Lenders have been hit from all sides in recent months and whether it is issues with warehouse funding or the tightening margins involved in mortgage lending, the result has been a significant rise in product and arrangement fees over the last year.
This could also have an impact on the number of people sitting on SVR as Bien says: “Fees have been going up and maybe it is going to be easier for some borrowers to stay put in the short term.”
Positive publicity
Although mortgage intermediaries and borrowers seem to pay little attention to SVR when arranging a home loan, it comes back to haunt them on more ocassions than most would like to admit.
Not only is there an opportunity for intermediaries and financial advisers to improve their own service and ensure they are in contact with those clients coming to the end of a deal, but also there is an opportunity for lenders to create some positive publicity and attract future clients to their cause.
At the moment lenders tend only to get negative publicity in regard to their SVR. Either they have not put it down quickly enough following a drop in the Bank of England Base Rate or they have failed to pass on the full cut.
By restructuring their SVR to track the Base Rate at a commercially acceptable level which was also viable for borrowers, lenders could ingratiate themselves to their clients and give them some certainty as to what they will end up paying if they fall onto the SVR.
They could also take a lot of pressure off borrowers who either slip accidentally on to SVR or are forced there through a lack of access to new products.
The irony is that by establishing an SVR which was commercially viable without being totally punitive to the borrower, lenders in the market could very well see more people happy to sit at that level and improve their margins overall.
HSBC may top the league table as the cheapest SVR lender in the UK, but lenders generally could do a lot more to make their basic rate work harder for both themselves and their clients.
Those that take up the challenge may well find it pays significant dividends in the months ahead.
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