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    • QuotesUK
    • By QuotesUK 10th Feb 18, 2:24 PM
    • 3Posts
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    QuotesUK
    Santander Follow On Rate
    • #1
    • 10th Feb 18, 2:24 PM
    Santander Follow On Rate 10th Feb 18 at 2:24 PM
    I have a Standard Variable Rate Mortgage with Santander. They have offered me the option to switch to a Base Rate Tracker, a Follow On Rate, which is currently cheaper.

    In February 2018, the SVR is 4.74%, the FOR is 3.75% (Bank of England base rate plus 3.25%)

    As we all know the Bank of England rate is likely to increase, so the FOR rate will increase. But Santander will probably increase the SVR too. Once you switch from SVR to FOR you canít go back.

    Santander passed on the recent base rate increase, so what would be the benefit of staying on SVR?
Page 1
    • kingstreet
    • By kingstreet 10th Feb 18, 3:24 PM
    • 33,194 Posts
    • 17,929 Thanks
    kingstreet
    • #2
    • 10th Feb 18, 3:24 PM
    • #2
    • 10th Feb 18, 3:24 PM
    You're being offered a customer retention product. The follow-on rate is what you get automatically at the end of a special offer, for example standard variable rate after a two year fix.

    Why not ask Santander about its fixed rate customer retention products, or look to remortgage elsewhere as this can often be done without cost?
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • QuotesUK
    • By QuotesUK 10th Feb 18, 3:38 PM
    • 3 Posts
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    QuotesUK
    • #3
    • 10th Feb 18, 3:38 PM
    • #3
    • 10th Feb 18, 3:38 PM
    A credit reference issue currently blocks new lenders and the fixed rate deals from Santander arenít attractive. FOR is only automatic for new products.

    However, given the choice between SVR and FOR, I am interested in knowing why anyone would want to stay with SVR.
    • kingstreet
    • By kingstreet 10th Feb 18, 3:42 PM
    • 33,194 Posts
    • 17,929 Thanks
    kingstreet
    • #4
    • 10th Feb 18, 3:42 PM
    • #4
    • 10th Feb 18, 3:42 PM
    Does the tracker have any early repayment penalties?

    If it does, there is your answer.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • QuotesUK
    • By QuotesUK 10th Feb 18, 4:25 PM
    • 3 Posts
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    QuotesUK
    • #5
    • 10th Feb 18, 4:25 PM
    • #5
    • 10th Feb 18, 4:25 PM
    There are no fees or early repayment charges. The only difference is the FOR rate is determined by the bank base rate instead of the SVR rate which is set by Santander.
    • Thrugelmir
    • By Thrugelmir 10th Feb 18, 5:53 PM
    • 58,226 Posts
    • 51,586 Thanks
    Thrugelmir
    • #6
    • 10th Feb 18, 5:53 PM
    • #6
    • 10th Feb 18, 5:53 PM
    Santander passed on the recent base rate increase, so what would be the benefit of staying on SVR?
    Originally posted by QuotesUK
    Very little. Seems as if the SVR is being phased out. You are better off taking a 5 year fix rate product at a lower rate of interest. Then reconsidering your options at the of the term.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • Cronky
    • By Cronky 7th Mar 18, 1:38 PM
    • 1 Posts
    • 2 Thanks
    Cronky
    • #7
    • 7th Mar 18, 1:38 PM
    • #7
    • 7th Mar 18, 1:38 PM
    It's a cheeky ploy by Santander:

    Santander has an uncompetitively high SVR at 0.75% above that of it's peers. This is a big problem for them as they are now required to assess affordability for new borrowers at 3% above their "revert to rate".

    But the problem with just lowering their SVR to a more competitive rate is that vast numbers of their customers are paying the current SVR -either through ignorance or are trapped as "mortgage prisoners". £23.3 billion in lending from their own figures which is 15% of their total lending is currently paying the standard variable rate of interest at 4.74%

    Which is why they have come up with this new "follow on rate" which is for new customers and is a full 1% lower than the current SVR.

    So it seems as though Santander wants to have it's cake and eat it. It wants to attract new customers but it also wants to keep the £233million per year that a 1% reduction in their SVR would equate to.

    It also leaves the possibility of raising their SVR even further in the future and not affecting their lending competitiveness.

    But is it within the rules? I suspect not but only time will tell when the Ombudsman starts reviewing complaints.

    Let's not forget that Halifax and Nationwide tried something very similar in 2002 and ended up paying millions in compensation. But hey! The board of Santander obviously think it's worth a punt!
    • Old Git
    • By Old Git 3rd Apr 18, 2:26 PM
    • 4,288 Posts
    • 3,737 Thanks
    Old Git
    • #8
    • 3rd Apr 18, 2:26 PM
    • #8
    • 3rd Apr 18, 2:26 PM
    I phoned Santander twice today (got cut of both times ).My mortgage deal ends in July .Currently I pay 1.94% .
    I want to overpay so the fixed rate wasn't a good option for me .
    I was offered two tracker rates but with £999 fees .Not realistic for the amount I owe ,so I will probably take the FOR of 3.75% .
    "Do not regret growing older, it's a privilege denied to many"
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