Santander to increase its Standard Variable Rate by 0.50%

Santander UK intends to increase its Standard Variable Rate from 4.24% to 4.74% from 3 October 2012.

There will also be an increase in the lender's SVR cap margin – the maximum amount above the Bank of England base rate that it can charge – from 3.75% to 4.99% from 24 September.

Santander said its competitors increased their SVRs by similar amounts earlier this year, reflecting the same market dynamics. In the past few months Halifax, Co-operative Bank, Bank of Ireland and Yorkshire and Clydesdale Bank have increased their SVRs.

Santander's analysis shows that its SVR mortgage holders will see an average increase of £26 per month for a £100,000 mortgage.

Santander now joins the list of lenders to hike its SVR, despite the fact the Bank of England base rate has remained unchanged since March 2009.

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; a significant amount for the many households who will be impacted by this.

Anyone affected by this or who is concerned their mortgage lender may join the SVR-hiking pack should consider remortgaging onto another deal if possible.

Speak to an independent mortgage broker like myself , if you are unsure of the best option as they will explain what is available to you and help to make the best decision for your situation.

As always thanks for your attention.

FSA to instruct banks to charge for current accounts

The Financial Services Authority (FSA) is to instruct banks to charge for current accounts, according to a report by consumer group Which?.

Research found charges for going overdrawn for two days per month without permission range from £120 to £900 a year, leading to confusion for consumers.

Customers who stay in credit also lose out through punitive charges levelled on withdrawing money abroad.

A senior executive at the FSA told Which? regulatory intervention may be needed to curb the problems arising from supposedly free banking.

Which? chief executive Peter Vicary-Smith said –

“Hidden charges completely shatters the myth that banking is free. The suggestion that banks should increase charges to avoid more scandals defies logic and is a slap in the face for consumers who are being hit hard by one of the worst financial crises in recent times. It's a disgrace that the very people who bailed out the banks are being asked to pay more for the most basic accounts, while the industry continues to be rocked by scandals like PPI mis-selling, LIBOR rate-rigging and IT failures. Banks must be far more transparent about their fees and charges so that people can clearly see what they already pay."

Many European retail banks currently level a monthly charge instead of relying on cross-selling or high hidden charges for income.

Peter McNamara, former head of personal banking at Lloyds, told the Today programme if UK banks wished to operate a similar system they would need to charge between £4 to £5 per month but felt the idea of  suddenly enforcing or regulating some charges on accounts is an extraordinarily unattractive one.

John Howard, former chairman of the consumer panel at the FSA, said he was in favour of monthly charges for a number of reasons.

Customers do not know "what the real cost of providing that basic banking service is", he said. "Banks have to be honest with us about what it really costs to provide that bank account. Consumers are immensely angry with the banks about everything that's happened, and the typical reaction is why should we pay banks even more. But there are real concerns that the regulator is trying to address, that free banking is creating distortions in the marketplace.”

The current system may have created the climate that led to the mass mis-selling of payment protection insurance (PPI), because effectively it encouraged banks to cross sell products, and unfortunately we are all too aware of what the by-product of that environment was.