An increase in the Standard Variable Rate (SVR) from four UK banks could see mortgage customers facing an additional £300 million in repayments over the next 12 months, according to Which?.
Mortgage customers of Clydesdale Bank, Yorkshire Bank, Co-operative Bank and Halifax will see their monthly mortgage payments increase, with effect from 1st May.
The Bank of Ireland will also increase its SVR, the biggest increase at 1.5 per cent, but this will be done in two stages, on 1st June 2012 and 1st September 2012, and will affect 100,000 borrowers.
The increase by Halifax from 3.5 per cent to 3.99 per cent will affect over 800,000 borrowers, by as much as £50.00 per month. The increase is likely to mean that around just over 10 per cent of mortgage holders in the UK will be unable to pay for everyday essentials.
Research carried out by Which? revealed that 70 per cent of the 3,345 borrowers surveyed are concerned about increases in interest rates. The research also showed that 14 per cent of borrowers are struggling with repayments without the increase taking effect. Which? are also concerned about those who are “mortgage prisoners”, unable to move to another provider to get a better deal.
Chief Executive at Which?, Peter Vicary-Smith, commented:
“Our advice to anyone struggling with their mortgage repayments is speak to your lender straight away. It is encouraging that a third of people we spoke to had approached their lender but worryingly in one in five cases, they said their lenders offered no help at all. This is just not good enough and we want to see banks do more to help their customers who are struggling.
These SVR rises are the consequence of the lack of competition in the market and the failure of the Government to take action to promote competition. This is why the new financial regulator, the FCA, needs to be a watchdog not a lapdog. It must stand up for consumers and stand up to the banks."
Which? are calling for both lenders and the Financial Services Authority to “do more” to protect consumers and to ensure that lenders are not able to take advantage of borrowers who are unable to move to a different lender.
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