Blameless? Nationwide and the fake gas bill
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An increase in rates comes at a time when the ability to offset mortgage interest against profits before tax is being withdrawn.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.”