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Halifax to increase SVR to 3.99%

Close to a million Halifax borrowers are facing a hike in their mortgage payments after the lender increased its standard variable rate.

Halifax’s SVR will increase from 3.50 per cent to 3.99 per cent on May 1, affecting some 850,000 customers.

Its SVR is now aligned with its homeowner variable rate, the reversion rate it introduced for new customers at the beginning of 2011.

The lender announced last week it was increasing its SVR cap from 3 per cent above base rate to 3.75 per cent above base, and within five days confirmed it would be increasing the SVR itself.

For a customer with a £100,000 mortgage balance and 15 years of the term remaining, the change will equate to a £24.30 increase in their monthly payment.

Halifax is offering affected borrowers a product transfer option of a fee-free two-year fix, which has a rate of 3.49 per cent at 60 per cent LTV and 3.74 per cent at 75 per cent LTV.

John Charcol senior technical manager Ray Boulger says there are cheaper two-year fixes available in the market so this option would only appeal to those who are unable to remortgage elsewhere.

He says: “This represents a huge remortgage opportunity for brokers. The rate rise will be a big catalyst for Halifax borrowers to review their mortgage options, and a large proportion of the lender’s book will be up for grabs.”

Halifax mortgage director Stephen Noakes says: “In light of market conditions, particularly ongoing higher funding costs, it has been necessary for us to review the Halifax SVR. At 3.99 per cent, the rate more accurately reflects the cost of funding a mortgage, but it remains competitive for borrowers.”

In February 2011 Lloyds Banking Group paid £500m in compensation to 300,000 Halifax borrowers after admitting its contract was not clear when it increased its SVR cap from 2 per cent above base to 3 per cent in September 2008.

Also last week, Royal Bank of Scotland increased rates by 0.25 per cent for its offset mortgage and One Account customers.

The majority of customers affected by the move, which RBS estimates to be around 200,000, will now be paying a rate of 4 per cent, up from 3.75 per cent previously.

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. I took a Halifax tracker 3 years ago which gave me a tracker at 1.89% over base, 2.39%. I did this firm in the knowledge the reversion rate would be 2.5% thus not representing a problem. Today my mortgage increased by £365 as my deal has now ended an the reversoion rate has increased by 1.5%! I am a mortgage broker who through no fault of my own has seen my business halve over the last 5 years, I cannot remortgage elsewhere, so I will now have to switch back to interest only if I am to stay in my home. I wonder how many others there are the same, there have been better deals than 3.5% many times in the last year so I think those that could have left Halifax would have done so already, this is Halifax capitalising on thoses borrowers who can’t. Incidentally as an existing borrower now wanted to switch to interest only this can be done by writing to them and providing copies of your repayment vehicle, the one you can no longer afford to pay anything into!

  2. Please tell me I am not the only one who saw that the general public would effectively be paying twice to bail out the banks. How else are the banks going to pay back the taxpayers than to squeeze their customers for more revenue?

  3. a murray north somerset 4th March 2012 at 12:58 pm

    how much more can we take from the banks, they always hit the poorer people this goverment must make a stand against the banks this country is becoming so divided. there is going to be such uprore we have no say any more we have to sit back and take it we becoming poorer by the year

  4. Srinivasan Devrajan 4th March 2012 at 5:19 pm

    I know something about banking, Irish style that you don’t. This is not an Irish joke. Further details by searching in Google for “Windle stops swindle”

    Cheers

    Srinivasan Devrajan, the Common Informer

  5. Snouts in the trough.

    They know many are stuck with them – the economic reasons aren’t simply about wages, they are often about families too.

    As The Realist says, we are bailing them out twice.

  6. Avenue & Co Private Finance 5th March 2012 at 9:34 am

    Mortgage Prisoners – that is what we will all become in the current m,arket – unable to remortgage elsewhere due to new tougher criteria, repayment only above 75% LTV and property downvaluations.

    Borrowers with Halifax – and all other lenders are going to suffer permanently as interest rates can only go up.

  7. not unexpected but I hope they dont then see fit to put the rate up “in line with BoE” which will inevitably increase over the next 12 – 18 months..

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