Standard Life increases SVR

Mortgage borrowers with Standard Life will be dismayed to learn that the company is increasing its standard variable rate (SVR) by 0.15 percentage points, to 7.46%, from Monday of next week.

The news comes as a surprise because the Bank of England left the base rate unchanged, at 5.75%, in November.

However analysts are warning that higher mortgage interest rates are on the cards, as lenders continue to feel the effects of the global credit squeeze.

In recent months, increases in standard rates have been common amongst so called “sub-prime” lenders.

However, Julia Harris from Moneyfacts, the financial comparison website, believes all borrowers should now be on their guard.

She describes the move by Standard Life as “a stark warning for anyone on an SVR rate or, indeed anyone with a rate linked to the SVR, as with many discounted rates.”

Ray Boulger from mortgage brokers John Charcol adds that: “Conditions in the wholesale money markets mean the average cost of funding for lenders has been going up steadily over the last three months and has now reached a peak”.

Standard Life has described its decision to increase its SVR as: “a consequence of significant changes to the mortgage market in recent months.”

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