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Market News

September 2010

"Mortgage Timebomb" alert as lenders hike variable rates

Millions of homebuyers are facing a 'mortgage timebomb' as lenders put up interest rates even though the base rate remains unchanged.

Ten banks and building societies have already put up their standard variable rates (SVR), costing borrowers hundreds of pounds a year. This is despite the fact that SVRs are traditionally linked to the Bank of England base rate, which has been 0.5 per cent for 18 months. 

The biggest culprit so far is Skipton Building Society, which hiked its SVR from 3.5 to 4.95 per cent in March and no fewer than 32 lenders now charge rates of more than 5 per cent  -  4.5 per cent above base rate.

More than three million people have SVR mortgages, which can fluctuate month by month. Even more worryingly, some lenders may see a rise in Bank of England base rate as an opportunity to hike their SVRs by much more than the base rate increase.

Now might be the perfect time for customers to consider remortgaging to another lender or trying to negotiate a better deal from their existing lender.

• July 2010
  • Interest rates set to rise?
• May 2010
  • Home Information Packs to be abolished this week
• February 2010
  • Interest Rate Outlook 2010
• October 2009
  • House prices back to September 2008 levels
• August 2009
  • Mortgage Volumes for July
• June 2009
  • It’s not all doom and gloom
• December 2008
  • The Bank of England has cut interest rates by one percentage point, from 3% to 2%, the lowest level since 1951
• November 2008
  • The Bank of England has cut the base rate by 1.5% bringing it down to just 3%