[2buyornot2buy]

I notice that lenders are announcing SVR increases. Halifax, Santander and BOI have all confirmed they are raising the rate they charge customers on their SVR.

I personally know several people on lifetime trackers of base +0.18% but there must be many more stuck on the SVR paying 2-3% up to now. How do we think this will affect house sales here and mortgage affordability? Will we see more repos coming to the market?

Is anyone on here currently on their lenders SVR and if so how do they feel about the inevitable increase?

I personally think there are many many people who have never had it so good - coming off fixes of 6+% onto 3% SVR. I think so many people living on the edge will find difficult to get the extra £40 a month to pay for this.

This post has been edited by 2buyornot2buy: 07 March 2012 - 03:52 PM

[Shotoflight]

The mort market is very fractured in terms of what is offered and who offers it ie banks & building societies and fixed, Base rate trackers, repayment, Interest only products etc., so I don't know the impact this will have or on how many locally - in its own right.

However it will impact sentiment/confidence and the direction of travel has been established. Other lenders, emboldened, will surely follow and I believe on interest only morts (of which close to 50% were taken at the peak), for example, the increase will be equal to a rise of 14%. Many may have been lulled into a false sense of security on rates and will get a wake up call whilst those thinking of buying will need to take it into account. And it will impact on affordability for new mortgagees - ie how much they can borrow. If potential buyers can't figure this out, the bank will do that for them. (I think Northern SVR is currently 4.39% BTW)

Currently BOE interest rate is at an emergency or distressed level. QE is linked to this. Once the economy and confidence does pick up, interest rates will normalise. How does a base rate tracker + 1.8% sound at a base rate of 5.5% rather than .5% ? If and when we get out of this mess, that's where we are heading.

I am still inclined towards inflation, pay freezes, job losses, benefit cuts and the cost of living (transport/food/clothes/energy) having a greater impact on a wider range of people than staggered .25% mortgage uplifts on some products - in terms of both sentiment, disposable income and house purchase affordability or indeed mortgage facilitation. But it is a welcome addition to the party.

It will certainly shoo things along.

This post has been edited by Shotoflight: 07 March 2012 - 04:22 PM

[Shotoflight]

BOI - wasn't aware of this earlier, even though you mentioned it.

Bank of Ireland to raise SVR mortgage rate

http://www.bbc.co.uk...siness-17286520

The Bank of Ireland is raising the standard variable rate (SVR) on its mortgages to 4.49% from 2.99%, affecting 100,000 UK customers.

The increase will come in two stages.

The rate will rise to 3.99% in June, and will then be increased to 4.49% in September.

The lender said the cost of funding mortgages had increased significantly. It added that its current SVR was considerably lower than the market norm and its rates would remain competitive.

The full increase will lead to a £81 rise in the monthly cost of a £100,000 Bank of Ireland repayment mortgage on an SVR rate.

The change does not affect Post Office customers.

Some of the customers are likely to be people who first took out a mortgage with the former Bristol and West building society, which the bank bought in 1996.
Funding

The move comes after the UK's largest mortgage lender, the Halifax, said it would raise its SVR from 3.5% to 3.99% from 1 May.

The SVR is a benchmark mortgage rate which large numbers of borrowers revert to after discount offers or fixed rates have expired.

It often mirrors changes in the Bank rate, but that has stayed at 0.5% for three years and lenders say that mortgage funding has become more expensive recently.

The Bank of Ireland said this was the first time it had raised its SVR since August 2007.

On Friday, RBS raised the rate on two of its mortgages from 3.75% to 4%. This affected 200,000 borrowers with RBS and NatWest offset mortgages and home loans from RBS's One Account range.

[Shotoflight]

Just what we didn't need - the return of rising mortgage rates

Government hopes of falling inflation and a consequent return by the end of the year to real terms income growth are being threatened by a potent combination of rising oil prices and increased mortgage costs.

http://www.telegraph...gage-rates.html

For those with a typical SVR loan, repayments will increase by £16.40 a month. It doesn't sound much, but the bigger the loan, the bigger the impact and for those already struggling, it will surely be enough to tip them over the edge.

