Mortgage providers increase SVR rates

Since April 2009 the Bank of England has kept base rate on hold at 0.50%, but since that time eight mortgage providers have increased their standard variable rate (SVR), according to Moneyfacts.co.uk.

Darren Cook, Spokesperson for Moneyfacts.co.uk commented: "Many borrowers have reverted to rates as low as 2.50%, which means that remaining on a SVR is an attractive option for many.

"The latest remortgage approvals figures continue to show record lows as borrowers continue to stay on a revert-to rate rather than move on to a new deal.

"There is little or no incentive for borrowers, particularly those with little or no equity, to find a new deal when in all likelihood they will have to pay a higher rate.

"By increasing the SVR, lenders are actively trying to encourage borrowers to find a new mortgage deal, but many are unlikely to act until a significant base rate increase is a real possibility.

"In recent months providers have been forced to increase savings rates in order to raise funding in a very competitive market. Increasing the SVR may be the only way some can offset this cost.

"The momentum to increase SVRs appears to be gathering pace and now that a few have taken the step, it is highly possible others will follow."