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Dave Beans

Timebomb' Alert As Lenders Hike Mortgage Rates Adding Thousands To Home Loans

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http://www.dailymail.co.uk/news/article-1308899/Timebomb-alert-lenders-hike-mortgage-rates.html

Timebomb' alert as lenders hike mortgage rates adding thousands to home loans

Millions of homebuyers are facing a 'mortgage timebomb' as lenders put up interest rates even though the base rate remains unchanged.

Experts are warning that lenders could hike their standard variable rate (SVR) at any time. Ten banks and building societies have already put up their rates, costing borrowers hundreds of pounds a year. This is despite the fact that SVRs are traditionally linked to the Bank of England base rate, which has been 0.5 per cent for 18 months.

The biggest culprit is Skipton Building Society, which hiked its SVR from 3.5 to 4.95 per cent in March. For someone with an average mortgage of £105,000 and 20 years left to pay, this is equivalent to an extra £81.10 a month, or £973.20 a year. A buyer with a £150,000 mortgage will have to find an extra £115.86 a month or £1,390.32 a year.

Experts warn that the hikes by the ten lenders, with whom hundreds of thousands have mortgages, will put pressure on other providers to do the same. Overall, it is estimated that lenders have made up to £10million so far from raising their SVR rates. No fewer than 32 lenders charge rates of more than 5 per cent - 4.5 per cent above base rate.

Stewart Hosie, a member of the Commons Treasury select committee, said: 'it will strike the borrowing public as odd that they are being asked to pay increased rates when the base rate has remained static for over a year.

'Banks and building societies have a duty to explain to customers whey they are paying 3, 4 or 5 percentage points above the base rate.'

More than three million people have SVR mortgages, which can fluctuate month by month. Many have moved to them since the credit crunch, because low interest rates made them cheaper than fixed rate deals.

There are wide variations in the SVRs on offer, ranging from 2.5 per cent at Woolwich, Lloyds and Cheltenham & Gloucester to 6.45 per cent at Chesham Building Society. The comparison website moneysupermarket.com says it is concerned that many people may be unaware that their mortgage rates could go up.

It warned of a 'mortgage timebomb' when interest rates inevitably start to rise over the next few years, and SVRs become more expensive than fixed rate or tracker mortgages. Site editor Clare Francis urged consumers to move to fixed rates as soon as possible, saying that although they may be more expensive in the short term, in the long term they are best.

'Millions are paying their lender's SVR because in many cases, when their fixed or discounted period ended, the rate was lower than on new mortgage deals,' she said.

'But these people could be in for a real shock when interest rates start rising. Anyone worried about affording higher repayments should look into remortgaging on to a fixed rate now.

'The big risk with being on an SVR is the lender can alter the rate whenever it wants.

'And as we've seen this year, changes don't necessarily correlate with movements in the Bank of England base rates, so we could see more banks and building societies increase their SVRs while base rate remains at 0.5 per cent.

'The other thing to watch out for is that when interest rates do start rising, some lenders may hike their SVRs by more than the base rate increase.

'In order to have some control over your mortgage payments, it's therefore well worth moving off your lender's SVR.'

Andrew Hagger, of moneynet. co.uk, said: 'There are some excellent tracker and fixed products priced at well under 3 per cent in some cases. Check the best buy tables and speak to an independent mortgage adviser to keep your mortgage repayments in check.'

Last night a spokesman for Skipton Building Society said: ' Skipton's SVR of 4.95 per cent remains very competitive.'

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The banks need to try and rebuild their balance sheet the "easiest" way is to up the SVR on those who cannot move. Obviously the slight pitfall is the banks may bankrupt too many and create large bad debts which in turn bankrupt the bank / building society.

The move to variable rates is a huge timebomb, especially if you factor in the risk of the BoE moving the base rate.

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Long time no rant - so

Basically BOE Base Rate is now irrelevant to the real economy.

