Close to a million Halifax borrowers are facing a hike in their mortgage payments after it announced it is increasing its SVR.
The lender’s SVR will rise from 3.50% to 3.99% on May 1, affecting some 850,000 customers.
Its SVR is now aligned with its home owner variable rate, the reversion rate it introduced for new customers at the beginning of 2011.
Halifax revealed last week that it was increasing its SVR cap from 3% above base rate to 3.75% above base, and confirmed within five days that it would be hiking the SVR itself.
For a customer with a £100,000 mortgage balance and 15 years remaining on their mortgage term, the change will equate to a £24.30 increase in their monthly payment.
Halifax is offering affected borrowers a product transfer option of a fee-free two-year fix, which has a rate of 3.49% at 60% LTV and 3.74% at 75% LTV.
Ray Boulger, senior technical manager at John Charcol, says there are cheaper two-year fixes available in the market so this option would only appeal to those unable to remortgage elsewhere.
He says: “This represents a huge remortgage opportunity for brokers. The rate rise will be a big catalyst for Halifax borrowers to review their mortgage options and a large proportion of the lender’s book will be up for grabs.”
Stephen Noakes, mortgage director at Halifax, says: “In light of market conditions, particularly higher funding costs, it has been necessary for us to review the SVR. At 3.99%, the rate more accurately reflects the cost of funding a mortgage, but it remains competitive for borrowers.”
In February 2011 Lloyds Banking Group paid £500m in compensation to 300,000 Halifax borrowers after admitting that its contract was not clear when it increased its SVR
cap from 2% above base to 3% in September 2008.
Meanwhile, the Royal Bank of Scotland hiked rates by 0.25% last week for its offset and One Account customers.
Most customers affected by the move, which RBS estimates to be around 200,000, will now pay a rate of 4%, up from 3.75%.