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Standard Life Bank increases its SVR
Today Standard Life Bank announced its standard variable rate would increase by 0.15% to 7.46% or 7.66% depending on the loan to value of the mortgage. Julia Harris mortgage expert at Moneyfacts.co.uk, the leading independent financial comparison site comments:
“It is very rare to see a lender increase its standard variable rate outside a base rate change. It could very well be the first sign that the mainstream ‘prime’ mortgage is feeling the pinch of the credit crisis.
“Even with this latest increase, Standard Life Bank’s SVR remains in line with the market average. While none of Standard Life’s rates are directly linked to the SVR, the increase will still affect many existing borrowers who have reverted to a SVR once their deal has elapsed.
“For those already paying the SVR, this shock move should be the straw that finally breaks the camel’s back and encourages them to find a better deal or, at the very least make, sure the SVR is still the best option for them
“But what might cause more shock and confusion is for borrowers who have secured a fixed rate with Standard Life, but added the original fee to the loan. Any fees added to a Standard Life mortgage are charged at the SVR rather than the pay rate, so even fixed rate borrowers will see a rise in their monthly repayments as a consequence of this change. With fees rising as high as £2K, it’s very likely that many borrowers will be in this boat.
“This is a stark warning for anyone on an SVR rate or, indeed anyone with a rate linked to the SVR, as with many discounted rates. SVR is a managed rate, controlled by the lender, and it can and does move when base rate is stable.
“Standard Life Bank is one of the top 20 mortgage lenders, so it could very well set a precedent for others to follow suit.”
Rachael Friend is one of the many borrowers who indeed added their mortgage fee to their fixed rate loan. Thinking their repayments were unable to move during their fixed rate term, it was a surprise when they received the letter from Standard Life this week.
If you would like any additional information on this case, to speak with Rachael or need comment then please do not hesitate to call.
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.
Think carefully before securing other debts against your home, your home may be repossessed if you do not keep up repayments on your mortgage.
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