SVR question(s)

1978

I realise that lenders aren't obliged to pass on all (if any) cut from the BoE base rate to their SVRs.

What occurs when the base rate rises? Do the lenders in general choose to pass on the full increase to the SVR, partial, or none?

Also - are SVRs ever likely to increase under any other circumstance than a base rate rise?

I'm just trying to get some figures together for decison making. :think:

Thanks, as ever.

latecomer

The SVR is completely up to the lender and doesn't have to do anything. that said, I suspect that you can pretty much guarantee it will go up when the BoE rate increases.

Peelerfart

They do have to compete of course, but sometimes it isn't so easy to leave.
So you may find yourself stuck with a bad lender before you can change economically.

There's plenty on here who could tell a tale or two about that.

hearts

I cant see them charging 7% (if presently 4) when rates go to 3% but you never know ;-)

dannykos

as "LukeKelly" reminded me on another thread:

"They lower their SVR by less than any decrease in base rate. If they really did always increase their SVR by at least any increase in the base rate then every `cycle' -- every time rates have a low period and then a high period -- we'd end up with higher SVRs.

To illustrate this suppose that the base rate started at 5% and SVRs at 6%. The base rate falls to 1% and the SVR to 3%, so the SVR has fallen by less. Then the base rate returns to 5% and the SVR increases by as much as the base rate. This would give SVRs of 7%. Repeat this cycle a few times and you end up with SVRs of 15% and a base rate of 5%! This clearly isn't what we really experience, and so SVRs do indeed go up more slowly than the base rate."