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Mortgage payments rise for Santander customers

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by Jan Harris
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Santander has increased its standard variable rate (SVR) from 4.24 per cent to 4.74 per cent, adding an extra £26 per month to monthly repayments on a £100,000 mortgage.

The move, which was announced in August, came into effect today.

The increase will affect existing mortgage customers who are on the SVR rate, including customers who were on a fixed-rate or tracker deal which defaulted to the SVR rate when the introductory deal expired.

Santander follows several other lenders in raising its SVR rate, including the Halifax, RBS and the Co-op.

Lenders are allowed to set their own SVR rate, even if the bank of England base rate remains the same.

The base rate has been at a historically low level of 0.50 per cent for the past three-and-a-half years.

Santander attributed the rise in SVR to higher costs due to increased liquidity requirements and higher wholesale borrowing costs.

The average SVR rate increased to 4.27 per cent at the end of August, its highest level for more than three years.

Meanwhile, the number of mortgages granted in August remained stable at 47,665, compared with 47,556 in July, according to Bank of England figures.

Net mortgage lending fell by £276 million, its biggest fall since December 2010.

Mortgage approvals are at less than half the monthly average of 103,000 prior to the onset of the credit crunch in 2007.

The Council of Mortgage Lenders said today that it is cautiously optimistic that the recently launched Funding for Lending scheme will boost mortgage lending.

The scheme, launched by the Bank of England and HM Treasury, offers funding to banks and building societies at below current elevated market rates to encourage them to lend to UK households and non-financial companies.

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News posted: October 3, 2012

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