SVRs have the potential to act like tectonic plates when they move upwards, unleashing a tsunami of remortgage demand and arrears that the lending market is unequipped to fund or underwrite.
A move like this would break the implicit understanding at policy level that monetary policy should ease our pain while fiscal policy does the hard work of balancing the books. For this to work the SVR has to behave to some extent like the Bank of England base rate.
It’s not my contention that these cases will prelude a rush of similar behaviour from other lenders.
The big banks know they cannot unilaterally make movements that would endanger this policy.
But strategic movements on fringe mortgage books – or books that have been sold on – are increasingly likely.
This is arguably good news for brokers as any activity will result in demand for more advice. But being able to place overstretched borrowers must not result in disappointment, nor in poor judgments made in haste.
Many of these cases will be difficult to place and getting it right will be imperative. But we are a long way from a remortgage boom.
The base rate will remain where it is for most of this year and lenders, in particular the ones we own, will tread carefully before moving independently of the base rate.