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After the Financial Conduct Authority met last week with lenders over their being too slow to pass on increased interest rates to savers, the HomeOwners Alliance was keen to highlight the way banks seem to have found another way to maximise their profits at the homeowner’s expense – in the form of staggeringly high Standard Variable rates (SVRs).
Referring to SVR’s as ‘daylight robbery by the banks’, the HomeOwners Alliance said it is urging mortgage holders to check their mortgage deal to ensure they are not potentially paying thousands of pounds a year more on their mortgages than necessary due to soaring standard variable rates.
It pointed to the fact that those with Aldermore are now paying an SVR that is now 9.48%, Yorkshire Bank’s and Virgin Money’s SVR is 8.74%, while Barclays, Furness Building Society, Halifax, Lloyds Bank, and Scottish Widows’ SVRs now stand at 8.49%, according to data from our partners L&C.
To illustrate what this means for mortgage payments, the HomeOwners Alliance compared monthly mortgage payments on a £200,000 mortgage over a 25 year term, at these rates:
| Best 2 year fix rate available 5.53% (1) | Average 2 year fix rate 6.52% (2) | Barclays, Furness Building Society, Halifax, Lloyds Bank and Scottish Widows’ SVR 8.49%.
|
Yorkshire Bank’s and Virgin Money’s SVR 8.74% | Aldermore’s SVR of 9.48% |
| £1,232 | £1,353 | £1,609 | £1,643 | £1,745 |
(1) 2 year fix from Lloyds Bank at 5.53%. You’ll need a 40% deposit and it has an arrangement fee of £999. But it’s only available for remortgages.
(2) According to Moneyfacts, the average rate for a new two-year fixed-rate mortgage reached 6.52% on Thursday 6 July.
Paula Higgins, chief executive of HomeOwners Alliance, said: ‘The staggering SVRs we are seeing from some lenders at the moment – up to 9.48% – is nothing short of daylight robbery. If predictions that the Bank of England is going to hike interest rates further are correct, we could see SVRs soaring even higher. So we’re calling on all homeowners to check the rate they’re on. If it’s the SVR they need to switch quickly. And if their current mortgage term comes to an end in six months, start looking now to secure a rate and avoid defaulting onto the lender’s SVR.
‘The FCA needs to challenge this situation. Not only are the standard variable rates punitive, they are also completely inconsistent between lenders, making it harder for consumers to track.”
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