As a mortgage advisor you often have to try and combat the expert opinion of “the bloke down the pub” and even apparently knowledgeable sources.
Whilst looking for a table of current standard variable rates recently I came across this quote on fool.co.uk;
“First of all, let’s look at Standard Variable Rate (SVR). This is the standard rate of interest that lenders use and like it says, it is variable. This is because it is linked to the Bank of England base rate – so whenever that goes up, so will your mortgage rate and thus so will your mortgage payments.
However, SVR Mortgages aren’t just linked to the base rate, they’re usually set at around 1-2% higher. This makes this type of mortgage very expensive.”
Any mortgage broker worth his salt would cringe at the apparent advice that SVR’s are linked to the bank base rate and will move in line with them. Any borrower whose SVR is still standing above 3% is probably more than aware that this is not the case.
Actually the lenders SVR is a rate that could move in relation to many things including the LIBOR rate, bank base rate and just as importantly the need to attract savers in order to lend money in the first place which is one of the key reasons why the full extent of the cuts in bank base rate has not been passed on by many banks as well as their obvious need to re-capitalise.
What’s the point you ask? When you’re looking to find out what to do with your mortgage speak to a qualified and authorised mortgage broker whose advice is properly scrutinised for accuracy