Santander to hike SVR mortgage rate to 4.74%

ReenaSewraz
by Lovemoney Staff ReenaSewraz on 23 August 2012  |  Comments 3 comments

Santander customers will receive letters warning of the steep rise to their mortgage repayments set to kick-in over October.

Santander to hike SVR mortgage rate to 4.74%

Santander has written to mortgage customers to inform them that its Standard Variable Rate (SVR) is set to rise.

From 3rd October, Santander’s SVR will increase from 4.24% to 4.74%. That’s a rise of 0.5%.

On a £150,000 mortgage the change will cost a customer an extra £43 a month.

Santander predicts this will affect hundreds of thousands of customers but declined to give an exact figure.

A spokesperson for Santander said the lender was forced to take this action because of the increased cost of raising mortgage funds, despite the static Bank of England base rate.

The move comes after a raft of other lenders hiked their SVRs earlier this year. However, many experts says it flies in the face of programmes such as the Government's Funding For Lending scheme, which was designed to provide cheaper borrowing costs by allowing banks to borrow cheaply from the Bank of England.

What is SVR?

The Standard Variable Rate is a type of mortgage rate set by lenders. It is something that you are likely to be dumped onto once an introductory offer has ended, meaning you could be paying more than you need to. The only way you can avoid being reverted onto a less appealing SVR is to switch deals.

How Santander’s SVR compares

So how will Santander's new SVR compare to other lenders?

Lender

Current SVR

Woolwich

3.89%

HSBC

3.94%

Lloyds TSB

3.99%

Halifax

3.99%

Nationwide

3.99%

RBS

4.0%

The Cooperative Bank

4.74%

Santander

4.74%

Clydesdale Bank

4.95%

Halifax, Clydesdale Bank and the Co-op all raised their SVRs earlier this year. But Santander’s increase means it now has one of the most expensive SVRs on the market.

Top mortgage deals

One way to avoid the hikes is to remortgage and switch onto a better deal.

To get a real sense of the best offers on the market you can talk to one of our fee-free mortgage advisers today.

In the meantime here are some best buy mortgage deals that can save you money if you're on an expensive SVR.

Remember to factor in the fee and any other charges to get the true cost of switching to another deal.

Lender

Deal

Rate

Fee

Max LTV

first direct

Two-year fixed

2.64%

£1,999

65%

HSBC

Lifetime tracker

2.64% (tracks base rate + 2.14%)

£999

60%

Leeds BS

Two-year discount

2.85% (2.84% discount on lender's SVR)

£1,198

75%

The Post Office

Two-year tracker

2.98% (tracks base rate + 2.48%)

£995

75%

Santander

Five-year fixed

2.99%

£1,495

60%

Woolwich

Two-year tracker

2.99% (tracks base rate plus 2.49%)

£999

70%

HSBC

Two-year discount

3.84% (0.1% discount on lender's SVR)

£0

90%

West Bromwich BS

Two-year tracker

3.89% (tracks base rate + 2.39%

£0

80%

NatWest Five-year fixed 4.59% £995 80%

The Cooperative Bank

Three-year fixed

4.89%

£0

85%

At lovemoney.com, you can research all the best deals yourself using our online mortgage service, or speak directly to a whole-of-market, fee-free lovemoney.com broker. Call 0800 804 8045 or email mortgages@lovemoney.com for more help.

Use lovemoney.com's innovative new mortgage tool now to find the best mortgage for you online

At lovemoney.com, you can research all the best deals yourself using our online mortgage service, or speak directly to a whole-of-market, fee-free lovemoney.com broker. Call 0800 804 8045 or email mortgages@lovemoney.com for more help.

This article aims to give information, not advice. Always do your own research and/or seek out advice from an FSA-regulated broker (such as one of our brokers here at lovemoney.com), before acting on anything contained in this article.

Finally, we tend to only give the initial rate of a deal in our articles, but any deal which lasts for a shorter period than your mortgage term may revert to the lender's standard variable rate or a tracker rate when the deal ends. Before you take out a deal, you should always try to find out from your lender what its standard variable rate is and how it will be determined in the future. Make sure you take all this information into account when comparing different deals.

Your home or property may be repossessed if you do not keep up repayments on your mortgage

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Comments (3)

  • Aitken B
    Love rating 146
    Aitken B said

    One really has to wonder about the purpose of the BoE base rate. It has been at its present level for some time now yet the banks, Santander in this case, seem to do whatever they like regardless of the BoE rate or anything else for that matter.

    Perhaps as LIBOR is now under some temporary scrutiny it is a little less easy to fleece their victims, ooops sorry, customers so until they find another subterfuge behind which to hide they must just blame other people not willing to give them "free" use of their money so they can mauntain their profits and bonuses.

    Still waiting for LibCon to actually do something to control these cowboys.

    BTW I heard a little whisper that Santander were about to take over RBOS.

    Anyone else heard this?

    Report on 23 August 2012  |  Love thisLove  0 loves
  • meldrewreborn
    Love rating 70
    meldrewreborn said

    Aitken B

    Why don't you call the BOE and ask them what the base rate is for and whether anybody (yes anybody) can borrow at that rate? the answer will be that the BOE rate is a deposit rate - not a borrowing rate. The effects it has on the market are many and various, but its been clear for years that there is no direct linkage between the BOE rate and mortgage rates. The gap now is not even the widest its been.

    As a saver Santander are paying me 3.0% on instant access funds. The rate they can borrow in the market for 6 month and 1 year money is probably similar. Why then do you think that Santander, or any other bank should offer an SVR of 4.5% or less? The government and BOE are doing all they can to keep rates low so as to help kick start the economy. However under the last government, government debt rose from circa 30% of GDP in 2003 to circa 70% (and rising) of GDP by the time they left office. Why did they borrow so much if times were so good and the cycle of boom and bust had been broken as claimed by that idiot Gordon Brown? And it wasn't just the financial crisis - the spending splurge was in train long before. And I'll be generous and say I don't blame Labour for not seeing the particular financial crises that hit in 2007 coming - few did - but a prudent government would not have bet the countries wealth on the same benign economic conditions that had existed from 1997 continuing indefinitely. Some sort of bust would inevitably come at some point and they were not prepared for it.

    As it is, The governments normal room to borrow to inflate the economy in times of recession has been scuppered by the previous government who instead of paying down debt in the so called good times, instead wasted the opportunity and led us to to the present crisis. Much the same applies to other governments around the world and anybody who thinks we can solve our current debt laden problems by spending even more cash we don't have is an economic imbecile - step forward Ed Balls! His conversion to Keynesian economics recently is welcome - he's got the argument that is a good idea for governments to boost spending if they can to counter a recession - unfortunately his conversion didn't come in office when paying down debt as Keynes would have called for wasn't in the forefront of his mind.

    Debt needs to be repaid by individuals and governments before confidence can be restored. When the confidence returns things will get better.

    We can all call for a quick fix but this time it really isn't available.

    Report on 23 August 2012  |  Love thisLove  0 loves
  • oakfern
    Love rating 0
    oakfern said

    Is Santanders 4.74% SVR the highest in the market? I notice C&G Mortgages cap their SVR to 2% above BoE rate ie 2.5% which is a lot fairer. Santander are treating their 'locked in' borrowers as cash cows and profiteering big time. The Government harps on about BoE rate being lowest ever etc at 0.5% but this is totally misleading as it has absolutely no correlation to mortgage lending rates.

    Report on 15 January 2013  |  Love thisLove  0 loves

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