And for all those affected, it is a further ratcheting up in the cost of unavoidable necessities, leaving even less for discretionary spending at a time when household incomes are already being severely squeezed.

Aggregated across the country as a whole, the macro-economic impact is also sizeable. The numbers on SVR mortgages have been growing rapidly in recent years, as mortgage holders take advantage of today's ultra-low interest rates to refinance from more expensive, older deals. SVR mortgages are also the default option for more distressed borrowers who find difficulty in re-mortgaging. In the past year alone, SVR mortgages have risen from 48pc of Halifax's loan portfolio to 56pc

According to the economic consultancy Fathom, a rise of 50 basis points across all mortgages would knock around 0.6pc off overall disposable income and therefore household consumption.

The bottom line is that for the first time since the crisis began more than three years ago, mortgage rates are on the rise, and for many it will quite badly damage their pockets. One of the main factors supporting demand through the crisis – ultra-low mortgage costs – is being partially removed.

it is in the nature of banking that once the market leader acts, everyone else finds some way of squeezing up prices, too.

The other big re-emerging negative is the rising oil price, which at one and the same time is both inflationary, by adding to costs, and deflationary, by reducing the amount that can be spent on other things.

No one really knows at what level a rising oil price begins to do significant damage, but we do know that virtually all serious recessions are preceded by an oil price spike. With oil back above $120 a barrel, we are back in the danger zone.

With devaluation, the terms of trade have moved badly against the UK, so for us, it may be rather lower. In sterling terms, the oil price is at record levels. Any major supply side shock, already to some extent anticipated in the price as a result of Israel's sabre rattling over Iran, would be a game changer.

In any event, the rising oil price is beginning to eclipse the eurozone debt crisis as the major concern for economic policymakers.

For the Bank of England's Monetary Policy Committee, which has been meeting this week, the policy choice just gets harder and harder. Just as things finally seemed to be moving in the Old Lady's direction, with inflation abating, along come rising oil and mortgage costs both to add to prices and to lower growth prospects.

For some years now, the Bank of England has consistently underestimated inflation and overestimated growth. The discomfort of this position may be more persistent than the Bank had hoped.

It was a big call for the Bank to ignore the inflation target in pursuit of demand and jobs. So far, the Bank has got away with it; Britain's inflationary adjustment is widely thought preferable to the deflationary one forced on the eurozone periphery. But there must be limits, and patience will have been tested to breaking point if, come the end of the year, living standards are still be squeezed by higher than expected inflation.

This post has been edited by Shotoflight: 07 March 2012 - 08:50 PM

[2buyornot2buy]

Great thread running on MSE on this. I don't know how much lending BOI had in England compared to NI but it looks like this will effect 150,000 borrowers. This doesn't even include their Post Office mortgages.

I think this could have a real effect.

I see the Post Office repayment calculator is down at the minute. Looks like they are updating for theis SVR increase too.

[Shotoflight]

2buyornot2buy, on 08 March 2012 - 09:24 AM, said:

Great thread running on MSE on this. I don't know how much lending BOI had in England compared to NI but it looks like this will effect 150,000 borrowers. This doesn't even include their Post Office mortgages.

I think this could have a real effect.

I see the Post Office repayment calculator is down at the minute. Looks like they are updating for theis SVR increase too.

http://www.bbc.co.uk...siness-17286520


The full increase will lead to a £81 rise in the monthly cost of a £100,000 Bank of Ireland repayment mortgage on an SVR rate.

The change does not affect Post Office customers.

Some of the customers are likely to be people who first took out a mortgage with the former Bristol and West building society, which the bank bought in 1996.

The move comes after the UK's largest mortgage lender, the Halifax, said it would raise its SVR from 3.5% to 3.99% from 1 May.

The SVR is a benchmark mortgage rate which large numbers of borrowers revert to after discount offers or fixed rates have expired

[2buyornot2buy]

Shotoflight, on 08 March 2012 - 09:45 AM, said:

http://www.bbc.co.uk...siness-17286520


The full increase will lead to a £81 rise in the monthly cost of a £100,000 Bank of Ireland repayment mortgage on an SVR rate.

The change does not affect Post Office customers.

