Switch your mortgage product early to avoid your lender's standard variable rate
Mortgage lenders have continued to increase their standard variable rates following the latest Bank of England base rate hike.
Once a fixed or tracker rate mortgage product finishes, banks and building societies automatically put borrowers onto their standard variable rates, also known as follow-on rates.
While homeowners are more conscious that rates have increased, conservative estimates show that hundreds of thousands of people are still on these variable rates. This is either because they have not switched to a new deal or they cannot swap to another product.
Nationwide Building Society's standard 'revert to rate' increased by 0.50% to 7.49% this week, and The Co-operative Bank's is now 6.87%. Halifax's new standard variable rate is 7.49%, while Bank of Ireland's rate is now 7.09%. TSB's reversion rate is 7.49%.
These standard variable rates are even higher if you had to take a mortgage through one of the specialist lenders because of your credit history or niche financial circumstances. Aldermore Bank's standard revert-to rate is now 8.48%, and Foundation Home Loans rate is higher at 8.99% - which is 4.99% over the Bank of England rate.
Aaron Strutt, product director at Trinity Financial, says: "In the past, data from some large lenders has shown that many homeowners act to secure a better deal once they notice their increased direct debit coming out of their bank accounts.
"Given the scale of new business mortgage rate improvements we have seen this week, you would have thought the base rate had just come down rather than gone up.
"The same cannot be said for the lenders and their standard variable rates. Borrowers will be shocked if they do not switch rates before their deal ends and automatically go onto their lender's reversion rate. They will probably increase again with any further base rate hikes."
Call Trinity Financial on 020 7016 0790 to secure a mortgage or book a consultation
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The information contained within was correct at the time of publication but is subject to change.
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