This is what happens when rates are set for entirely political rather than economic reasons.

The BOE has been ignoring economic reality and setting rates at what 'it' thinks 'its' political masters want for years.

The idea of the BOE being independent when its members are political appointees is frankly laughable

Ultimately he who pays the piper calls the tune.

Base rate should have been hiked years ago to prevent a huge asset price bubble forming - but it was kept low for entirely political reasons.

Base rate should now be raised slowly to forestall STAGFLATION and to try and engineer a managed fall in property prices but this will not happen - again for political reasons.

The end result IMO will be rapid rate rises forced on the BOE by external events at some point in the near future.

China is holding 2.5 trillion dollars which represents a huge risk of Global food and commodities price inflation IMO - the clock is ticking.

:huh:

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Long time no rant - so

Basically BOE Base Rate is now irrelevant to the real economy.

This is what happens when rates are set for entirely political rather than economic reasons.

The BOE has been ignoring economic reality and setting rates at what 'it' thinks 'its' political masters want for years.

The idea of the BOE being independent when its members are political appointees is frankly laughable

Ultimately he who pays the piper calls the tune.

Base rate should have been hiked years ago to prevent a huge asset price bubble forming - but it was kept low for entirely political reasons.

Base rate should now be raised slowly to forestall STAGFLATION and to try and engineer a managed fall in property prices but this will not happen - again for political reasons.

The end result IMO will be rapid rate rises forced on the BOE by external events at some point in the near future.

China is holding 2.5 trillion dollars which represents a huge risk of Global food and commodities price inflation IMO - the clock is ticking.

:huh:

Rubbish rant, D-. Must try harder.

Use of profanity, capitals, varied font colours and personal insults of political figures required.

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Rubbish rant, D-. Must try harder.

Use of profanity, capitals, varied font colours and personal insults of political figures required.

Ok....

Mervyn King is a *ecking tw*t of the highest order

And anyone who thinks we are going to get deflation and low interest rates for the next 5 years is a complete and utter *ecking moron

(You know who you are)

Better?

:blink:

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Long time no rant - so

Basically BOE Base Rate is now irrelevant to the real economy.

This is what happens when rates are set for entirely political rather than economic reasons.

The BOE has been ignoring economic reality and setting rates at what 'it' thinks 'its' political masters want for years.

The idea of the BOE being independent when its members are political appointees is frankly laughable

Ultimately he who pays the piper calls the tune.

Base rate should have been hiked years ago to prevent a huge asset price bubble forming - but it was kept low for entirely political reasons.

Base rate should now be raised slowly to forestall STAGFLATION and to try and engineer a managed fall in property prices but this will not happen - again for political reasons.

The end result IMO will be rapid rate rises forced on the BOE by external events at some point in the near future.

China is holding 2.5 trillion dollars which represents a huge risk of Global food and commodities price inflation IMO - the clock is ticking.

:huh:

Your insight is auspiciously spot on. When will our politicians take notice of the truth?

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Long time no rant - so

Basically BOE Base Rate is now irrelevant to the real economy.

This is what happens when rates are set for entirely political rather than economic reasons.

The BOE has been ignoring economic reality and setting rates at what 'it' thinks 'its' political masters want for years.

The idea of the BOE being independent when its members are political appointees is frankly laughable

Ultimately he who pays the piper calls the tune.

Base rate should have been hiked years ago to prevent a huge asset price bubble forming - but it was kept low for entirely political reasons.

Base rate should now be raised slowly to forestall STAGFLATION and to try and engineer a managed fall in property prices but this will not happen - again for political reasons.

The end result IMO will be rapid rate rises forced on the BOE by external events at some point in the near future.

China is holding 2.5 trillion dollars which represents a huge risk of Global food and commodities price inflation IMO - the clock is ticking.

:huh:

All the malinvestment in non productive stuff is likely to bite us in the ass sometime soon too.

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  • 239 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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