According to broker John Charcol, the quarter of all homeowners who are still stuck on their lender’s SVR will be landed with a bill of £43 million extra each month, if the predicted increase in interest rates goes through.
Borrowers who are paying their lender’s SVR are already at a disadvantage, paying an average of over £100 more each month than they need to compared to those who are on the market leading deals.
Ray Boulger, senior technical manager at John Charcol, says: “While an interest rate rise is never good news for homeowners, those who are still on their lender’s SVR will be hit particularly hard.
“The vast majority of lenders will pass the Bank Rate increase on in full and some will no doubt increase their SVR by more. To the average householder on an SVR repayment mortgage a bank rate increase will mean £15 more per month, adding up to £180 a year.”
Recent weeks have also seen many lenders withdraw their market leading fixed rate deals as the cost of funds increased in anticipation of the Bank Rate rise. The withdrawal of these deals comes as a further blow to borrowers who want to protect themselves from any further interest rate rises by fixing their repayments.
Boulger says: “It’s absolutely vital that homeowners don’t languish on their SVR and seek advice on getting the right mortgage to suit their needs.
“With interest rates hotly tipped to increase not just once, but possibly twice in the next few months, all borrowers need to ensure that they are on the best rate possible, especially if they do not have a fixed rate mortgage.”