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 [...]

More: Many SVRs ?disjointed? from base rate

A lenders SVR has no relation to the bank base rate whatsoever and is the traditional way for a lender to make some profit from the mortgage as usually the profit from the term of a mortgage product is limited. In the current climate where there is a lot of pressure for lenders to go back into profit I suspect that you will see a lot more movement in SVR's. SVR's increasing could also prompt those that can remortgage to actually now look at what can be done with their mortgage and stimulate the mortgage market.

The divergence of SVR and Bank of England Base Rate became obvious in 2007. This was highlighted by Moneyfacts in its Mortgage Market Report published in early 2008.

Also SVR's have been creeping up for this last few months and as Minerva quite rightly points out this may well stimulate homeowners to remortgage as the SVR becomes less attractive.

I get the impression that banks really want to push Discounted Mortgages and Tracker Mortgages as these ensure they can maintain margin with minimal management and risk.

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