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.

I am telling you, Look at fixed rates if you have a variable rate mortgage !

I am now recommended those borrowers currently sitting on their lender’s Standard Variable Rate (SVR) to consider locking in to a fixed-rate deal.

The advice comes following the news that rates are on the rise for average fixed rate deals. John Charcol has also sounded a similar warning, as well as other leading mortgage advice firms.

Significant numbers of current borrowers will benefit over a three or five-year term if they opt to fix their mortgage payments now. I can only stress that the rates currently on offer will not be available when Bank Base Rate (BBR) starts to make its inevitably move upwards.

I can appreciate that some borrowers will feel pleased with their current mortgage arrangement particularly if they are on an SVR of between 2.5 to 3.5%. The question, ‘Why should I fix when it will mean increasing my monthly repayments?’ is often raised. I understand and sympathise that borrowers will want to pay as little as possible on a monthly basis. However, what might seem a ‘no brainer’ at present needs to be looked at in closer detail, preferably with a mortgage adviser.

All this market needs is for Bank Base Rate to begin inching up and lenders to act accordingly before any short-term gain turns to long-term pain. As can be seen by the latest Moneyfacts research, the rates for fixed-rate products are already on the rise and any movement in BBR will see this escalate greatly. When this does happen, borrowers will find that the attractive long-term fixed rates available now will no longer be an option.

Those who are contemplating remortgaging to a fixed rate should certainly consider their options right now rather than waiting. To hang on, even for a couple of months, could mean a further 30 to 40 basis points (that's 0.3 to 0.4%, or about £25 to £33.33 per month per £100,000 of mortgage loan) rise in pricing which over the course of the mortgage will add a significant amount to the overall payment.

I am fully aware that many borrowers will be feeling the benefits of significantly reduced payments at present, however, a mortgage is a long-term commitment and everyone should consider their repayments over a period much greater than the next few months.

To discuss your particular needs, please use the links to the side of this blog to contact me, or pick up the phone and dial 08458 386938.

Homeowners should fix

Homeowners should take advantage of lowest fixed rates in a decade, according to Alliance & Leicester Mortgages.

Research by Alliance & Leicester Mortgages reveals that homeowners currently on their lender's SVR risk missing out by not taking the chance to fix now at a low rate. With fixed rate deals now available from as low as 2.99%, A&L is urging borrowers who need to remortgage to act quickly in order to secure some of the best deals currently on offer for a limited period only.

The research revealed that eight out of ten (81%) borrowers currently on their lender's SVR deal have no immediate plans to search for a better deal, with a further 264,000 existing SVR holders (14%) planning to wait until interest rates and house prices start to rise again.

Alliance & Leicester commented: "It is perhaps unsurprising that some homeowners currently on SVR deals are reluctant to commit to a new mortgage but past experience shows that fixed rates tend to increase in price before the base rate, in anticipation of the base rate increasing. Although SVR deals can be favourable for the short term, once interest rates start to rise they can become unaffordable very quickly. In comparison, as well as giving borrowers the security of low, regular monthly mortgage repayments, opting for a fixed rate deal will also protect homeowners from any future rate rises."