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Mortgage rates: why are they rising and who'll be hit?
Update: Santander has become the latest bank to hike its standard variable rate. Are more increases are on their way?
by Victoria Bischoff on Aug 22, 2012 at 16:12Follow @VBischoff
(Update) Santander has today become the latest mortgage provider to increase its standard variable rate (SVR) – joining the Bank of Ireland, the Co-operative Bank, Clydesdale and Yorkshire banks and Halifax, which have all announced increases to their SVRs.
But why is anyone increasing their rates when the Bank of England's base rate is still so low?
Santander today announced plans to increase its SVR by 0.5% from 3 October.
The move, which will push up the bank's SVR from 4.24% to 4.74%, will cost customers an average of £26 a month more for a £100,000 mortgage and £42.54 a month more for a £150,000 mortgage.
The Spanish bank also revealed that it will be increasing its SVR cap margin – the maximum amount above the Bank of England base rate it can charge – from 3.75% to 4.99% from 24 September.
This is the second time Santander has increased its mortgage rates this year. In March the bank increased the interest rate on four of its mortgage products – the two-year fix and tracker deals at 60% LTV and 75% LTV sold though its Abbey Intermediaries channel – by 0.10%.
The increase, however, only affected new customers – there was no change to existing customers’ rates.
The Co-operative bank announced back in April that it would be raising its SVR by 0.5% from 1 May.
This pushed its rate up from 4.24% to 4.74% for some 54,000 customers, costing them an average of £15 more a month.
Co-op said the increase was a result of 'changing conditions in the mortgage market' and an 'increased cost of funding'.
Bank of Ireland
Bank of Ireland, which includes Bristol & West, increased its SVR by 1.50% for around 100,000 customers.
The change is taking place in two stages, with rates increasing from 2.99% to to 3.99% in June, and then to 4.49% in September.
More about this:
More from us
- What is a mortgage and how do I get one?
- Q&A: why are banks clamping down on interest-only mortgages?
What others are saying
- Halifax mortgage announcement
- Money Advice Service
- Clydesdale and Yorkshire SVR increase
- Bank of Ireland SVR increase
- Cambridge building society
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