by Mark Johnston
Santander to Raise its Standard Variable Rates.
In May 2012 lenders including the Halifax, Yorkshire bank and Clydesdale bank increased their standard variable rates (SVR), despite the Bank of England’s base rate remaining at its historical low of 0.5 per cent.
Figures show that over 1.2 million people have therefore already seen rises in their standard variable rate (SVR) mortgages, which will cost them over £300 million in the next year alone.
Then in more recent weeks mortgage lenders have been slashing their rates, although this has been particularly been aimed at people with larger amounts of equity.
Even more recently, thousands of Santander customers are facing a hike in their mortgage costs.
The Spanish based bank, which swallowed up Abbey National in 2004 and has 1,400 branches across the UK, has told its customers that from October 2012 the rate on their standard variable rate (SVR) mortgages will rise by half a per cent from 4.24 per cent to 4.74 per cent.
Campbell Robb, of shelter the housing charity, has warned that “even a small rise in interest rates could leave many more home owners struggling to pay the bills and put them on a downward spiral of mortgage debt and ultimately repossession”.
Santander’s standard variable rate (SVR) mortgage customers will therefore see an average increase of 326 a month or £312 a year for a £100,000 mortgage as a result of this rise.
The 2011’s second biggest mortgage lender declined to reveal an exact figure of how many customers the rise in October will affect, but estimates suggest that up to 300,000 mortgage holders may be affected.
However, a Santander spokesman did say: “this move is prompted by several factors, most notably the fact that for the last 3 years the amount it costs us to provide mortgages and the rate we offer our savings customers have been increasing despite the base rate remaining static”.
Experts have stated that ‘Santander has proven that lenders can raise their standard variable rates (SVR) on a whim so borrowers have no protection. Therefore they suggest that borrowers remain vigilant and check what their lender is charging.
It seems though that some people are now accusing Santander of ‘profiteering’ after they announced this big hike in its basic rate.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said “this move is profiteering, pure and simple. Interest rates may have been held at 0.5 per cent for three and a half years but lenders such as Santander are raising their standard variable rates regardless”.
Which?, the consumer magazine’s chief executive, Peter Vicary-Smith, says “the government needs to explain why thousands of home owners are still being hit by increases when the banks are supposed to be passing on cheaper credit through the ‘funding for lending’ scheme”.
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