Friday, October 21, 2011
Savers: subsidising homeowners since 2009
The research found that â€œabout 1.8m borrowers had come to the end of their initial fixed-rate period by late 2010 and reverted onto a variable rate with their lenderâ€. It estimated that the switch was worth â€œroughly Â£4bn a yearâ€, or â€œan average of around Â£2,600 for each borrowerâ€. The windfall is unusual because lendersâ€™ standard variable rates (SVRs) are typically higher than their fixed deals. However, because SVRs are tied to the Bank of Englandâ€™s base rate, costs have tumbled following the emergency rate cuts in the financial crisis. Nationwide and C&G offer SVRs of 2.5pc â€“ or two percentage points above base rate. By comparison, a two-year fixed taken out in June 2008 would have cost 6.6pc, according to the Bank of England.