An Atom Bank analysis of the income generated by Lloyds, HSBC, Natwest and Santander in 2022 found that the money made from SVR payments equated to nine per cent of the lenders’ profit after tax. The banks analysed had around £47bn worth of SVR balances, according to the data.
Lloyds was found to have the highest SVR of 8.49 per cent, which generated an additional £900m a year. This was equivalent to seven per cent of its 2022 revenue and 18 per cent of its profit after tax.
Looking at the current SVR of the top six banks today, Atom found that this averaged at 7.91 per cent with Lloyds still topping the table at 8.49 per cent as of 1 August.
This means the average mortgage borrower on an SVR is paying £713 a month or £8,552 a year on their mortgage.
If they switched to a best buy two-year fixed rate at six per cent, they could save £958 a year, Atom said. By switching to the best buy five-year fixed rate at 5.36 per cent, borrowers could pay £1,265 less each year on their mortgage.
The best buy rates are based on information sourced from Twenty7Tec as of 21 July, on a fee-free deal at 60 per cent LTV for a £75,000 loan.
Benefits of switching
Atom Bank is running a ‘get paid, not played’ campaign to encourage people to switch providers for a better deal on their savings accounts.
Mark Mullen, CEO at Atom Bank, said: “This is simply the mirror image of profiteering at the expense of savers. We’ve been campaigning for better savings rates for months now, but given the news from OSB we decided to focus some attention on SVR.
“It turns out banks are taking full advantage of mortgage customers too, and it’s not just the traditional banks, it’s even some of the new ones.”
In its latest update, OSB issued a profit warning and said it had taken a £180m hit because borrowers were spending less time on an SVR.
Mullen added: “Competition should be better, it isn’t. The incumbents should be better, they aren’t. Rate rises have exposed the inefficiencies of these organisations. They have blamed running costs and GDPR as reasons for not passing on better rates to customers, but have been called out on these excuses by the Financial Conduct Authority and the Bank of England. We have a long-term vision to do things differently and our low-cost model allows us to do that.
“We’ve said it before, and we will say it again: loyalty to your bank is bad for your financial health. We implore you to vote with your feet and shop around for better savings and for better mortgages – it could make a real difference.”
