Paul Darwin, head of intermediary sales at Skipton Building Society, described such surveys as like comparing apples with pears since lenders have many different business models and variations.
He said: “In reality various factors influence a borrowers’ or mortgage advisers’ choice of lender – product, price, acceptability, service, credit history, circumstances, future aspirations, view on future rates and a low SVR are all part of the mix. Surveys often fall short in not recognising, nor taking into account, regulation has been instrumental in forcing the market down the most appropriate ‘short-term route’ such as up-front price rather than ‘longer-term value’.”
The survey showed the annual interest cost of a £150,000 mortgage at all lenders’ SVR between 1 January 2005 and 31 December 2005. Direct lenders and mutuals led the way with First Direct occupying top spot.
Darwin continued: “For a non-conforming lender it will look at a product proposition to give them a return over a three-year period, with ERCs applying to ensure profitability. Its model allows for the fact most borrowers will move on when the product comes to an end. To these lenders its SVR is purely academic.”
Keith Street , director of sales at Kensington Mortgages, disagreed. He said: “20 per cent of our mortgage book is on a variable rate so it’s important to have a low SVR to remain competitive and treat our customers fairly.”
Darren Cook, head of mortgages at Moneyfacts.co.uk, said: “Borrowers who do not wish to continually switch their deal by chasing short-term fixed rate deals may do well to look at the lenders that feature at the top end of the table.”
