SVR and OVR

DE_612183

I've got an offset with Clydesdale - I know that the standard rate is different - usually about 0.3%.

Every time there is a change in the BOE rate that gets reflected in both rates - however on the latest change the SVR has gone down 0.25 but the OVR has only gone down by 0.1%.

Seems strange - is this just Clydesdale or a common occurrence?

ACG

It can happen. 
I remember after the mini budget some of the building societies were putting up their rates slower than the base rate was going up - either they were not passing on soe of the rises or they were only passing on maybe 0.15% rather than the full 0.25%. 

Likewise, when the rates came down, they did not pass on the full reductions until they had rebuilt their buffer. 

I cant speak specifically for Clydesdale but the rates "tend to" follow the BoEBR but they are independent of them so can fluctuate at their own pace. It could also have something to do with the nationwide purchase maybe? Trying to get their base rates a little more aligned. 

DE_612183

@ACG - Thanks for that - it makes sense - the only bit I don't understand is the "tracker" bit - I always assumed that trackers were linked to the BoE base rate - so they fluctuated in conjunction with that - however they are linked to their own internal rate and "track" against that - which in my opinion is a bit misleading.

ACG

DE_612183 said:

@ACG - Thanks for that - it makes sense - the only bit I don't understand is the "tracker" bit - I always assumed that trackers were linked to the BoE base rate - so they fluctuated in conjunction with that - however they are linked to their own internal rate and "track" against that - which in my opinion is a bit misleading.

Tricky one. I can genuinely see your point and up until 2022 I would have agreed. But having seen the good side of banks/building societies not passing on the full rate rise during what was clearly an exceptional time, I think its good that they have that ability. You could argue they didnt have to pass it all on anyway, but then they would not have been able to rebuild their buffer when rates came down. 

I remember 2023 and as a broker it was awful. Mentally I am a strong person, but speaking to people I had built bonds with over the the previous 10 years and seeing them worrying about keeping the roof over their heads and looking for solutions was quite hard. When you had building societies trying to help, it was a bit of a win during a bad time.