Stop lenders hiking their SVRs while base rate is falling
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I was intrigued to read recently on Mortgage Strategy Online about Nationwide Building Society increasing its SVR on specialist products from The Mortgage Works and UCB Home Loans.
For mortgage products in its mainstream range reserved on or before April 29 Nationwide’s Base Mortgage Rate is payable. This is currently 2.5%.
In Nationwide’s correspondence to clients it says it is “guaranteed to be no more than 2% above the Bank of England base rate”.
The lender obviously needs to cover any shortfall by raising its SVR for other customers.
If chancellor Alistair Darling can bring in legislation to curb bankers’ bonuses surely he can do the same in instances where lenders charge higher rates even though the base rate has stayed the same or fallen. After all, these SVR increases feed indirectly into bonuses.
The Financial Service Authority should step in and cap rises in SVRs or we could end up in a double-dip recession.
SALIL CHAUDHARI
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