SVR's are increasing, don't get caught unaware !

Got this latest piece of news today, and thought that it needs sharing with the unaware public...

"Mortgage advisers need to be aware of the fact that standard variable rates (SVRs) are potentially on the increase.

This is the opinion of Dean Jones, head of Paaleads.com (who are part of Moneysupermarket.com), who said: "This week we have seen three providers increase their SVRs including Skipton BS by 1.45% to 4.95%, Holmesdale BS by 0.35% to 4.89% and Norwich & Peterborough BS by 0.50% to 5.35%. With SVRs having been at low levels for some time, this shift by building societies could be early warning that banks will soon follow suit and raise their SVRs.

”Brokers should be mindful of those providers still offering competitive SVRs and look to secure fixed rates for their clients before there is a more whole scale shift to higher level SVRs."


This means that if you are even considering changing from your existing lender's SVR, that now is a good time to look at your options. I've always said that you can be caught unawares of creeping changes, as you never know when matters change for the worse. When it happens without you even realising, that's the worst feeling ever. Don't say you've not been warned ! Call me on 0845 838 6938 and let's discuss what your options are.

Lastly just to make this entirely clear, the SVR means that lender's Standard Variable Rate, which is the default rate that borrowers automatically switch to when a mortgage deal ends, i.e. after a 2 year fixed rate. Currently SVR's are looking attractive, but hopefully you can see from this post that complacency may become expensive.

Mortgage market myths and misconceptions

Research by professional advice website Unbiased.co.uk suggests many of Britain's would-be borrowers may wrongly assume they are excluded from the mortgage market by the extent of lenders' tougher criteria.

One in ten think an average borrower needs a 40% deposit to get a reasonable mortgage deal, and 18% believe a minimum 30% is required.

More than one in four believe an individual could borrow no more than 2.5 times their salary, and over half feel that 3 times salary is the limit.

Several months of alarming news from the banking sector and high profile crackdowns by individual lenders appears to have left an extreme impression on the public. When asked what size deposit ‘the average borrower would need to get access to a reasonable mortgage deal', almost one in ten (9%) people said they would require a deposit of at least 40%, while 18% felt this typical applicant would be unsuccessful with any less than a 30% down-payment.

In reality however, the average deposit needed to get one of the current best buy mortgages is just under 22%. This number falls even further when looking at 5-year fixed rates, where the average deposit required is just under 19%. Londoners in particular feel the screw has tightened more severely than it has.

Confusion also exists when it comes to how many times an individual's annual income the average mortgage provider would consider lending. Over one in four (27%) Brits feel lenders would restrict a homeloan for a typical borrower to 2.5 times their annual income, while 52% believe 3 times salary is the limit. Again, Londoners are the gloomiest, with one in three (32%) expecting to be offered no more than 2.5 times their salary. In reality, whilst lenders are still being more conservative than in normal times, as a basic guide most lenders will offer between 3.25 and 4 times an individual's annual income.

Unbiased said "With the credit crunch in full swing and lenders tightening their lending criteria, it is not surprising that people are confused about the mortgage options available to them. Britain has been gripped by the recession doom and gloom and this has lead to an extremely pessimistic view of the mortgage market. In reality, whilst the lending criteria we have seen applied over the last few years are a thing of the past, there may well be options available to people looking to take out a new mortgage.

"Our research reiterates just how important it is in the current market conditions to seek advice from a whole of market mortgage adviser. Many people may be putting off looking for a mortgage simply because they think they won't be able to get a good deal. A whole of market mortgage adviser can look at all the mortgages available to and find the best deal not just by rate but also by income multiples and loan-to-value required."

Whatever your situation is, I can help you find the most suitable mortgage product for your needs. 'Going it alone' may cost you massively, so just call or email me (link on the right hand side above) and let's discuss your situation.