With interest rates falling from 5% in October last year to just 1%, there has been a lot of movement in the Standard Variable Rates (SVRs) offered by mortgage lenders. The difference between the best and the worst rates is now substantial.
If you are paying your lender’s SVR, or if your deal is linked to this rate, then following a cut in interest rates, you will have to wait and see how much of that cut your lender passes on to you.
Lenders have complete discretion over their own Standard Variable Rates (SVRs) and are not obliged to cut them after a cut in the Bank of England Rate. Following the drastic rate cuts over the last few months, some lenders have been much better than others at passing on the cuts to their borrowers.
Following the February rate change, lenders such as Nationwide, Cheltenham & Gloucester, Halifax and Skipton were quick to announce that they were cutting their SVRs by 0.5%. Both Nationwide and Cheltenham & Gloucester now have SVRs of just 3%. Woolwich is also cutting its SVR by 0.5%, although it has only passed on 2.15% of the total 4% drop in Bank Base Rate since the beginning of October – its SVR now stands at 4.99%. Many other lenders are yet to make any announcement.
With such major rate cuts in recent months, the difference between the lowest and highest SVRs is now more than a whopping 3.25%. Based on a mortgage of £150,000, that could mean a massive difference of £406.25 a month in repayments.
With all the changes going on in the mortgage market, make sure you’re getting the best possible deal. Check what your lender is charging you and see if you can get a better deal elsewhere – you could save hundreds of pounds.