Mortgage repayments in the UK are expected to rise in May, as lenders increase their standard variable rates (SVRs), leaving many borrowers locked into expensive deals.
While the Bank of England’s base rate remains unchanged, Halifax’s SVR will increase by 0.49 percent to 3.99 percent on 1 May 2012, with other banks following including the Yorkshire and Clydesdale banks as well as the Bank of Ireland.
In addition, Co-operative Bank announced earlier that it will raise its SVR by 0.5 percent to 4.74 percent starting in May.
According to mortgage analysts, at least one million borrowers will be impacted by the SVR increase, which has been blamed on higher funding costs and changing conditions in the mortgage market.
“Anyone on their lender’s SVR, whether they have increased it or not, should check every six months or so whether they would get a better deal by remortgaging,” said Mark Harris, Chief Executive of Mortgage Broker SPF Private Clients.
Stricter lending criteria as well as falling home prices have also reduced the number of borrowers that qualify for an alternative and cheaper loan.
“If you have little or no equity remortgaging to another lender will be tricky, so ask your existing lender if it will offer you one of its fixed or tracker rates. If you are on one of the cheapest SVRs of 2.5 percent from Lloyds and Nationwide you will struggle to find anything cheaper,” explained Harris.
“But if your SVR is, say, four percent plus there should be something cheaper out there, assuming you have at least 20 percent equity in your home,” he added.
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