Low interest rates and limited remortgage options this year mean many borrowers coming to the end of a fixed or discounted deal have been content to stay on their lender’s standard variable rate (SVR). These are as low as 2.5 per cent at C&G and Nationwide, with other big lenders such as Halifax and Abbey charging 3.5 and 4.24 per cent respectively.
What’s in store for SVRs? Many thousands of existing borrowers will see their SVRs increase, brokers predict. Lenders can change their SVRs at any time, and some have already increased them. More attractive remortgage deals are emerging which could offer savings of hundreds of pounds a month.
How about the tracker option? There is a huge spread of SVRs — up to 6.45 per cent at Chesham Building Society, while recent increases include Yorkshire Building Society’s Accord brand, up 0.65 per cent to 5.99. This compares with remortgage deals of 3 per cent or less for some trackers and about 4 per cent on certain fixed rates. Many brokers continue to favour low-cost trackers — which will only rise if the base rate goes up — over fixes. By contrast, discounted variable rates are at risk from SVR increases.