Charcol stated borrowers who are paying their lender’s SVR are already at a disadvantage, paying an average of over £100 more each month than they need to compared to those who are on the market leading deals.
Ray Boulger, senior technical manager at mortgage broker John Charcol, commented: “While an interest rate rise is never good news for homeowners, those who are still on their lender’s SVR will be hit particularly hard, yet have the greatest opportunity to do something about it. The vast majority of lenders will pass the Bank Rate increase on in full and some will no doubt increase their SVR by more. To the average householder on an SVR repayment mortgage a bank rate increase will mean £15 more per month, adding up to £180 a year.”
Recent weeks have also seen many major lenders withdraw their market leading fixed rate deals as the cost of funds increased in anticipation of the Bank Rate rise. The withdrawal of these deals comes as a further blow to borrowers who want to protect themselves from any further interest rate rises by fixing their repayments.
Boulger continued: “Whilst the most mouth-watering of fixed rate deals may have gone, there are still some great mortgages available and there will always be deals out there that are significantly cheaper than a lender’s SVR, including lifetime trackers. It’s absolutely vital that homeowners don’t languish on their SVR and seek advice on getting the right mortgage to suit their needs.
“With interest rates hotly tipped to increase not just once, but possibly twice in the next few months, all borrowers need to ensure that they are on the best rate possible, especially if they do not have a fixed rate mortgage, so that if their monthly repayment increases, they will still be able to make ends meet.”
