After a spate of mortgage rate rises over the last few months, the next few weeks will see thousands more borrowers hit with a jump in their mortgage repayments.
Santander, the UK’s second largest mortgage lender, recently announced that from 3rd October, it intends to increase its Standard Variable Rate (SVR) for mortgage customers from 4.24% to 4.74%.
Prior to this move it is increasing the cap on the margin that its SVR can be above the Bank of England Bank Rate, from 3.75% to 4.99%. This means that from 24th September, Santander’s SVR will not be able to go above 5.49%, based on the current Bank Rate of 0.5%.
On its website, Santander says that the reason it is planning to increase its SVR is, “because of the increased cost to Santander of raising the money which we lend to our customers, including what it costs us to provide you with your mortgage.” The change would mean a homeowner with a £150,000 25-year repayment mortgage would end up paying an extra £43 a month or £516 a year.
This month will also see the second rate rise in four months for Bank of Ireland customers whose mortgage rate is linked to their SVR.
In June, Bank of Ireland’s SVR increased by 1% from 2.99% to 3.99% and it’s going up again this month, by a further 0.5% to 4.49%.
With other lenders like Halifax, ING Direct and the Co-operative Bank having already raised their SVRs this year, there’s now a group of over a million homeowners who have seen their mortgage payments rise out of the blue – at a time when budgets are tight for a lot of families.
If you’re paying Santander’s SVR (or any other lender’s SVR for that matter), see how a mortgage rate rise could affect your finances with our rate change calculator.
If you’re a Santander mortgage customer, the lender has more information about the changes on its website here.
The good news is that interest rates on new mortgage deals have actually been coming down recently and we’ve seen some healthy competition between lenders, resulting in some good deals to be had for people looking to switch their mortgage.
To see some of the best mortgage rates around now, visit our best buy tables.