Halifax has announced that it is to increase its mortgage standard variable rate (SVR) from the 1st May 2012 by 0.49% to 3.99%.

This increase will add £490 a year to an interest only mortgage of £100,000 with Halifax, which equates to £40.83p per month. If you had a 25 year repayment mortgage this would put an extra £27.25p on the monthly payments (£327 a year)***.

This follows the Royal Bank of Scotland (RBS) increasing its SVR on three of its products from 3.75% to 4% last week.

The SVR is the rate you would pay for a mortgage without agreeing to a special deal like a tracker, fixed or discounted rate. An SVR mortgage is usually the cheapest to set up and the cheapest to move onto another rate from.

Halifax, just as RBS before them, has blamed the money markets and the cost of using retail savers money for the rate rise. A spokesperson for the lender said "The change acknowledges that the cost of funding a mortgage in today's market remains significantly higher than the longer term average. The increase to the rate reflects the fact that raising money through retail savings and in the wholesale markets is currently very expensive by historical standards."

With the current economic climate making it good sense for many people to be on the lender’s SVR, it is assessed that there could be some 850,000 mortgage borrowers affected by this move. Some borrowers have also been forced onto the SVR as they are unable to change mortgages because of the more stringent borrowing requirements that bare now in force.

With an average balance on these of £67,500 that means an extra £330.75p a year or £27.56p a month interest only and £18.39p a month more for a repayment mortgage (£220.68p a year)***.

If you are affected by these SVR changes it might be a good time to have a word with an IFA or ‘whole of market’ (independent) mortgage broker and consider remortgaging. But bear in mind that some of the more attractive rates do usually have larger fees. If you just speak to your lender’s mortgage salesperson they will be ‘tied’ to only dealing with that organisation’s mortgage products.

I checked around the web today and compared the Halifax SVR with other lenders as follows:

Lender

Standard Variable Rate

New Customers

Existing Customers

Co-operative FS

4.24%

4.24%

Coventry

4.74%

4.74%

Halifax

3.5% (3.99% from 01 May)

3.5% (3.99% from 01 May)

HSBC

3.94%

3.94%

Lloyds TSB

3.99%

2.50%

Nationwide

3.99%

2.50%

Northern Rock

4.79%

4.79%

RBS

4.00%

4.00%

Santander

4.24%

4.24%

Skipton

4.95%

4.95%

Yorkshire

4.99%

4.99%

***Calculations were made using the BBC mortgage calculator.

Comment Here!

comments