MSE News: Mortgage blow as building society hikes SVR

Former_MSE_Guy

This is the discussion thread for the following MSE News Story:

"Skipton will up its standard rate by a whopping 1.45 percentage points from March, leading to huge repayment rises..."

Read the full story:
Mortgage blow as building society hikes SVR

Cannon_Fodder

Trying to push more people onto Trackers, before the Base Rate goes up ?

Gorgeous_George

A whopping 4.95%? :shocked:

Hardly whopping is it Guy? Did you work for The Sun in a previous life. Did you mean Wapping?

4.95% isn't described as whopping when applied to savings rates. Many savings accounts earn less than inflation i.e., you lose money by saving and pay tax on the interest.

Sensationalism adds nothing to MSE.

GG

ETA: Sorry, it was The Daily Mail. Must be an election coming up.

ETA2:

SVRs are usually linked to the Bank of England base rate

Nope, that's Trackers (the clue is in the name).

[Deleted User]

It's funny how perceptions change over time. Back in 1990, the 15.4% mortgage rate prevailing that year was definitely whopping but was softened somewhat by the 25% mortgage interest tax relief available on the first £30,000 of the mortgage. In those days interest rates moved up or down by 1% at a time which was hardly considered whopping!
Fast forward 20 years with mortgage debt in the stratosphere and yes, a 1.45% increase against no corresponding increase in base rate does seem pretty whopping.
These are strange times that we are living in where the range of mortgage rates that people are paying can be anywhere between 0 and 7%.
Compared to Nationwide's BMR of 2.5% the rate of 4.95% could be called whopping. It all depends on your point of reference.

MORPH3US

Gorgeous_George wrote: »

ETA:

ETA2:

What are ETA's please?

JimBoB_5

Skipton BS have cited clauses in their 3% above BoE rate guarantee that talk about being able to remove it in "exceptional circumstances". What I'm wondering is whether Nationwide has some similar clauses, until now I presumed they were bound to their 2% guarantee.

Gorgeous_George

ETA = Edit to add

I'd be surprised if any lender didn't have a clause that allowed them to protect their business in exceptional circumstances. To avoid invoking such a clause and receiving the bad press that it will attract they try to get people to move to other products.

GG

property.advert

It is a strange day indeed when mortgage rates are more closely linked to savings rates than BoE rates. I guess history will find a plethora of thesis on this time period in our financial lives but I do not see any "normality" to decisions until we get base rates back up to around 4% or so followed by a period of stability where we see a tightening of spreads over base in the mortgage market and the return of sub 200 basis points margins over base for regular mortgages.

Thrugelmir

property.advert wrote: »

It is a strange day indeed when mortgage rates are more closely linked to savings rates than BoE rates.

If they weren't, how would Building Societies fund mortgages?

poppy10_2

Gorgeous_George wrote: »

A whopping 4.95%? :shocked:

Hardly whopping is it Guy?

The rise was 1.45 percentage points, from 3.5% to 4.95%. That's a massive 41% rise in monthly paments for anyone on the SVR - whopping by anyone's standards. Particularly when you thought you had a contract stating that the SVR would never rise above 3 percentage points over BoE base rate.

Even more whopping are the implications for the mortgage market in general. Skipton are not the only BS in trouble - many are finding it impossible to raise funding at anywhere near competitive rates. There's no point the BoE keeping their base rate so low when in practice banks and building societies are not able to secure funding at those rates. 8 building societies have failed so far in this credit crunch - expect many more to follow.

ILW

Anybody who took out a mortgage and did not budget for rates over 5% was playing with fire. Whilst it is not nice, I have little sympathy for anyone that says they cannot afforrd the rise.