Halifax, part of Lloyds Banking Group, has written to forty thousand customers indicating that it is raising the cap on its SVR to 3.75pc above Bank of England Base Rate or 4.25pc. These forty thousand customers are the only ones who have this guarantee.
However, hundreds of thousands of other customers will also suffer if the bank raises its SVR by quarter of a per cent, as this is the rate most mortgages revert to when they come to the end of their initial period. This rate is currently 3.5pc, equivalent to the current cap of 3pc above Bank Rate.
The cap applies only to customers who have an Early Repayment Charge on their mortgage. These borrowers are now being given three months to change their mortgage to another lender or repay it without charge. The bank said that rise should not be read as an indication that the SVR was about to rise.
However, a spokesman said that the change to the cap had been driven by “increases in the cost of funding” despite the fact that Bank Rate has not changed from a rock bottom 0.5pc for three years.
If the bank does increase its SVR by 0.25pc, the move could add over £500 a year to the cost of a £200,000 mortgage – an increase that many families can ill afford. Last time the bank raised the cap on its SVR, it raised the rate to equal the cap three months later.
Halifax's move paves the way for other mortgage companies to raise the SVRs that have enabled millions of people to survive the recession because of their low mortgage payments.
Mortgage rates are varying regularly as compare to other interest rates. Pay attention to trends and keep in mind those present mortgage rates changes frequently. Instead of trying to pinpoint a day when the mortgage rate is at its lowest, ensure how the rates vary from one day to the next.
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