Skipton to introduce new SVR at 4.95%
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Skipton Building Society is temporarily removing the ceiling on its SVR and launching a higher SVR of 4.95%.
The ceiling previously applied to Skipton’s mortgages meant that the majority of borrowers with SVR-linked accounts would not pay more than 3% over the base rate.
The building society now plans to introduce a new SVR at 4.95%, which will take effect from March 1.
Skipton says the move is a response to “exceptional market conditions”, notably the Bank of England base rate at 0.5% since last March and “unusually expensive retail funding relative to mortgage rates driven by unprecedented competition and distorted markets.”
The increase will also apply to Skipton’s specialist lending subsidiary Amber Homeloans Limited.
The building society says that their new revert rate is still below the average SVR of the top 10 building societies, which Moneyfacts puts at 5.12%.
Borrowers that are affected by this move will be notified by letters going out this week.
David Cutter, chief executive of Skipton Group, says: “Throughout 2009 the society operated, by any historical measure, on an extremely low SVR which helped our borrowers through the recession.
“At the same time, we tried to protect our savers from the effects of such unprecedented macro economic policy by offering them consistently high returns relative to an extraordinarily low base rate of 0.5%.
“Our duty for 157 years has been to act in the long-term best interests of all our members, both savers and borrowers, and with base rate expected to remain low for some considerable period we have reviewed our low SVR.”
Cutter says that savers have been “the forgotten victims of the credit crunch” but that now the market for retail deposits is being hotly contested as state-banked backs try to reduce their reliance on the wholesale money markets.
He says that the savings rates available through the government’s National Savings & Investments operation has driven up retail funding even further.
In a statement Skipton says: “The society reserves the right to remove its SVR ceiling under exceptional circumstances and we are writing to all borrowers explaining what those current circumstances are and what options they have.
“At the same time the society is committing to voluntarily re-introduce the SVR ceiling in the future, once these exceptional circumstances no longer prevail.
“We will regularly update our members via our website and other means regarding our progress towards this goal.”
Cutter adds: “While we understand this change will be unwelcome for those borrowers who will end up paying more as a result, we hope that they will understand it is a necessary step that is in the best interests of our membership as a whole, and indeed the society itself, in the long run.”
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Readers' comments (6)
Tom Cleary | 21 Jan 2010 1:58 pm
Is this actually enforceable? This could help the re-mortgage market if others follow suit but could also lead to a rise in reposessions. The fragile property market could take a dent in condfidence too.
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Anonymous | 21 Jan 2010 3:04 pm
Does this new SVR also apply to existing borrowers ? If so this is extremely unfair and this practise must be banned as it means that a lender's BMR (Base Mortgage Rate) which is 2.5% from some lenders can be doubled to around 5% at will if these lenders follow suit.No wonder the economy is in the mess that it is in.
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Anonymous | 21 Jan 2010 3:16 pm
I suspect that there are clauses within the mortgage conditions that would make this enforceable. Personally I think that it is about time that the 'mouse roared'. The Building Society movement has been trampled all over for quite some time and has been expected to be acquiescent whilst the State pumps massive sums into the banks and then gives them a competitive advantage whilst at the same time the bulk of the cost of the FSCS fell on Building Societies. This is of course at the same time as the FSA bumps up the capital adequacy requirements and then tries to limit the way we lend money!! This isn't just 'fighting with one hand tied behind your back' but is trying to compete with both arms and both legs lopped off.
Despite it all Building Societies have done a lot to keep the mortgage market alive and now that one of the bigger members of the Association has taken this step perhaps the powers that be might start taking notice of a sector that they seem to be trying to kill off.
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Anonymous | 22 Jan 2010 11:07 am
I'm not a Skipton borrower but if I was, or if my lender tries to pull this one on me, the first thing I would do is get a Face Book petition up and running with a view to organising a class action. I understand that this move by Skipton will affect 100,000 + Skipton borrowers ! I suspect 100,000 + people will buy a lot of defence barrister time! Wake up people and fight these bullies back, who the hell do they think they are?
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Anonymous | 25 Jan 2010 10:28 am
I have evidence of another lender following suit: A client with an ex UCB Homeloans BTL mortgage has called me saying her SVR has increased from 4.99 to 5.29% She thinks it is scandalous when Bank rate is only 0.5%. I am now interested to see what transfer products are on offer.
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Sarah Bennett | 31 Jan 2010 5:25 am
Hi guys, facebook group has been set up but needs more members, class action being considered, petition is online and linked to facebook group Skipton Building Society Mortgage Borrowers Against SVR Rise, and facebook group linked to a "this is money" article
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