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Ash4781

Standard Variable Rates (Svrs)

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Looking at the SVR's at some of the building societies they are up in the 4% region with a 0.5% base rate. One even has a SVR at 4.99%. Ok so the BOE trackers are about +2.5% over base rate but these only track the base rate for a few years and then revert back to SVR.

Presumably the MPC will be hoping that if they raise rates the lenders will erm seek charitable status and cut the rate or not raise them?

Though if the expectation was that the MPC would never raise rates again well the variable rates would just get converted to fixed rates by the lenders right?

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Looking at the SVR's at some of the building societies they are up in the 4% region with a 0.5% base rate. One even has a SVR at 4.99%. Ok so the BOE trackers are about +2.5% over base rate but these only track the base rate for a few years and then revert back to SVR.

Presumably the MPC will be hoping that if they raise rates the lenders will erm seek charitable status and cut the rate or not raise them?

Though if the expectation was that the MPC would never raise rates again well the variable rates would just get converted to fixed rates by the lenders right?

There is no reason for them to cut them. Essentially they have a whole load of customers who either:

1. Don't have sufficient equity to remortgage (unless at a punitive rate)

2. Don't have sufficient evidence of income (ie liar loans) so can't remortgage

Now if you ran a business that needed to rebuild its balance sheet and had lots of customers who couldn't go anywhere else, what would you do? Sure, there will be some 'collateral damage' in that a higher number of defaults will result but this would still be relatively insignificant when compared to how much more the other customers can be milked.

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Looking at the SVR's at some of the building societies they are up in the 4% region with a 0.5% base rate. One even has a SVR at 4.99%. Ok so the BOE trackers are about +2.5% over base rate but these only track the base rate for a few years and then revert back to SVR.

Funny you should post this, was reading a couple of other forums today where people are complaining that their GMAC mortgage was sold onto another company (MAS no 5) who have proceeded to put rates up and up and up, sometimes two hikes a month, now paying 5.5% where the SVR was 2.5% .. Certainly sorts the wheat from the chaff but it does seem like profiteering

Edited by exiges

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Looking at the SVR's at some of the building societies they are up in the 4% region with a 0.5% base rate. One even has a SVR at 4.99%. Ok so the BOE trackers are about +2.5% over base rate but these only track the base rate for a few years and then revert back to SVR.

Presumably the MPC will be hoping that if they raise rates the lenders will erm seek charitable status and cut the rate or not raise them?

Though if the expectation was that the MPC would never raise rates again well the variable rates would just get converted to fixed rates by the lenders right?

A lot of the trackers done in the 2005 - 2007 era are lifetime trackers and never revert to the SVR. There are loads set at -.25% or -15% or +.25% or +.5% to base rate.

A heck of a lot of mortgagees are currently paying sweet FA for their mortgage.

This is one of the problems.

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I seem to recall that a few years ago all the major lenders signed up to an agreement (albeit non-binding) that their standard variable rate would not exceed the BOE base rate by more than 2%.

Of course when times got tough, they all reneged like crack adicts.

However, I'm sure they will all be desperate to redeem themselves, so, if you believe interest rates are likely to increase significantly, taking the SVR might not be a bad idea compared to the rubish deals available at the moment.

This doesn't apply to the 'less reputable' lenders out there who collectively traded under various guises such as 'sub-prime' or 'adverse credit'.

If you took one of their mortgages, well, maybe you need to consider whether house ownership was really for you.

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http://www.bankofengland.co.uk/publications/other/monetary/TrendsApril11.pdf

In Chart 2.5 of the BOE trends in lending it does show how elevated the spreads are on the higher LTV floating rate mortgage products. Aside from those on those mega good deals that were dished out in boom times mentioned by another poster we might be able to see why there is a reluctance to raise rates.

Could they drag it out long enough ?

As far as I can see as soon as rates rise alot of the new business high margin, LTV product would get rapidly squeezed. I seem to remember this was pretty much what happened last time as soon as rates went up the system imploded. I don't know how the capital repair operations are going ?

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  • 276 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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