SEVERAL banks and building societies will not hike mortgage rates, despite the Bank of England’s latest interest rate rise.
The central bank unexpectedly increased its base rate by 0.5 percentage points, the sharpest increase since February.
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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.
Nicholas Mendes, mortgage technical manager at John Charcol said: “85% of mortgages holders are tied into a fixed rate, to some extend will be shielded for the current volatility in fixed rates.
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“Ultimately this isn’t good news for mortgage holders currently on a variable rate or approaching their final year of their fixed rate deal likely to be sub 2%.
“When it comes to reviewing their options, they will undoubtably be in for a shock by how much their monthly payment will have increased but also what face a tough choice in what to do next.”
Today’s move means means a typical mortgage holder on an SVR will see their bills go up by an average of £30.28 a month based on the mortgages currently outstanding, according to UK Finance.
But, some banks are opting NOT to pass on the latest increase to their SVR borrowers.
We list the major banks and building societies that will not be hiking their rates 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.
Leeds Building Society
Major lender Leeds Building Society has confirmed to The Sun that it will not be passing on the rate rise to its borrowers on SVRs.
It said the majority of its borrowers are on fixed rate products so their rates will remain the same until their fixed periods end.
Rates on its tracker accounts will change automatically.
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.
Virgin Money
Virgin Money said it hasn’t made any changes at this stage.
A spokesman said: “We have always aimed to price competitively and will continue to do so.”
What are other banks doing?
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.
But it said mortgage rates on tracker mortgages held by existing members will automatically increase based on the rate rise from July 1.
The Sun has asked Nationwide exactly how much it expects rates to rise for these customers.
Barclays
Following the BoE increase Barclays has made no decision about whether to make any changes to its SVR.
Natwest
Natwest told The Sun it is keeping all of its mortgage products under review.
Skipton Building Society
Skipton Building Society has opted to increase the rate on its SVR and its MVR (mortgage variable rate) mortgages by 0.25%.
MVRs will now be 6.79%.
Charlotte Harrison, chief executive of home financing at Skipton Building Society, said; “After not increasing our MVR/SVR rates following the last base rate rise and many before that, we will be passing on 0.25% of the Bank of England increase today.
“However, we commit to maintaining our approach to protect borrowers from further rate hikes.”
Metro Bank
Metro Bank is increased said it will be updating all of its products that track the base rate – including its mortgage products.
A spokesperson for the bank said: “We expect all changes to come into effect on the next monthly payment, however, we will formally confirm this on our website for our customers over the next couple of days.”
The Sun has also contacted Coventry Building Society, Santander, TSB and Lloyds Banking Group about changes to their rates.
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]
