Are there rules about banks increasing their SVRs

carlw

Hi all

I am not sure if this has been covered before, but i couldn’t find it.

I just wondered what the rules were concerning Mortgage "standard variable rates". Can banks increase their SVRs for existing customers as and when they wish?

I am a NRAM customer on their SVR. As the BOE base rate dropped Northern Rock passed on some of the reductions. My concern is that as it increases they are likely to pass on all of the increases.

My question is really just for information, so i can plan ahead. Obviously with the fact that i am paying less on the SVR (4.78%) than i was on my fix (6.19%) now, i can afford some increases in the rate.

Thanks

Carl

dunstonh

Are there rules about banks increasing their SVRs

no there are not. At least not many and not in respect of what you are talking about.

I am a NRAM customer on their SVR. As the BOE base rate dropped Northern Rock passed on some of the reductions. My concern is that as it increases they are likely to pass on all of the increases.

What makes you think that the base rate is linked to the SVR?

carlw

What makes you think that the base rate is linked to the SVR?[/QUOTE]

Are you saying there is no link?

My experience is limited but as base rates move in general terms SVRs do as well dont they? My SVR has not changed since the base rate has not changed, and i suspect as soon as the base rate is increased by .5% my SVR will increase by .5%. Is that not a link?

dunstonh

Are you saying there is no link?

Doesnt have to be. Funding comes from a number of sources which have nothing to do with the BOE base rate. A lot of the high risk lenders got money based on LIBOR rates.

carlw

Isnt it the intention of the Bank of England when increasing base rate to increase LIBOR rates though?

What is your opinion on base rates and SVRs because i guess there is to actual answer. Do you think some banks will pass on some increases and some will pass on all of the increases. Much like the decreases? Really we just dont know, so we should not assume an increase in base rate means an increase in SVR?

Thanks for your replied.

TrickyDicky

Tracker mortgages are tied to BOE rates. So when they change, your rates change immediatly.

SVR is the standard variable rate - standard at that bank and variable in that they can change as and when they like, to sort out their profit margins. If the BOE drops, SVR may only drop because of competition dropping thier rates and the LIBOR rates.

Basically, BOE and SVR are unrelated. If you want it to be related, move to a tracker.