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Homeowners Need to Make Choice Stay and Pay or Switch

Homeowners Need to Make Choice Stay and Pay or Switch

With the number of attractive remortgage offers available for homeowners it is time to shop around rather than endure increases to a lender’s standard variable rate (SVR).  When a homeowner chooses to not remortgage when their current mortgage deal ends they are converted to the lender’s SVR.  A SVR is a risky interest rate due to the ability of the lender to raise the rate with little warning and it is not connected with the Bank of England’s Monetary Policy Committee’s (MPC) standard base rate.  Despite the risk, many homeowners choose to stay on an SVR rather than remortgage but with lenders increasing their SVR it is pushing homeowners to make a choice: stay and pay or switch.

The latest lender to increase their SVR is Santander which will increase their SVR by 0.5% on October 1 pushing it to 4.74%.  Other lenders have also increased their SVR including Halifax, Co-operative, and Yorkshire and Clydesdale banks.

David Hollingworth, of London & Country, said “Swap rates, the rates at which banks lend to each other, are very low, which has led to fixed-rate mortgages improving significantly in recent months.

“Getting a mortgage offer can take at least a couple of weeks, and often more for those lenders with the best rates as they deal with higher volumes of business.  It therefore makes sense to get the ball rolling sooner rather than later and to be sure to provide any supporting documentation promptly to ease the process.”

Currently there are many remortgages on the market that have low or no fees on long term fixed rates that are very appealing.  Homeowners should be willing to set aside loyalty to their current lender and shop around among the many deals currently available.

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