Santander to hike SVR in October
There will increase the lender’s SVR cap margin – the maximum amount above the Bank of England base rate that it can charge – from 3.75% to 4.99% from 24 September.
A Santander spokeswoman said: “This move is prompted by several factors – most notably the fact that for the last three years the amount it costs us to provide mortgages and the rates we offer our savings customers have been increasing despite the base rate remaining static.
“Indeed, for some time the correlation between base rate and mortgage and savings rates has been weakening. Additionally, the cost of running a bank in the UK has increased dramatically through a combination of increased liquidity, capital and funding requirements.”
Santander said its competitors increased their SVRs by similar amounts earlier this year, reflecting the same market dynamics. In the past few months Halifax, Co-operative Bank, Bank of Ireland and Yorkshire and Clydesdale Bank have increased their SVRs.
The bank said: “While we were able to delay this decision through the first half, conditions now require us to follow them and move to adjust our rate.”
Santander’s analysis shows that its SVR mortgage holders will see an average increase of £26 per month for a £100,000 mortgage.
It added it will consider all particular customer circumstances that might lead to financial difficulties as a result of this change and will work with customers on an individual basis to help them manage any impacts.
Clare Francis, mortgage expert at MoneySupermarket.com, said: “This is yet another blow for mortgage borrowers as Santander joins the list of lenders to hike its SVR. Despite the fact the Bank of England base rate has remained unchanged since March 2009 SVRs have been edging upwards.
“A Santander customer on its SVR rate with a £150,000 25-year repayment mortgage will see their payments increase by £42.54 a month; a significant amount for the many households who will be impacted by this. Anyone affected by this or who is concerned their mortgage lender may join the SVR-hiking pack should consider remortgaging onto another deal if possible.
“If you are happy to stick with a variable rate then go for a tracker rather than a discount as trackers move in line with the Bank of England base rate. Speak to an independent mortgage broker if you are unsure of the best option as they will explain what is available to you and help to make the best decision for your situation.”