A recent report has claimed that many lenders are increasing the interest rates on their mortgage loans despite the fact that the base interest rate has been kept on hold for the tenth month.
It was announced this week by the Bank of England that the base interest rate was being kept on hold at 0.5 percent. This was the tenth month in a row where the base rate had been kept at this level, which is the lowest it has ever been in the history of the Bank of England, which spans over three centuries.
However, despite the base interest rate being kept on hold at 0.5 percent there are some lenders that have continued to increase the interest rates on their standard variable rate mortgages. Man y people that are coming off special deals such as fixed rate deals are moved on to these standard variable rate mortgage loans, and many new buyers opt for these because they can be the cheapest option in the current climate.
However, the fact that many lenders are increasing their SVR rates means that those that are on these mortgages are being stung for up to fourteen hundred pounds a year extra in mortgage repayments. Already around eight lenders have increased their SVR rates during the base rate freeze, and some industry officials believe that other lenders will follow suit.
One industry official said: ‘The momentum to increase SVRs appears to be gathering pace. Now that a few have taken the step, it is highly possible others will follow.’ Experts are concerned that increasing interest rates on mortgage loans will cause huge problems for some borrowers who have seen their pay frozen and are already struggling to keep up with bills and other financial commitments.
Source - This Is Money