SEVERAL banks and building societies will not hike mortgage rates, despite the Bank of England’s latest interest rate rise.
The central bank increased its base rate from 4.25% to 4.5% – the 12th increase in a row.
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The rate is used by high street banks and lenders to set the rates it offers customers on mortgages, loans and savings.
A rate rise is generally good news for savers, especially after a long stretch of getting very low returns.
Usually, the BoE rise would mean a blanket increase in the cost of borrowing for households too – depending on what loan you have.
If you have a tracker mortgage that follows the base rate, you can expect your interest payments to rise.
That’s because it’s directly linked to the base rate.
Households on a fixed mortgage deal won’t see a payment increase straight away as they are locked into a rate for a set period.
Standard variable rates (SVR), which borrowers land on after a mortgage fix ends, can also rise.
Yesterday’s move means a typical mortgage holder on an SVR will see their bills go up by £35 a month, according to AJ Bell.
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And according research firm MoneyFactsCompare a rate rise of 0.25% on the current average SVR of 7.37% would add approximately £780 onto total repayments over two years.
But, some banks are opting NOT to pass on the latest increase to their SVR borrowers.
Nicholas Mendes, mortgage technical manager at John Charcol said: “Lenders are free to increase or decrease their SVR as they see appropriate and will be influenced by wider market conditions, overhead costs, base rate.”
He added that anyone that is currently on a SVR or approaching the end of their fixed rate, should check what new deal they can get.
The markets that lenders use to price mortgage costs have stabilised since being shaken by September’s disastrous Mini Budget.
The Bank of England’s base rate is now expected to peak well below the 6% previously feared.
That means mortgage rates have been coming down in recent months, when typically they increase with a rate rise.
We list the major banks and building societies that will not be hiking SVRs for borrowers following the BoE announcement.
It’s worth noting that even if your SVR is not increasing, that these rates are often higher than fixed deals.
But while a fix could save you money now, you could end up paying more later on if interest rates later fall.
We also explain how to get the best deal on your mortgage below.
Finance expert at L&C David Hollingworth said: “Lenders have generally been passing on interest rate increases and that has seen some lift their SVR from 3.59% before base rate started to rise in December 2021 to 7.99% after yesterday’s increase.
“That makes SVR a pricey place to be so borrowers should review whether there is a better option especially if they used SVR as a holding position in the aftermath of the mini Budget, which created so much volatility in mortgage rates.
“Even if some lenders don’t pass on the hike it’s unlikely to be a rate that can compete with fixed and tracker deals that are available in the market.”
But he warned that borrowers shouldn’t second guess what will happen, and do what’s best for them.
HSBC
Major high street bank HSBC has confirmed to The Sun that it will not be passing on the rate rise to its borrowers on SVRs.
The only loan which will see a rise is its tracker mortgages, which go up in line with base rate increases anyway.
HSBC said that rates, including SVRs, will be kept under review.
Its current SVR for residential mortgages is 6.99% as of March 1, 2023.
Santander
Another big name bank, Santander, has confirmed that it will not be increasing its rates for borrowers on variable rates.
The Santander and Alliance & Leicester SVRs will instead remain unchanged at 7.50%.
It comes following an increase to rates following the previous BoE update.
Skipton Building Society
Skipton Building Society has opted to keep both its SVR and its MVR (mortgage variable rate) at their current levels.
For mortgage holders on these types of loan, their rates will be frozen at 6.25% and 6.54% respectively.
Charlotte Harrison, Skipton’s CEO of home financing, said: “For the millions of people who are due to come off a fixed rate mortgage product in the next few months and potentially onto an SVR, a base rate increase is unwelcome news.
“And to those people I can share that Skipton will not be increasing our MVR or SVR as a result of today’s anticipated announcement.
“This means for the bulk of our mortgage customers – those not on base rate tracker linked products – there will be no increases to their payments.”
Coventry Building Society
Coventry building society will be holding the rate for its SVR customers too.
The lender said it felt it was in the best interest of members to keep its rate unchanged.
Ian Biggs, head of product performance said: “Whether our members are saving for their first home, have entrusted us with their life savings, or borrowed money to purchase their dream house, our aim is to always offer great value both now and in the future.”
For borrowers on SVR, it means they won’t see it rise from 6.99%.
What are the other banks doing?
Barclays
Barclays mortgages rate changes will be effective from June 1, following yesterday’s announcement.
Here is how much they’ll be increasing by:
- The Barclays UK Residential SVR will increase from 7.74% to 7.99%
- The Barclays UK BTL SVR will increase from 8.74% to 8.99%
Virgin Money
Virgin Money said only a small minority of its mortgage customers that aren’t covered by the tracker rate and fixed rates.
Its SVR is under review.
Nationwide
Nationwide is currently working through what this latest Bank Rate change means for SVR borrowers and said it will announce any changes to rates soon.
Metro Bank
A spokesperson for Metro Bank said: “In line with the Bank of England increasing the base rate to 4.5% from 4.25%, we’re updating all mortgage products that track the Bank’s base rate.
“We are confident that our wide range of mortgages continue to meet our customers’ needs.”
It expects all changes to come into effect on the next monthly payment, but it will formally confirm this on its website for customers over the next few days.
TSB
TSB has not issued an update on its SVR as yet.
Leeds Building Society
Leeds BS is reviewing the potential impact of the latest change to the BoE base rate.
Yorkshire Building Society
Following the BoE increase YBS has made no decision about whether to make any changes to its SVR.
Lloyds
The Sun is yet to hear back from Lloyds on the effect the BoE increase will have on its SVR borrowers.
We will update this story when we hear back.
How to get the best deal on your mortgage
If you’re looking for a traditional type of mortgage, getting the best rates depends entirely on what’s available at any given time.
But there are several ways to land the best deal.
Usually the larger the deposit you have the lower the rate you can get.
If you’re remortgaging and your loan-to-value ratio has changed this could also give you access to better rates than before.
A change to your credit score or a better salary could also help you access better rates.
If you have a fixed rate, you could see higher rates when you come to the end of the current term after the BoE rate rises.
And if you’re nearing the end of a fixed deal soon it’s worth looking for new deals now.
You can lock in current deals sometimes up to six months before your current deal ends.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.
To find the best deal use a mortgage comparison tool to see what’s available.
You can also go to a mortgage broker who can compare for you, but you may have to pay for this service.
It could cost a couple of hundred pounds but it might save you thousands on your mortgage overall.
You’ll also need to factor in fees for the mortgage, though some have no fees at all, or you can add it to the cost of the mortgage, but beware that means you’ll pay interest on it and so will cost more in the long term.
You can use a mortgage calculator to see how much you could borrow.
Remember, that you’ll have to pass the lender’s strict eligibility criteria too, which will include affordability checks, and looking at your credit file.
You may also need to provide documents such as utility bills, proof of benefits, your last three month’s payslips, passports and bank statements.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected]
