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Standard variable rate mortgages rise to highest level since 2009

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The base rate rise in August helped push the average standard variable rate (SVR) to its highest level since 2009, according to data.

Fixed rates are also on the rise, but lenders are still trying to entice borrowers by revisiting their incentive packages, the latest figures from Moneyfacts show.

The report revealed that the average SVR rose from 4.75% in January 2018 to 4.90% in December.

The two-year fixed mortgage increased from 2.35% in January to 2.51% in December, while the five-year fixed rates rose to 2.92% compared to 2.88% at the beginning of this year.

Rachel Springall, finance expert at Moneyfacts, said that the cost of mortgages appears to be on the rise as a whole, fuelled by the base rate rise in August.

She added: “Lenders will be focused on meeting their annual lending targets, but at the same time, it will be increasingly difficult to improve their range by rate alone due to the squeeze in their margins.

“Therefore, providers have revisited their incentive packages as a way to entice prospective borrowers, such as by offering cashback or creating a bundle of cost-saving incentives upfront.

“Those borrowers who are looking to remortgage will find that motivation to switch from an SVR has never been greater. Today, a borrower could save over £3,000 within the first year of their mortgage if they switched to an average fixed rate deal.”

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