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SVR hikes will cost mortgage borrowers £300m, says Which?

Co-operative Bank, Halifax and Clydesdale and Yorkshire Banks all increase their SVRs today, with Which? estimating it will cost consumers an additional £300m in mortgage repayments over the next year.

The Co-operative Bank is raising its standard variable mortgage rate by 0.5%, from 4.24% to 4.74%, while Halifax is increasing its SVR from 3.5% to 3.99%, and Yorkshire and Clydesdale Banks from 4.59% to 4.95%.

Research from Which? reveals 70% of mortgage-holders are concerned about an increase in interest rates.  

Some 14% say they are already struggling with repayments. The greatest impact of these latest rises will be felt by mortgage prisoners who are unable to move to another provider.

Three quarters of mortgage-holders say they would be affected if their repayments increased by £50 a month, with 41% saying they would need to cut back on regular spending, 20% would need to reducing savings and 11% would not have enough for essentials.

An increase of £100 a month would see 20% of mortgage-holders not having enough for daily essentials like food and 11% being unable to pay their mortgage. Consumers also highlighted the emotional impact of increases in mortgage repayments, describing them as “devastating” and “a disaster”.

Peter Vicary-Smith, chief executive of Which?, says: “Our advice to anyone struggling with their mortgage repayments is speak to your lender straight away.  It is encouraging that a third of people we spoke to had approached their lender but worryingly in one in five cases, they said their lenders offered no help at all. This is just not good enough and we want to see banks do more to help their customers who are struggling.

“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 FCA, needs to be a watchdog not a lapdog. It must stand up for consumers and stand up to the banks.”

Which? wants lenders and the Financial Services Authority to do more to protect consumers against unjustified interest rate rises and ensure that consumers are offered the ability to fix their payments at a reasonable level.

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  • Bob the builder 1st May 2012 at 1:27 pm

    I must say Phil I agree with you that it is not being covered enough in the press but even if it was I wonder if the public would take notice as they seem to be immune to doom and gloom nowadays.

    I do feel sorry for those clients trapped on their deal with little chance of escape such as the self cert cases and higher LTV clients in negative equity.

  • Sam Jones 1st May 2012 at 11:44 am

    I would say that the majority of people effected and moaning are on self cert deals, 80-90% LTV and would be unable to secure a new deal at all, let alone fixed at 4%

  • Phil Shelford 1st May 2012 at 11:28 am

    so why do these individuals not seek indepenent advice then? With great rates avaibale and the ability to fix at 4% for 5 years you would think the brokers phones would be red hot. I blame the media for not putting out the right message that lenders are lending and that borrowers can secure their future.