Tracker vs Discounted SVR

andrewc_2

Hello,

At last a forum genuinely biased in favour of the consumer.

I'm about to remortgage from a 2yr tracker.
I have a £120k repymt mortgage and will reduce this to a 10 yr term when I switch lender/product.

My current lender (Abbey) has offered me a guaranteed discount of their svr, which makes the deal a few hundred £'s cheaper than the best new lender 2 yr tracker, when you take into consideration remortgage fees/exit admin fees and associated costs. Both options allow 10% overpayments.

I've approached my lender for a movement history of their SVR in comparison with the BoE BR. They have responded by confirming that in the last 2/3 yrs their SVR has never been > 2% above BR.

The risk in taking their discounted SVR offer depends on the risk of them increasing their margin between SVR and BR.

Could anybody offer me any advice wrt their experiences, especially those with Abbey, or perhaps a longer history of Abbey's SVR over say the last 5 yrs or more.

Thanks for any info./advice you can offer.

Andrew

PS I approached two very large brokers and was surprised to note that the new FSA regulations have done very, very little to change the techniques they use when dealing with customers.

MortgageGenie

Hi Andrew,

It's a competitive market place so with an SVR currently at 2% over BOE I wouldn't expect them to alter their margin significantly as it may lead those who are current on their SVR to look elsewhere and would make their SVR more expensive than the likes of the Halifax etc. Not good for PR...

Hopefully somebody else may have the historical figures if not I guess you'll have to accept that they may or may not pinch a bit extra on any BOE movement.

If you don't mind me asking, what discount did they offer you?

Sorry to hear you had a bad experiance with the brokers, what techniques did they use?

andrewc_2

Abbey confirmed that the difference between BR and SVR could widen.
They were unable to comment on the duration or likelihood of the current 2% margin

ReportInvestor

andrewc wrote:

Abbey confirmed that the difference between BR and SVR could widen :rolleyes:

The issue here is relatively simple, as illustrated by the answer to your key question .

Fewer and fewer people at all companies are on the SVR as opposed to trackers / teaser rate deals for new customers. So anyone linked to the SVR will be disproportionately squeezed when push comes to shove and Banco Santander (Abbey's new owner) needs to raise its dividend and times are tough.

ac, if it was me I'd get out of that disadvantaged SVR minority fast.

And pay no attention to Abbey's past history as the landscape has changed at Abbey and throughout the mortgage industry.

P.S. I am not a mortgage broker.