The price comparison specialist published some research into SVRs last Summer.
In a statement issued at the time, the company said: “While a borrower will never sign up for a lender’s SVR directly, it is surprising just how many consumers are prepared to leave their borrowing at this rate when their initial fixed or discounted variable rate mortgage deal expires.
"This situation was highlighted in an online survey Moneyfacts.co.uk during 2005 in which 46 per cent of a sample of 4,342 website visitors claimed their mortgage interest rate was being charged at their lender’s SVR.”
Some may say that it is hardly surprising that borrowers going on to a price comparison site have ended up on SVR as they are looking for a deal to replace their old one.
However, surely those borrowers taking the time to look up details of a new mortgage deal and compare best buy tables would also be well versed enough to make sure they did so long before ending up on their current lender’s SVR?
Contact is needed
Whatever the truth of the matter, there is little doubt that there is a very much larger per centage of people paying SVR than the 3 per cent to 5 per cent who actively seek the rate out.
This is down to a combination of factors, but in a mortgage market that is dominated by the intermediary channel one of the key issues is that brokers are not doing a good enough job when it comes to contacting existing clients at the end of their deal and rebroking them on to another product.
Boulger comments: “Statistics from lenders show that a lot of clients remortgage or redeem through a different mortgage adviser.
"This is most likely because they have not been sufficiently satisfied with their initial intermediary, or because that broker did not get back in touch at the end of the client’s deal.”
It seems almost ridiculous to suggest that mortgage intermediaries are not getting back in touch with their clients in today’s age of computerised diary systems, but during the boom times of recent years paying attention to this was seemingly not as important as it will be in the coming months.
Intermediary Savills Private Finance runs an automated system which ensures clients are contacted in good time ahead of their deal expiring, and director Melaine Bien says:
“This year it is going to be very important. There are fewer products available and new business is likely to slow a bit. In the last few years in particular it has not perhaps been such a priority for some mortgage intermediary businesses.”
Poor client management may play an important part in seeing borrowers slip onto SVR, but mortgage borrowers themselves have a responsibility to bear and in the coming months the changing lending environment is going to continue to make it more difficult for non-conforming and non-standard borrowers to get access to the products they have been used to in the past.
Alex Hammond, spokesperson at Kensington says that SVR will grow in importance for a certain borrower type. “Funding on higher loan-to-value (LTV) and adverse products is not so readily available and it will be tough to find new products.
"SVR is going to grow in importance for a certain type of borrower and particularly those with adverse credit, and high LTVs who are coming to the end of their deal.”
It remains to be seen how many borrowers in this category are forced onto SVR and how many manage to get new terms for their borrowing, even if it comes at a premium.
Whatever the case, there is little doubt that those with anything but clear-cut prime credentials are going to find it harder to get a mortgage at the rates that were on offer in the recent past, even with the cut we have seen to Bank of England Base Rate.
