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SVRs are too high, says Which?

The majority of lenders’ standard variable rates are too high and further increases following a base rate hike could leave thousands of households in financial difficulty, Which? has warned.

Research by Which? Money shows 95% of lenders failed to fully pass on cuts in the base rate to their SVR mortgage customers.

It also reveals that more than a fifth of lenders have increased their SVR since the base rate hit an all time low of 0.5% in March 2009.

Cheltenham & Gloucester and Lloyds TSB Scotland are the only lenders that are part of the four biggest banking groups to have passed on the full cut.

The average SVR is now 3.48% above the base rate, compared with 1.95% in September 2008.

And Which? says that with many borrowers trapped on SVR mortgages because they are unable to remortgage, any further increases in SVRs could have serious implications.

Peter Vicary-Smith, chief executive at Which?, says: “Millions of people are on variable rate mortgage deals and for many a rate hike could mean they’re facing real financial difficulties.

“Banks have enjoyed increased margins on mortgages for the last few years and when the base rate rises again, few lenders will be able to justify passing the full amount onto their SVR customers.”  



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  • John Lacy 22nd June 2011 at 12:50 pm

    Just another example of why which should stick to comparing washing machines and toasters.
    They’ve either dumbed down the analysis to the point that it is worthless or just plain don’t understand how the market works. Either scenario reflects badly on their analytical integrity

  • Dan McGeehan 22nd June 2011 at 9:48 am

    The article raises some interesting points although some of the examples given where probably not relevant. Yes there are millions on customers on SVR..some through choice sush as C&G, Halifax, First Active for example who have low SVR and can afford to potentially wait. They are others above with LTV in excess of 75% on SVR such as Northern Rock together clients and indeed if interest rise what options will be open to them? Lastly some of the examples used such as Kent Reliance’s SVR of 6.09% are not very relevant…i doubt many clients will ebs tuck on this.

  • Harry Ford 21st June 2011 at 10:35 am

    Yet another ridiculous article that completely fails to understand how lenders are funded. It also completely ignores the impact on savers, who are suffering for different reasons as a result of the low base rate. As a consumer it makes me very angry that these people speak up on behalf with completely inaccurare stories.