Halifax to raise SVR

Graham_Devon

Thousands of Halifax customers could see their mortgage payments rise after the high street lender said it is to increase the cap on its standard variable mortgage (SVR) rate from 3% above bank base rate to 3.75% from 31 March 2012.

The bank, part of the Lloyds Banking Group, which also includes Lloyds, and Cheltenham & Gloucester, has written to 40,000 borrowers who took out a mortgage before September 2007 and have some of their borrowing on the SVR and some on another product with an early repayment charge on it, to inform them of the move.

It said the change would not affect the amount customers paid – currently 3.5% – but the last time it raised the cap it increased its SVR just three months later. In February 2011, the bank was forced to write to 600,000 customers – and repay up to 300,000 of them – after it failed to properly notify customers of a change in the SVR cap from 2% above base rate to 3%. It said its mortgage terms and conditions allowed it to do this and the Financial Services Authority (FSA) did not take enforcement action against the bank.

A mortgage consultant believes other lenders will follow suit, upping current SVR's.

Apparently though, this won't change the amount customers pay. So I'm much confused.

What's the point in upping the cap from 3% above rate to 3.75% above rate, if no ones going to pay it? Or is this only for customers not currently on SVR?

A Halifax spokesman said: "This change does not affect the amount customers pay, and the SVR remains at 3.50%. We continually assess the many dynamic factors that impact mortgage pricing, and have reviewed the current cap level to ensure that it remains suitable in the current market conditions."

http://www.guardian.co.uk/money/2012/feb/28/halifax-mortgage-rate-cap-increase

Mexas

They wont pay more but will actually pay less off the mortgage/loan?

Graham_Devon

Mexas wrote: »

They wont pay more but will actually pay less off the mortgage/loan?

Could Halifax do that? People have a mortgage for 25 years (or whatever term)?

ash28

Graham_Devon wrote: »

A mortgage consultant believes other lenders will follow suit, upping current SVR's.

Apparently though, this won't change the amount customers pay. So I'm much confused.

What's the point in upping the cap from 3% above rate to 3.75% above rate, if no ones going to pay it? Or is this only for customers not currently on SVR?



http://www.guardian.co.uk/money/2012/feb/28/halifax-mortgage-rate-cap-increase

Haven't they (for the moment) just increased the SVR cap - not the actual SVR?

That's my understanding of the article - people's repayments won't change until they raise the actual SVR not just the cap - I guess that won't be long. Give it a month or two.

Nikkster

The way I read it - they are altering the cap i.e. what they could charge, but aren't actually making use of the change in cap to increase the SVR. Probably read that wrong, but nevermind!

Crossed posts with ash28! At least that makes 2 of us

Graham_Devon

I'm interested as this will effect me (I think). Not sure again, as it talks about effecting those with "some of their borrowing on SVR and some on another product". Don't really know what that means. Can people have the same mortgage split between 2 different products?!

ILW

I would suspect they are covering themselves incase wholesale and cheap indirect government lending dries up and they have to start atracting deposits from savers at some time in the future.

wotsthat

They want to increase their SVR but can't because BoE rates are going nowhere so the current cap prevents them doing that. They'll up the cap now and increase the SVR in a couple of months with or without BoE rates moving.

I'd imagine that they don't have many customers on the SVR but that those customers are the least likely to take positive action if the rate goes up so it's fairly easy money. The SVR is realistically the only rate they can change because fixed rates and trackers will be bound by contracts.

ash28

Graham_Devon wrote: »

I'm interested as this will effect me (I think). Not sure again, as it talks about effecting those with "some of their borrowing on SVR and some on another product". Don't really know what that means. Can people have the same mortgage split between 2 different products?!

You can have your mortgage split between 2 products. According to the article and as you say, it affects people who are on the SVR for part of their mortgage and another product (with early repayment charges) for the rest.

It will affect mortgages taken out before September 2007 - from then onwards you would have been on 3.75% cap anyway.

According to the Halifax they will be writing to affected customers this week.

Graham_Devon

Well I'm on SVR, product taken before 2007. To my knowledge however I'm not split between products. Got the recent payout. Just wondering really whether I will be paying an extra 0.75%.

Thrugelmir

wotsthat wrote: »

I'd imagine that they don't have many customers on the SVR

A good rate if you've finished a fixed rate term and don't have the equity or the financial circumstances to remortgage to a lender such as HSBC.

Across all lenders average SVR is nearly 5% now.