Millions of homebuyers are facing a “mortgage timebomb” as lenders put up interest rates even though the Bank of England base rate (BEBR) remains unchanged.
Industry experts are warning that lenders could hike their standard variable rate (SVR) at any time. Indeed, ten banks and building societies have already put up their rates costing borrowers hundreds of pounds a year, despite the fact that SVR’s are traditionally linked to the BEBR which has been 0.5% for 18 months. The biggest culprit is Skipton Building Society which hiked its SVR from 3.5% to 4.95% in March.
No fewer than 32 lenders charge SVR rates of more than 5%, some 4.5% over BEBR. There are a wide range of variations in the SVR’s on offer, ranging from 2.5% at Woolwich, Lloyds and Cheltenham and Gloucester to 6.45% at Chesham Building Society.
The other worry is when interest rates start rising, some lenders may hike their SVR’s by more than the base rate increase. In order to have some control over your mortgage payments either consider a fixed or tracker option and do so sooner rather than later. With the market in such a state of flux it is difficult to recall a time when it was more beneficial to review your mortgage options and shop around.