Standard variable rate mortgage holders face a dilemma.
Home-owners on lenders standard variable rate mortgage deals are currently faced with a decision as whether to stick with their lender's increased rate or try to switch to a cheaper product.
Standard variable rates are set arbitrarily by individual lenders. The rates set take into account such factors as the BoE base rate, mortgage funding costs and retail savings.
There has been a shift towards standard variable rate mortgages in the last few years. Mortgage-holders who have come to the end of their fixed rate deal have chosen to stick with their lenders cheap SVR rather than remortgaging.
With SVRs having increased recently this trend could be at an end.
Any SVR which has increased to 4% or above is now no longer competitive when compared to the wider market. Those home-owners now sitting on more expensive standard variable rate mortgages, are advised to shop around for a cheaper deal.
The low mortgage rate environment experienced for the last couple of years is unusual. Mortgage-holders have not always had access to such low rates. The rates currently available even at 4%, are cheap when considered on a historical basis.
For some standard variable rate mortgage holders, such as those with the Bank of Ireland who are to experience a two stage rate increase, the right decision could be to remortgage.
If you are unsure as to what to do and would like advice or an up to date mortgage market comparison call Deal Direct today.
