sales and marketing director Mike Fitzgerald says a flurry of well publicised SVR increases may spook borrowers into remortgaging.
He says: “We have had a year of low rates and people will not want to be caught out. Hikes in SVRs may push more people to their brokers for a remortgage.”
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Readers' comments (5)
Matt | 8 Jan 2010 3:21 pm
I don't know if you are on First Direct's SVR, or on a Tracker.......
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Ketan Yadav - Avenue & Co Private Finance | 8 Jan 2010 3:34 pm
Consumers must consider a review of their mortgages top priority in 2010. Independent advice is still important and most brokers wont charge fees for this so its well worth doing.
Further rate increases are on the cards with many lenders and as BBR increases in Q4 20011 onwards, SVR could reach 8-9% and the falls in property prices will make affordability a big issue for many borrowers.
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James Lang | 8 Jan 2010 5:17 pm
"most brokers wont charge fees for this"
I'd say we should be charging a fee to research & recommend a mortgage. I think clients accept it, we shouldn't give the impression that we work for nothing.
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Dale Tranter | 10 Jan 2010 5:09 pm
This going to take the margin beteween what banks and buildling societies are paying depositors and charging borrowers to 5.5%+.
I know they have balance sheets to rebuild but you can see why Richard Branson thinks there is money to be made...
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Nick Clark | 11 Jan 2010 11:57 am
I agree with James Lang that fee's should be charged and why should we be giving out our expertise for nothing - most client's wouldn't work for free!
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