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.