Lenders including Halifax, the Co-operative Bank, Yorkshire Bank and Clydesdale Bank have all increased their SVRs in recent months. Santander is the latest lender to announce that it will be increasing its SVR by 0.50% to 4.74% in October, a move which is expected to affect several hundred thousand customers.
According to Moneysavingexpert.com, a Santander customer on its SVR rate with a £150,000, 25-year repayment mortgage will see their payments increase by £42.54 a month.
Ben Thompson, managing director of Legal and General Mortgage Club said that one positive factor to come from this is that it has brought about remortgage opportunities for homeowners.
He said: “Figures from the Council of Mortgage Lenders (CML) show that remortgage activity peaked at 51% in Q3 2008. However, since that time and in the wake of the financial crisis numbers declined steadily to a low of 23% in Q3 2010. In the last 12 months quarterly figures have held steady at 29% showing that this area of the market is starting to get back on its feet.
“With the prospect of increased market stimulation from the government’s Funding for Lending Scheme and a price war getting in to full swing we may see the number of remortgages in the UK start to climb once again. Although these figures will not filter through into CML stats until Q4 2012 the hope is that the relief will be felt far sooner by borrowers.”
Stuart Gregory, director at Lentune Mortgage Consultancy said that he doesn’t expect a surge of remortgage business.
“I expected the Halifax changes earlier this year to have more of an effect and kick start a lot of people looking to remortgage. While we saw a rise in enquiry levels, we didn’t see a huge increase in the number of people remortgaging,” said Gregory.
Halifax raised its SVR from 3.49% to 3.99% on 1 May, affecting 850,000 borrowers.
“Borrowers, who may have kept their eye on the market before, may not be doing so at the moment. Another point is that if borrowers are on their lender’s SVR it’s probably for a reason, so this hike will most likely hit the people who least need the hit.”
Rob Killeen, mortgage adviser at Capital Fortune added: “There is a lot of remortgage business out there but at the same time there are a lot of people who simply can’t move. Even if the banks increased their SVRs to 5% or above, I reckon 60% of their clients would still remain on their lenders’ SVR. I just don’t think they can move.”
Brian Murphy, head of lending at Mortgage Advice Bureau added that Santander’s latest move could be the start of a new round of SVR increases, which could potentially push up remortgage business.
“This rise could be the start of a trend. Santander has been seen as being late compared to some its peers in raising its SVR. But it may actually be the start of a new round of increases.
“We’ve seen product prices come down recently for both purchase and remortgage, and it looks like some lenders have more of an appetite to lend at the moment. There could well be cheaper products now available to remortgagors.”
Other lenders who have raised their SVR in recent months include the Co-operative Bank, which pushed its SVR up by 0.5% to 4.74% on 1 May, impacting 54,000 borrowers and the Bank of Ireland, which increased its SVR to 4.49% on 1 June, affecting 100,000 borrowers.
Below is a list of SVR changes that have already taken place: