Categories: Mortgages
Topics: SVR| Which?| mortgages| Cheltenham & Gloucester| Lloyds Banking Group| base rate
Variable rate mortgage lenders are failing to pass on cuts in the base rate to customers, meaning some will face “real financial difficulty” when rates climb again, research suggests.
A study by consumer group Which? found 95% of standard variable rate (SVR) mortgage lenders had not passed on cuts to the main interest rate, which now stands at an all-time low of 0.5% having been at 5% in October 2008.
According to the research, the average SVR is now almost 3.5% above the base rate, with some lenders' SVRs at more than 6%.
Which? CEO Peter Vicary-Smith said: "Millions of people are on variable rate mortgage deals and for many a rate hike could mean they're facing real financial difficulties.
"Banks have enjoyed increased margins on mortgages for the last few years and when the base rate rises again, few lenders will be able to justify passing the full amount onto their SVR customers."
The Which? study found more than a fifth of lenders have increased their SVR since the base rate was cut to 0.5% in March 2009.
Cheltenham & Gloucester and Lloyds TSB Scotland were the only lenders who are part of the four biggest banking groups to pass on the full cut.
At 6.08%, KRBS has the highest SVR on the market - more than 12 times the base rate.
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| Comment | Which? hits out at lenders' 6% variable rates |
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Which? & Variable Rates
I am an IFA & have been specialising in the mortgage market since 1999. After being on the receiving end of a .35% reduction in a lenders Standard Varaible Rate after a .5% Bank of England Base Rate reduction I have told this story to all my prospective clients considering such a product & made it quite clear that lenders are free to vary their SVR's as they see fit as it is their individual commercial decision. As a result any client buying such a product will not have the same level of honesty that a client with a tracker mortgage will get. Perhaps the "Discounted from SVR products" should come with a separate health, or should that be wealth, warning that lender's don't have to play fair with this product! A put this up as a challenge to Which? & the FSA to do a proper job to protect the client and campaign for this, bearing in mind that under the FSMA 2000 the FSA is supposed to be protecting customers interests!
Posted by: John Morgan
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Which? on the ball???
This is hardly a ground breaking observation from Which? is it? And these the same muppets who think IFAs taking a gross margin of 1% (or whatever) is excessive! Maybe Which? should change their name to What?, it would certainly be a better description of how far behind they are with their observations! What? we missed the fact that banks are shafting people? What? we have no understanding of investments? What? we think people should work for nothing?
Posted by: You must be joking