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Big SVR mortgage price gap: The cheapest and most expensive lenders on the market

Rebecca Goodman
Written By:
Rebecca Goodman
Posted:
Updated:
21/11/2023

Hundreds of thousands of borrowers rolling onto a Standard Variable Rate (SVR) mortgage are in for ‘bill shock’ as lenders charge up to 9.49% in interest.

The UK’s 15 largest high street banks and building societies charge between 6.79% and 9.49% on their SVRs, showing the big difference in cost for borrowers.

There are currently 679,000 borrowers on their provider’s SVR, while 800,000 fixed-deals are set to end in the second half of this year. As such, it’s important to know what you’ll pay if you roll off an introductory mortgage deal onto an SVR so you can budget accordingly, according to TotallyMoney and Moneycomms who compiled the data.

They found that a number of lenders charge SVRs which are significantly higher than the Bank of England (BoE)’s base rate which currency sits at 5.25%, following 14 successive rate rises. However, it is expected to increase further this week.

They are also higher than the average two-year fixed rate mortgage at 6.70%. But there is a lot of variation between the rates charged by the 15 biggest lenders. The big high street banks dominate the table of the most expensive SVRs, while many building societies have passed on lower hikes to customers.

It comes as major lenders have also been accused of passing on mortgage rate hikes quickly to borrowers but not increasing rates on savings accounts at the same pace.

Virgin Money charging the highest rates

Virgin Money charges the highest rate of 9.49% on its SVR, the data revealed. A Virgin Money spokesperson told YourMoney.com: “We consider our savers and borrowers when setting interest rates and look to provide a fair and balanced outcome for both. The vast majority of our mortgage book is on a fixed rate product and only 2.5% is on residential SVR, with the price reflecting the temporary nature of the product and its volatility.”

Skipton Building Society was revealed to charge the smallest amount of the 15 lenders at 6.79%.

Metro Bank charges the second-highest amount, at 8.75%, while Barclays, Lloyds, and TSB all charge 8.74%.

Leeds BS and Yorkshire BS both charge 8.24%, followed by Co-Op Bank at 8.12%, Bank of Ireland (8.04%), Nationwide BS (7.99%), NatWest (7.74%), Santander (7.50%), Coventry BS (7.49%), and HSBC (6.99%).

Bank of England base rate rises

Lenders can decide how much to put an SVR up by and while some have passed on the full rate rises charged by the BoE since its rate hiking cycle started in December 2021, some have decided to pass on smaller rate hikes to customers.

Five lenders –  Lloyds, Barclays, Virgin Money, TSB and Metro – have added the full 5.15% onto their SVR. But some building societies have added a much smaller amount with Skipton BS adding 2.15%, Leeds BS 2.95%, and Coventry BS addin 3%.

Alastair Douglas, CEO of TotallyMoney, said: “Anybody rolling off their introductory offer, and onto a SVR will be in for a real shock when they find out that their monthly mortgage repayments could be doubling. So if you’re not sure when your deal’s coming to an end, double check so you budget accordingly.

“Those struggling to keep up must get in touch with their lender as soon as possible. New rules mean banks must act in the best interest of their customers and provide flexibility — whether this means reducing monthly payments, or letting customers extend the term of their agreement. It’s free to do, and it won’t impact your credit score.

“With mortgages being such complex products, not knowing what rate you’ll be put on can only add to the confusion. Meanwhile, those looking to remortgage can suddenly find the offer they were about to take out suddenly disappears.”