Standard variable rate (SVR) mortgages seem to be fading away as mortgage lenders look to their profit margins.
The 0.5% base rate sounds great, and we should all be benefiting from ultra low mortgages and loans, shouldn’t we?
Well, there are many people who actually do have very low home loans, particularly if they are tracker mortages that offer a discount below the already microscopic 0.5% base rate.
Sadly there are also millions of mortgage borrowers who are seeing their rates at levels that do not seem to reflect the base rates. Unfortunately, those numbers are set to increase as mortgage lenders look long and hard at their standard variable rate mortgage products.
Charging us competitive low rate mortgages is obviously starting to hurt the lenders profit margins, particularly as the current low base rate has been around for so long now, and will probably (but don’t bet the farm on it) continue for a few more months to come.
Take the Nationwide, for example. They have withdrawn their SVR mortgages entirely. If you are currently on a SVR mortgage with them then you are OK, however if you want to switch to a SVR mortgage or are a new customer, then I’m afraid Nationwide no longer sell them.
The Skipton Building Society is the latest lender to hit their SVR mortgage customers in their wallets. It is to increase its SVR mortgage to 4.95% from March 1st.
Although this rate remains below the average SVR of the top 10 building societies (currently 5.12%), Skipton are temporarily breaking their commitment to not charge their SVR customers more than 3% over the base rate.
As Hannah-Mercedes Skenfield, mortgage channel manager at moneysupermarket.com says:
“SVRs have provided somewhat of a haven for cash-strapped homeowners over the past 12 months, but homeowners relying on the safety net of a low SVR could now find themselves stranded. It’s absolutely vital that borrowers with an SVR deal remain vigilant, especially over the coming weeks when we could see more of the same from other lenders.”