Advisers have hit out at Skipton Building Society’s move to remove the ceiling on its standard variable rate and raise the present SVR from 3.5 per cent to 4.95 per cent.
Money Marketing revealed last week that Skipton was to remove its ceiling temporarily. The limit meant that borrow- ers would not pay more than 3 per cent over the base rate.
The company blames “exceptional circumstances” for the move and says it plans to reintroduce the ceiling rate once market conditions improve.
Burwood Financial Consultants managing director Peter Suttill says: “I think it sends out a worrying sign to the market. Lenders reneging on deals is a worrying trend.
“It is a matter of confidence. We are trying to restore con- fidence in the market and if lenders start doing these sorts of things it inhibits that.”
London & Country technical manager Richard Morea says: “The 1.45 per cent rise is a massive blow to Skipton borrowers linked to SVR and the timing could not be worse as the latest figures show a bigger than expected rise in inflation, stretching finances even further.”
First Action Finance head of communications Jonathan Cornell says other lenders are likely to do the same. He says: “This move will be incredibly controversial and will attract lots of negative feedback but, despite this, I still suspect that more lenders will follow.
“Now Skipton has done this, some of its borrowers will undoubtedly look to remortgage. However, there will be quite a few people who cannot remortgage because they are in negative equity or their income or employment status has changed.”
Skipton group chief executive David Cutter says: “We understand this change will be unwelcome for borrowers who will end up paying more as a result but we hope they will understand it is a necessary step that is in the best interests of our membership as a whole in the long run.”