Many SVRs “disjointed” from base rate

The collapse of the remortage market as borrowers coming to the end of fixed-rate deals opt to remain on reversion rates, is prompting lenders to raise their standard variable rates (SRVs).

According to Moneyfacts.co.uk some borrowers on SVRs have benefited from the record low 0.5% base rate but others have not been so lucky.

The financial website’s spokesperson, Michelle Slade, says: “Many lenders’ SVRs have become disjointed from base rate, with only a fraction of the cuts having been passed on.”

She believes small building societies have been particularly keen to encourage borrowers to remortgage.

The point is illustrated by Skipton’s recent decision to increase its SVR from 3.5% to 4.95%, having evoked “exceptional circumstances” clauses that allowed it to remove an SVR cap of 3% above base rate.

Furthermore, research from Moneyfacts indicates that some borrowers on SVRs may have paid more than double for the same mortgage than if they had been with a different lender.

With the average SVR now at 4.6%, the difference between the cheapest and most expensive lender for a typical £150,000 mortgage stands at of £5,670, Moneyfacts calculates.

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