Rising mortgage rates could hit more borrowers

The Momentum UK Team 14 March 2012

Standard variable mortgage rates are on the rise in spite of the historically low Bank of England Base rate.

Last week Clydesdale and Yorkshire banks announced that they would be raising interest levels on mortgage loans, a move which could impact more 30,000 borrowers.

The banks confirmed that they would be raising their standard variable rate (SVR), the interest rate that they pay once the fixed or variable rate deal period is over.

A number of other high street mortgage providers have also increased their SVR recently, including Halifax, RBS and the Bank of Ireland.

Steve Reid Retail Director at Clydesdale and Yorkshire Banks defended the banks decision to raise SVRs:

"We don't take such decisions lightly and fully appreciate the impact this will have on some customers but you only have to look at the narrow gap between longer-term savings rates and mortgage borrowing rates to see how things have changed.

"For instance, on our market-leading five year savings account we are offering interest rates that are just 0.7%* below the new SVR. With significantly more savers than borrowers, it is important that we balance the needs of all of our customers"

Rising rates make could make it increasingly important that consumers should regularly review there mortgage deals to ensure they are getting the best available rate for their money according to leading market commentators.

A recent survey suggest that around half of those in mortgage debt have not reviewed their mortgage since the Bank of England set the base rate at 0.5pc in 2009, and as many as 56% are unaware of the cost of their mortgage loan.