Some of the customers are likely to be people who first took out a mortgage with the former Bristol and West building society, which the bank bought in 1996.

The move comes after the UK's largest mortgage lender, the Halifax, said it would raise its SVR from 3.5% to 3.99% from 1 May.

The SVR is a benchmark mortgage rate which large numbers of borrowers revert to after discount offers or fixed rates have expired

It looks like the Post Office is going to follow suit anytime now. As I say their affordability calculator on their site is down, meaning they are updating it with new rates.

[Shotoflight]

The flag has been raised, the hare is running. Logically the Post Office will follow - and so will all the rest.

The shock value and uncertainty is more influential than the actual % and amounts - at present - though these are not without consequence.

The question is, will it be a slow burner or is it full steam ahead?

Expect plenty of coverage in MSM especially Sat/Sun supplements.

And as stated elsewhere this move is, of course inflationary on top of everything else.

Post Office mortgages eh - what a mismatch.

On some of my Land Registry searches you wouldn't believe the variety off beam and 'non-traditional' financial institutions that gave out mortgages (from Wales, Scotland everywhere) and now have charges on said properties. Real sub-prime stuff with interest rates to match, no doubt.

Stolen from main board - M21er - with some more figure detail

http://www.cityam.co...uk-s-top-threat

SOME time-bombs can be defused. Not this one. At some point – in a year, in two, or perhaps even in five – the cost of borrowing for consumers will climb back to the sorts of levels we were used to 15 years ago. Complacent borrowers addicted to rock-bottom interest rates – and for whom an 8 per cent mortgage is almost inconceivable – will be in for the rudest awakening of their lives. The timings are unclear; the direction of travel isn’t. The Bank of England, which will doubtless keep base rates on hold today, has been desperately trying to keep money cheap, but it only controls very short-term interest rates.

Borrowing costs need to normalise. The bubble was caused by excessively cheap money; we can’t delay the necessary readjustment forever. But the pain will be almost unbearable for those caught unaware. They need to evaluate their debt levels, stress test themselves for rate hikes – and deleverage as fast as possible

This post has been edited by Shotoflight: 08 March 2012 - 10:20 AM

[tinbin]

Massive rate shock hits 100,000 MORE as Bank of Ireland and Bristol & West borrowers face 50% hike in their monthly payments

Bank of Ireland and Bristol & West borrowers are the latest to have been delivered a mortgage rate shock with a huge hike from 2.99 per cent to 4.49 per cent, despite believing they had escaped a hike by not being sold to Nationwide.
It is the latest in a round of rises that has shocked those sat on lenders' standard variable rates and believed they would not rise independently of base rate - more homeowners will now be worried their lender could follow suit.

The 100,000 Bank of Ireland and Bristol & West borrowers who avoided being moved on to Nationwide’s subsidiary The Mortgage Works have begun to receive letters from the Irish bank telling them that their mortgage payments could go up by 50 per cent from next September.

A borrower with a £150,000 interest-only mortgage would see their monthly payments shoot up from £374 to £561. Those with a repayment mortgage for the same amount over 25 years will see a smaller £125 per month rise.
A sizeable number of borrowers could be stuck with the higher payments, and unable to remortgage due to low equity, as the lender courted small deposit mortgage borrowers during the property boom.

The shock follows Halifax’s decision to hike its standard variable rate to 3.99 per cent from 3.5 per cent for an estimated 1million customers and RBS / NatWest lifting its SVR by 0.25 per cent to 4 per cent for offset mortgage customers.
Those customers who did get sold on to the Nationwide buy-to-let arm already have the threat of an even bigger rate shock hanging over them.
The building society says it will align their standard variable rates with the 4.79 per cent one charged by The Mortgage Works, rather than the 2.5 per cent or 3.99 per cent one it charges Nationwide brand borrowers.

That would hike payments by a huge 60 per cent for interest-only borrowers and those affected are still waiting in limbo to find out when they will be hit.

Bank of Ireland has announced the massive rise in its standard variable rate will arrive in two stages. First a hike from 2.99 per cent to 3.99 per cent will arrive in June and then a further move upwards to 4.49 per cent from September.

