Standard variable mortgage rate fears are eased.
Home-owners stuck on lenders standard variable mortgage deals may have just been offered a life line by the Government in conjunction with the Bank of England.
The Government announcement of plans to make over £100 billion in funding available for small businesses and mortgages, could prove very good news for those on a standard variable rate.
Banks have struggled for a while to borrow at a reasonable rate, which has led several lenders to increase their standard variable mortgage rates in an attempt to cover increased costs. For those with little equity who have found themselves unable to remortgage, the news that banks are to have access to cheaper funding is positive.
Extra funding should reduce the pressure on mortgage rates, including lenders SVRs. It is hoped that first time buyers and home-owners with low equity wanting to remortgage will benefit greatly. The cheap funding needs to be targeted at those who need the help most.
Recently various lenders have adjusted their rates, but not all have been adjusted in the same direction. Rate are fluctuating, lenders such as Virgin Money have reduced theirs while rates from lenders such as Santander have increased.
It will probably take until the last quarter of this year to see what effect the Government's cheap funding will have on the standard variable mortgage sector, and wider market as a whole.
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