The typical standard variable rate (SVR) paid by mortgage borrowers in the UK not on a specific rate has reached over five per cent for the first time in 13 years, increasing the amount borrowers will pay by up to £100 per month alongside other cost pressures.
This finding, published first by Moneyfacts has highlighted the importance, particularly for those with credit issues, to seek advice from CCJ mortgage specialists before committing to a mortgage or switching to a different rate.
The five per cent barrier being breached for the first time since January 2009 (where it sat at 5.14 per cent) is the result of a range of factors, but one of the biggest is the rapid increase of the Bank of England’s base rate from 0.1 per cent in December 2021 to 1.25 per cent over the course of just six months.
The SVR is currently being paid by over a million borrowers, typically as the result of coming to the end of a discounted, fixed rate or tracker mortgage period, and according to industry figures, has added over £70 per month on average to repayments since December.
The reason for the bank rate increase is an attempt to curb the rate of inflation, which currently stands at 9.1 per cent.
At present, mortgage experts, such as Eleanor Williams at Moneyfacts, have recommended that people coming to the end of their current mortgage deal should lock into a new fixed deal for as long as possible and shop around for the best possible rate.
Whilst the average fixed rate has itself increased by 1.4 per cent, the highest rate since 2013 and has been increasing month-on-month for the last three quarters, it is still significantly lower than the SVR, and can save borrowers up to £150 potentially based on a £200,000 mortgage balance over 25 years.
