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Standard Bank surprises brokers with SVR increase

Standard Life Bank has been criticised by brokers for raising its standard variable mortgage rate last week from 5 per cent to 5.1 per cent as they consider that base rates are likely to remain the same or fall.

The bank blames the move on the wholesale money markets, claiming it was forced to make the increase as it is becoming more expensive to fund mortgages from capital markets and this increase for borrowers avoids slashing savings rates.

The announcement surprised the industry as it coincided with the Bank of England keeping the base rate at 4 per cent for the 14th consecutive month.

It also comes as national broker Charcol predicts “the very competitive nature of the market is likely to result in some lenders now reducing their fixed rates very soon.”

The bank denies that the move is a result of problems within Standard Life Group which has been downgraded to AA2 from AAA by Moody&#39s rating agency.

Charcol senior technical manager Ray Boulger says: “They are blaming wholesale money markets but this is so easy to disprove it is nonsense as market rates are the same or lower. It is all about margins.”

Standard Life Bank public affairs manager Angus Macleod says: “We made the decision before the Bank of England&#39s announcement. This is a modest rise and our SVR is still competitive and below the average SVR in the market of 5.53 per cent.”

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