Moneysupermarket.com: mortgage SVR changes

Commenting on the mortgage SVR changes following the November MPC rate rise Louise Cuming, head of mortgages at moneysupermarket.com, said:

“Borrowers have been left in financial no-man’s-land with only 61 out of 112 lenders to date having announced their intentions regarding their products’ standard variable rates (SVR). This is a dreadful approach to customer care at this time of year."
“More than two weeks after the MPC rate rose to five per cent nearly half the market’s providers have yet to inform customers of their fate. Consequently, with millions of people not able to plan their finances going into the New Year, Christmas could be a time of anxiety rather than cheer for many.

“Worryingly, of those lenders to have announced new SVRs four have increased them by more than the base rate’s 0.25 per cent increase. In particular, Abbey’s plan to increase its SVR by 0.34 per cent to 7.09 per cent will shock its many customers. As Abbey is one of the biggest lenders in the market this could indicate to other lenders this is acceptable practice going forward. Additionally, Bank of Scotland and The Mortgage Business have both increased their rates by 0.35 per cent to 7.25 per cent and 7.34 per cent respectively; and Accord has increased its SVR by 0.30 per cent to 7.05 per cent.

“These providers have used the rate rise to disguise an attempt to increase profits. Borrowers have little protection against lenders who decide to hike their SVR up by more than the quarter point base rate rise. Therefore, people should look to remortgage, which is becoming increasingly hassle-free. Alternatively they should speak directly to their lender, because some such as Halifax, First Active and Nationwide now allow existing borrowers to transfer easily onto their more competitive products without actually remortgaging.

“Only four providers so far have decided not to pass the full rise on to their customers. Of these Portman Building Society and Bath Building Society have increased their rates by 0.24 per cent to 6.99 per cent each. Stafford Building Society has increased its rate by 0.22 per cent to 5.92 per cent, and Scottish Building Society has increased its rate by 0.20 per cent to 6.75 per cent.

“While these milder rises may prove beneficial for existing customers, people should bear in mind there may be steep rises in the future if these providers need to make up for lost ground in future. And, although these providers have passed on a smaller percentage increase these deals are not necessarily the most competitive on the market. Of these four mortgage products the Stafford Building Society SVR mortgage is arguably the only competitive product with an SVR rate below six per cent.

“moneysupermarket.com today calls on all providers to announce their intentions now and end this period of uncertainty for so many millions of people.”