Mortgages with standard variable rate 'on the increase'

Date:Wednesday 6th January 2010
Author: Susanna Kavka

The standard variable rate (SVR) used by eight mortgage lenders has increased since April 2009, despite the Bank of England base rate remaining at 0.5 per cent during the same period.

Opting for a SVR loan is becoming a more attractive and affordable option for borrowers as several institutions, such as Cheltenham & Gloucester and Cheshire Building Society, are offering rates as low as 2.5 per cent to their customers.

Many borrowers are finding it more affordable to stay on a revert-to rate, rather than switching to a different deal.

Darren Cook, spokesperson for said: "By increasing the SVR, lenders are actively trying to encourage borrowers to find a new mortgage deal, but many are unlikely to act until a significant base rate increase is a real possibility."

Last month, reported that many lenders were also cutting the rates on their fixed-rate loans, with the average fixed-rate loan falling below five per cent for the first time since June 2009.