Mortgage borrowers face paying an extra £300m a year as a result of lenders’ SVR hikes, says Which?.
Last week Halifax, The Co-operative Bank, and Clydesdale and Yorkshire banks all increased their SVRs, with Which? estimating it will cost consumers an additional £300m in mortgage repayments over the next year.
Co-operative Bank raised its SVR by 0.5%, from 4.24% to 4.74%, while Halifax has hiked its SVR from 3.5% to 3.99% and Yorkshire and Clydesdale banks have gone from 4.59% to 4.95%.
Research from Which? revealed 70% of mortgage-holders are concerned about a rise in interest rates.
Some 14% say they are struggling with repayments, while 75% say they would be affected if their repayments rose by £50 a month, 41% would have to cut back on regular spending, 20% would need to reduce savings and 11% would not have enough money for essentials.
Peter Vicary-Smith, chief executive of Which?, says: “These SVR rises are the consequence of the lack of competition in the market and the failure of the government to take action to promote competition.
“This is why the new financial regulator, the Financial Conduct Authority, needs to be a watchdog not a lapdog. It must stand up for consumers and stand up to the banks.”
Ben Thompson, managing director of Legal & General Mortgage Club, says more than eight million of the 11 million or so mortgage borrowers are on a floating rate of some description.
He says: “The question is how many more will be affected in this way and which lenders will make similar moves?”
Thompson says lenders’ mortgage terms and conditions will have to allow them to revise SVRs.
But he adds: “For example, some cited exceptional market circumstances to justify a rate rise. However, most lenders don’t have equivalent flexibility and if they had they would no doubt have pulled the trigger by now.
“So while there may be a few more moves in the pipeline, we don’t expect a landslide of SVR changes to follow.”