SVR - any info on how they move?

Jaxxb

Hi,

My 0.84 tracker ends at the end of October and I'm looking at 2yr tracker 2.79% or a 4yr fixed at 4.49% with £100 transfer fee but no booking fees (I have to stay with Santander 'cos its a joint mortgage with my partner and my mum who is now 65 and there's still 23yrs to run - not a lot of choice out there for us).

Anyway, I like the 2yr tracker 'cos I don't think base rates are going to rise very fast and by the end of 2 yrs I think they will be about 2 to 2.5%, so I would be paying about the same as the fixed rate is now. The money I save could then go on paying off some debt.

However, I am thinking that after the 2yrs I would need to get another deal or stay with the SVR. I am wondering whether the SVR's rise at the same rate as the BOE base rate or whether the banks would stall their rises so there isn't such a wide disparity between the two as there is now. Also I assume mortage rates would be slightly more expensive in two years time as well so I wouldn't get the 4yr fixed at 4.49% anymore.

Is there any information on the correlation between BOE base and SVR's? I'm probably splitting hairs here a bit but its such a difficult decision! Any advice would be greatly appreciated.

tonycarew

I think the various lenders would simply add any future rise in BOE base rate straight onto their SVR.

firstaspect

There's officially not a link between BOE base and SVR, it's up to the bank to set their standard rate. However the SVR will usually follow the BOE pretty closely (i.e. if BOE goes up by 0.5% then so will the SVR). It is very unlikely that the SVR will be stalled when the BOE starts to rise.
My personal opinion is that the BOE is unlikely to rise by more than 2% maximum over the next 2 years, could well be closer to 1%. But it obviously is a gamble and as you say if it does rise then in 2 years you less likely to get a fixed deal at that price. I'm just signing up to a fixed rate myself.