The Bank of Ireland move affects 100,000 borrowers with residential mortgages under that name and the Bristol & West brand, but not the vast majority of buy-to-let loans, which reverted to base rate trackers rather than an SVR. It does not affect Post Office mortgage borrowers.

http://www.thisismon...l#ixzz1oXE4VEQn

[tinbin]

It is also my understanding that the Northern Bank has just increased the tracker rate for First Time Buyers to 5.99% ... although I haven't been able to find any online info to back this up

[tinbin]

Clydesdale and Yorkshire Banks to increase SVR

Clydesdale and Yorkshire Banks are increasing their SVR for residential mortgage customers from 4.59 per cent to 4.95 per cent.

The change, effective from May 1, will affect around 30,000 existing mortgage customers.


.The banks say borrowers will see an average increase in repayments of less than £30 a month.

They say the hike is due to the increased cost of mortgage funding.

Until July 31, the lenders will waive their exit fees so impacted customers can remortgage to another provider.

Retail director Steven Reid says: “While our SVR will continue to remain competitively below a number of other UK mortgage providers, the market and costs associated with providing mortgages have changed significantly in the three years since the rate last moved.

“We don’t take such decisions lightly and fully appreciate the impact this will have on some customers but you only have to look at the narrow gap between longer-term savings rates and mortgage borrowing rates to see how things have changed.”

http://www.moneymark...1047738.article

[Shotoflight]

tinbin, on 09 March 2012 - 01:27 PM, said:

Clydesdale and Yorkshire Banks to increase SVR

Clydesdale and Yorkshire Banks are increasing their SVR for residential mortgage customers from 4.59 per cent to 4.95 per cent.


http://www.moneymark...1047738.article

Some more - different source:

Clydesdale and Yorkshire banks follow Halifax with mortgage rate rise

http://www.guardian....tgage-rate-rise

Woolwich, part of the Barclays group, has already warned mortgage brokers that it will reduce funding for its deals.

Clydesdale and Yorkshire, part of National Australia Bank group, blamed the increase on the rising cost of providing mortgages at a time when they are having to pay higher rates to attract savers.

Retail director Steve Reid said: "You only have to look at the narrow gap between longer-term savings rates and mortgage borrowing rates to see how things have changed. For instance, on our market-leading five-year savings account we are offering interest rates that are just 0.7% below the new standard variable rate (SVR). With significantly more savers than borrowers, it is important that we balance the needs of all of our customers."

Reid added that Clydesdale and Yorkshire banks are among just a handful of lenders that offer 95% loans, and that they are committed to remaining in the market.

It is unclear how many borrowers are on SVRs, but at the end of 2010, the Council of Mortgage Lenders said that about 1.8 million people had come to the end of a fixed-rate deal and moved on to their lenders' SVR.

In the past, borrowers who faced high SVRs were free to remortgage elsewhere to better deals. But first-time buyers who bought during the boom are finding it difficult to remortgage as they have no equity and can't meet minimum deposits required for most loans today.

The result is that banks can now raise SVRs with little fear that they will lose customers to rivals. "Anyone on their lenders' SVR is at risk of a hike in payments," warned Mark Harris of broker SPF Private Clients

[Shotoflight]

Mortgage holders face fix or twist decision

http://www.bbc.co.uk...siness-17371515

Faced with a slew of lenders raising their standard variable mortgage rates, some homeowners will be questioning whether to fix or twist.

The standard variable rate (SVR) is arbitrarily set by each individual lender, taking into account the Bank of England base rate, the cost of funding mortgages and the balance between savers and borrowers.

Over the last few years there has been a "clear trend", according to the Council of Mortgage Lenders (CML), for homeowners to revert to the SVR.

Collectively, this will lead to a million households seeing their mortgage bill rise this summer. If they have a £100,000 loan, they could see about £30 a month added to their bill.

