Lloyds warns borrowers to reassess SVRs
Lloyds said that since late 2008 falling SVRs lessened the gap with fixed-rate mortgages and significantly reduced the incentive for many borrowers to remortgage.
Historically remortgage activity has typically been driven by borrowers replacing their fixed home loans at the end of their term to avoid moving on to an SVR. This is because SVRs on the whole were more expensive and brought uncertainty over future monthly payments. However, this changed in recent years as interest rates fell to an all time low.
Stephen Noakes, mortgage director at Lloyds TSB, said: “With SVRs at historically low levels, many homeowners have actually found their mortgage payments have reduced at the end of their term and the incentive to remortgage has been reduced.”
However Noakes warned that as fixed rates start to fall borrowers should assess their mortgages as they could benefit from a further drop in their monthly payments.
To encourage borrowers to remortgage Lloyds is reducing the rates on a number of its remortgage deals by up to 0.25%.