View more on these topics

Fixed borrowers pay 2.5% extra on ‘big six’ lender SVRs


Borrowers with the six largest mortgage lenders would see their SVR jump 2.5 per cent when coming off a two-year fixed rate, according to Trussle research.

The extra SVR boost equates to households paying an extra £3,242 a year with Lloyds, Nationwide, Santander, RBS, Barclays, and HSBC, which collectively serve 69 per cent of the market.

Trussle commissioned research to compare average SVRs and two-year-fixed rates from 76 lenders over a six-month period.

Three million households are on lender SVRs, with one million being mortgage prisoners.

The two million that are not mortgage prisoners represent 18 per cent of all mortgagors, and are collectively overpaying lenders by £9.8bn in interest payments every year.

Trussle says inertia is the main reason borrowers move onto SVRs.

Around 65 per cent of mortgagors do not know SVR rates are normally worse than fixed rates.

One in four (24 per cent) do not know what ‘SVR’ stands for.

Trussle chief executive Ishaan Malhi says: “The results of this inaugural Mortgage Saver Review highlight the need for the mortgage sector to better educate borrowers and simplify a raft of unfair practices.

“The industry, its regulators, and the UK government can address these challenges by working together.

“Potential solutions could be to agree a reasonable upper limit on SVRs, and a system where lenders are not only obliged to warn their mortgage customers well in advance of their fixed rate coming to an end, but also to confirm receipt of this notification.”

HomeOwners Alliance chief executive Paula Higgins says: “This study confirms that more needs to be done to educate homeowners on the value of remortgaging at the right time to avoid ending up on a more expensive SVR.

“There is an onus on lenders to not take advantage of homeowners’ switching inertia and instead look to foster an active ongoing client relationship. This includes making greater efforts to alert their customers to more suitable deals and the financial benefits of remortgaging at the right time.”

A Council of Mortgage Lenders spokesman says: “Lenders write to their customers in advance of any impending rate change, and this provides a trigger for borrowers who do not want to move on to a standard variable rate.

“Some lenders pro-actively offer their customers another discounted rate before they are due to move on to the SVR.  Where borrowers do not take up this option, it is often because they prefer to remortgage instead.

“Some customers may also consciously choose to move to the lender’s SVR.  This may be because they judge their outstanding balance to be too small to be worth remortgaging, or because they want flexibility and do not want to agree to a new mortgage for another fixed period.”



A quarter of lenders failed to pass on base rate cut on SVRs

With a further base rate cut before the end of the year becoming a possibility, it has emerged that a quarter of lenders have not reflected the reduction applied two months ago. The base rate was cut to 0.25 per cent on 4 August, but has found that many lenders failed to pass on […]


Teachers BS passes on base rate cut to SVR borrowers

Teachers Building Society is to cut its Standard Variable Rate (SVR) by the full 0.25 per cent recent Bank of England base rate reduction with effect from October 1, 2016. The reduction will mean the Society’s SVR for residential mortgages will be reduced from 4.99 per cent to 4.74 per cent, while its buy-to-let SVR […]


Guide: what you need to consider for your auto-enrolment project

In this guide, Johnson Fleming reveals what items you need to understand to gauge the impact of auto-enrolment on your business. The guide focuses on: the impact that your auto-enrolment scheme will have on you; assessing your workforce; understanding your staging date; reviewing your current provision; and modelling contribution levels and costs.

Embrace simplicity!

By Fiona Holmes, proposition communications manager When I first took out critical illness cover, I was overwhelmed. It wasn’t just the form filling, it was finding out about the sheer number of illnesses I was covered for. Did it give me peace of mind that I was covered for neuromyelitis optica or systematic lupus erythematosus? […]


News and expert analysis straight to your inbox

Sign up
  • Post a comment
  • Andy 3rd June 2017 at 7:52 am

    I’m sorry, am I missing something. Someone’s just paid for a survey to confirm that borrowers rates go up after the fixed period?
    Surely a quick look at Mortgage Brain tells you this in all LTVs except 95% (where it still goes up in the majority of products)
    Then someone else comes out saying they are glad it’s been confirmed.
    Then a call for lenders to tell customers it’s going to happen which they already do.
    Surely the story here is that somebody likes wasting money, not that SVR is higher than the product rate in the majority of cases?


Why register with Mortgage Strategy?

Mortgage Strategy continues to be the market-leading B2B mortgage publication in the UK, and provides trusted, independent insight with the aim of helping, promoting and analysing the latest developments for mortgage professionals.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Mortgage Strategy Events
Be the first to hear about our industry leading conferences, awards, webinars and more.

Research and insight
Take part in and see the results of Mortgage Strategy's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now