JAMES WATSON, SALES AND MARKETING DIRECTOR, PAYMENTSHIELD
While the economy has slowly edged out of recession the pain is only just beginning for thousands of home owners.
Previously somewhat cushioned from the downturn, those on SVR mortgages are now braced for a dose of reality.
Last week, Norwich and Peterborough Building Society became the latest lender to raise its SVR, upping the cost of borrowing for thousands of clients.
Although the Bank of England base rate has remained at 0.5% since last March N&P’s SVR has increased to 5.35% from 4.85%.
N&P’s move follows Skipton Building Society’s decision last month to break its promise to borrowers and increase its SVR to more than 3% above the base rate.
Several smaller building societies including Kent Reliance Building Society and Cambridge Building Society have also raised their SVRs in recent weeks, with others likely to follow.
Borrowers’ woes have been compounded by the revelation that the number of insolvencies in England and Wales rocketed to a record 134,142 last year, with further rises predicted this year.
Rising unemployment and the credit crisis drove the figure beyond the previous record of 107,288 insolvencies in 2006.
This trend is likely to continue and brokers should consider the consequences when recommending new mortgages or remortgages, ensuring they highlight the benefits of mortgage payment protection insurance. It’s not the case that things can only get better – they may get a great deal worse.