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High street banks have begun to confirm dates that customers with standard adjustable rate mortgages (SVR) will be impacted by higher costs.
The Bank of England (BoE) yesterday confirmed it had raised interest rates to 1.25% from 1%, affecting around two million homeowners.
Those who have a tracker rate mortgage will see their interest rates rise automatically in line with the BoE rate hike.
For those who have an SVR mortgage, your lender will likely pass the full rate hike on to you.
You’re usually in an SVR mortgage deal after your fixed or tracker rate ends.
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Santander has confirmed that its SVR will increase by 0.25 percentage points from August 1, while its tracker mortgage products will increase by the same amount from July 1.
This includes the Santander Follow Rate (FoR) which will increase to 4.50%.
Rate changes on adjustable rate mortgages for existing customers will come into effect again on July 9, by 0.25 percentage points, according to TSB.
If you’re a Barclays customer with an SVR mortgage, your rate will increase by 0.25 percentage points from August 1, the lender has confirmed.
According to Nationwide, tracker mortgages will increase by the same amount starting August 1. It has not been confirmed when changes will be made to the SVR products.
HSBC and First Direct customers will see their tracker mortgages increase from June 17th. The bank has not confirmed any changes to its SVR mortgages.
Lloyds Banking Group – which includes Lloyds Bank, Halifax and Bank of Scotland – says it is still reviewing its interest rates.
Sarah Pennells, Consumer Finance Specialist at Royal London, explained how someone with a £200,000 25-year redemption mortgage pays an extra £27 a month due to the rate hike. This adds up to £324 over the year.
“While some homeowners can afford it, others will undoubtedly struggle, especially when other costs skyrocket,” she said.
“A mortgage broker can recommend the best mortgage for you, because it won’t necessarily be the one with the cheapest prime rate.”
It is important to remember that this is the fifth straight BoE rise in a row – so the actual price rise will be hundreds of pounds more than last year’s 0.1% increase.
However, by historical standards, interest rates are still considered low.
How to compare mortgage offers
If you’re a homeowner, there are mortgage comparison tools you can use to check if you’re getting the best deal.
We have a guide on how to find the best prices here.
If you’re thinking about switching, remember to consider all other costs and see if your current deal has an early exit fee associated with it.
Unfortunately, banks and lenders have been slowly raising interest rates on their fixed businesses for several months in anticipation of rate hikes.
But it’s still possible to save thousands of pounds every year when you have an expensive business and could take advantage of a cheaper rate right now.
“The current average adjustable rate mortgage is 2.8% according to the Bank of England, which will rise to 3.05% after today’s hike,” she explains Laura Suter, Head of Personal Finance at AJ Bell.
“However, the highest two-year fix is 2.6%, which means that if a homeowner borrowed £100,000 by switching, they could still save £276 a year.
“With a £250,000 mortgage, the equivalent of saving £696 a year, and borrowing £400,000, a homeowner could save £1,116 a year by switching.”
https://www.mirror.co.uk/money/santander-tsb-more-banks-confirm-27258414 Santander, TSB and more banks confirm when mortgages will rise after rate hikes