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Co-Op SVR hike shocks brokers

Co-Operative bank has been slammed by brokers for raising its SVR by 0.45% from 5.34% to 5.79%.

But the lender says that such a large rise was necessary to allow it to offer a better range of discounted products to attract new borrowers.

Paul Lawler, spokesman for the Co-Op says: “We&#39re stuck between the devil and the deep blue sea. The companies that are offering bigger discounts also have SVRs that are a lot higher. We have repositioned but our overall package is still a lot better than the rest of the market.”

Co-Op has just released a two-year fixed rate mortgage at 4.79% until June 2006 and a two-year tracker deal offering a 0.07% discount on Bank base rate.

The two deals are available for house purchase and for remortgaging with an LTV of 95%.

However the reaction from brokers to such a big rate hike has been one of shock, with the main criticism being that while it allows the Co-Op to offer better packages for new customers, existing ones are left worse off.

Mike Fry, director of Halton Insurance Service, says: “It&#39s an insult really. If the Bank of England puts the rate up by 0.25% and then the Co-Op raises it 0.45%, you wouldn&#39t use it out of principle. OK, the Co-Op might be pre-empting the next rise but what happens when another one comes? I can&#39t see why anyone would want to place business with the Co-Op.”

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Strong dollar can be a powerful driver of UK dividend growth in 2015

By Robin Geffen, fund manager and CEO 

This year threatens to be a challenging one for UK dividend hunters. Last year saw an all-time record amount paid out in UK dividends — some £97.4bn, according to research from Capita Dividend Monitor. Yet as Capita also pointed out, out the biggest single factor driving the growth in the fourth quarter of last year was easy to identify: the rising US dollar. 

In our view, this trend is much more than simply a one-quarter phenomenon. It is actually the most profound issue to get right as a UK equity income investor in 2015. We believe that the US dollar will continue to strengthen significantly from its current level. This is due more to the US economy’s demonstrable de-coupling from the rest of the world than to a view on the UK. The US has a strong chance of tightening monetary conditions this year without jeopardising growth or de-stabilising its housing market. The same can unfortunately not be said about the UK.