Blame­less? Na­tion­wide and the fake gas bill


The Daily Telegraph - Your Money - - FRONT PAGE -

Page 5 tracker where you pay Bank Rate plus 1.25pc.

With Bank Rate at 0.25pc, that would mean a “pay rate” of 1.5pc. Now Bank Rate has risen to 0.5pc, the mort­gage rate will rise to 1.75pc.

Bor­row­ers with track­ers from San­tander, Na­tion­wide and Lloyds will pay a higher rate from De­cem­ber 1. HSBC, Cly­des­dale and York­shire Banks put their tracker rates up yes­ter­day.

Th­ese are also less pop­u­lar now than be­fore the cri­sis.

Here, bor­row­ers pay a rate which is for a short pe­riod dis­counted from the lender’s “stan­dard vari­able rate”.

There is no di­rect link to the Bank of Eng­land’s Bank Rate, though SVRs do gen­er­ally rise when Bank Rate rises and vice versa.

Mil­lions of bor­row­ers pay stan­dard vari­able rates or SVRs.

That is be­cause when fixed or dis­counted rates come to an end, the lender switches the bor­rower to the SVR. Only if bor­row­ers re-mort­gage and switch to another deal or lender can they avoid pay­ing SVRs.

A rise in Bank Rate does not – as in the case of tracker deals – re­sult in an au­to­matic or im­me­di­ate in­crease in SVRs. Banks can al­ter SVRs at their dis­cre­tion. How­ever, a Bank Rate move­ment does al­most in­evitably get passed on to bor­row­ers fairly shortly. So far Bar­clays, Na­tion­wide and York­shire Build­ing So­ci­ety have said their SVRs will rise in line with Bank Rate, with ef­fect from De­cem­ber 1.

An in­crease in rates comes at a time when the abil­ity to off­set mort­gage in­ter­est against prof­its be­fore tax is be­ing with­drawn.

An­gus Stewart, of Prop­erty Mas­ter, an on­line mort­gage bro­ker, said: “I think for some land­lords the rise could be highly sig­nif­i­cant. There are a lot of pres­sures on land­lords, not only in mort­gage re­lief, but also in lend­ing re­stric­tions across a port­fo­lio.”

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