As homeowners have had their current mortgage deal end they have converted over to their lender’s standard variable rate (SVR).  There could be many that aren’t even aware that this has occurred.  They remain blind to the fact that they have put themselves into a vulnerable position financially.  Unaware they could be paying much lower repayments they continue to sit on their lender’s risky SVR.  There are others that have chosen to sit out getting a new remortgage in the hopes that the current historical interest rate offers will dip further or they are waiting until warnings come of possible increased interest rates before making a commitment to a new deal.  Still there are others that would love to remortgage but cannot due to being unable to gain approval or they have lost property value due to falling house prices in their area and are currently in negative equity.

Most lenders have increased their SVR over the past few months.  The increases have left homeowners, a possible 1.5 million of them, paying an average of 4.27 per cent interest rates.  This level is the highest seen since March 2009.  The data released by the Bank of England also reveals that the average SVR has been on a constant increase this year and blame from lenders is placed on the increased cost of lending.

To help keep loans available and affordable the government launched the Funding for Lending scheme.  The scheme allows lenders to borrow funds for lending from the government at cheaper interest rates than what they can find on the global lending market.  This has led to historically low interest rates on fixed deals for the best borrowers.  Many deals have been offered at less than 3%.  Those with slightly higher interest rates are still attractive with no or lower fees and free legal work and valuations.

In response to the rising SVR levels, David Hollingworth, from mortgage adviser London & Country, said, “No SVR is safe at the moment. There is every chance that there will be other banks and building societies which increase their rates in the next few weeks and months.

“Lenders are still feeling the pressure. The SVR is something that they can easily change.”