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.”