[tinbin]

I posted an article from this source before as it summarised the position of those on SVR much better than I could have. http://www.mortgager...rg.uk/news/svr/

Highlights relevant to this topic are;

2.3 Million borrowers are on their lenders standard variable rate. It is believed that this accounts for 30% of the UK mortgage Market.
Borrowers tend to end up on standard variable rate mortgages once their fixed term, discounted mortgaged has ended. Terms can vary as different borrowers prefer opt for various timescales but the most common are two, three and five year terms.
Many borrowers are now stuck on standard variable rates as they do not have enough equity in their homes to find a better deal.
Tom Girling, a mortgage product manager at Yorkshire Building Society, said: “A record number of mortgage customers are currently stuck in ‘mortgage limbo’ on SVR rates that are generally far higher than best buy deals.“
The biggest concern borrowers have with staying on their lenders standard variable rate is that interest rates will rise. As rates rise so does the SRV which increases your overall monthly repayments. This is why many prefer to fix their monthly fee by moving so they can be confident of the amount that is due in repayments per month.

Most ppl believed that SVR's would only increase when the BOE started to increase the BOE Base rate, with many not expecting any change for years. What we are now starting to see is lenders increasing the SVR anyway because of their own long term funding etc.

It is very difficult to obtain information regarding historical SVR's online but I have managed to find a few below that you can use for comparison to see just how SVR has dropped over the last few years. (I cannot confirm the accuracy 100% but it would appear to be in line with what I would have expected to see)

Standard Variable Rates - 2008

HBOS 6.50%
Nationwide BS 6.19%
Abbey 6.94%
Lloyds TSB/ C&G 6.50%
Northern Rock 7.34%
Barclays 6.64%
RBS 6.69%
HSBC 6.25%
Alliance & Leicester 6.94%
Bradford & Bingley 7.09%
Bristol & West 6.59%
Britannia BS 6.30%
Yorkshire BS 6.60%
GE Money 10.39%
Coventry BS 6.84%
Standard Life 6.59%
Clydesdale & Yorkshire 6.64%
Chelsea BS 6.94%
Skipton 6.45%
One Account (RBS) (avg) 6.55%

Here is a list of Standard variable rates for comparison (this data was accurate as of 16 July 2010)

RBS             4.00%
Nationwide   2.5% or 3.99%
Halifax            3.5%
Santander     4.24%
HSBC             3.94%
Barclays         2.99%
Leeds Building Society   5.69%
Natwest           4.00%

In 2008 and before there wouldn't have been that many on SVR's. Many have since came out of fixed rate deals and defaulted onto SVR and are 'stuck' on them. That is fine while they are around the above levels i.e. 2.5-4%. But if lenders keep on increasing the SVR and they go up anywhere near the 2008 and before levels - crisis time for a lot of ppl!

This post has been edited by tinbin: 16 March 2012 - 10:00 AM

[Shotoflight]

Co-op Bank to raise mortgage rate

http://www.bbc.co.uk...siness-17585150

The Co-operative Bank will raise its standard variable mortgage rate (SVR) by 0.5 percentage points from 1 May.

The rate, which sets monthly payments for 54,000 mortgage borrowers, will go up from 4.24% to 4.74%.

The average increase in cost for these customers will be £15 per month, or £180 a year.

Some homeowners across the UK have been preparing to pay more after Halifax and Bank of Ireland sparked a round of SVR increases.

Lenders to have announced increases in SVRs in recent weeks include:

The Halifax, which will raise its SVR from 3.5% to 3.99% on 1 May

The Bank of Ireland's UK arm, which includes Bristol and West, which will put up its SVR from 2.99% to 3.99% in June, then increase it again to 4.49% in September

Clydesdale and Yorkshire banks, which will raise their SVR from 4.59% to 4.95% on 1 May

The Co-op said the move was the result of the higher costs it faced to fund mortgages, as well as "changing conditions in the mortgage market".

"When changes are made that impact our customers, we do seek to ensure that wherever possible, we provide solutions for them," a Co-op spokesman said.

An SVR is arbitrarily set by each individual lender, taking into account the Bank of England base rate, the cost of funding mortgages and the balance between savers and borrowers.

Over the last few years, there has been a "clear trend", according to the Council of Mortgage Lenders (CML), for homeowners to revert to the SVR.

This means that when the term of their fixed-rate deal - which offers a certain monthly bill - comes to an end, they switch to the often cheaper SVR rather than remortgage on to another fixed-rate deal.