Nationwide's specialist division is the latest to raise SVR

Published 26th Jan 2010

Borrowers with a residential or self-cert deal from The Mortgage Works or UCB Homeloans will see their SVR rise by up to half a point.


Thousands of borrowers are set to face a sharp increase in the cost of their mortgage repayments after Nationwide Building Society announced plans to raise standard variable rates (SVR) across its specialist lending divisions.

Homeowners with residential, buy-to-let or self-cert deals from either The Mortgage Works or UCB Homeloans will see their SVR jump by up to half a point from February 1, adding £62 a month to repayments on a £150,000 interest-only deal.

The variable rate on residential or self-cert deals will rise from 4.69 per cent to 5.19 per cent, while the SVR on buy-to-let loans will climb by 0.3 percentage points.

Homeowners typically revert to an SVR at the end of their mortgage deal.

A spokesperson for Nationwide, which is the UK's biggest building society, said: “Particularly in the specialist marketplace, the rates for specialist products tend to be higher than prime, and there has been more movement in that area.

“It is a symptom of the market that we are having to review these rates. Other lenders have also done this and we feel this is an appropriate action to take.”

Building societies are under increasing pressure to raise SVRs to cover the cost of raising money to fund new mortgage lending from retail deposits, where building societies face still competition from banks to attract customers.

Last week Skipton Building Society, the fifth biggest building society, announced plans to hike its SVR, warning borrowers that from March 1 it will rise from 3.5 per cent to 4.95 per cent.

It had previously promised not to raise the rate while the base rate was at 0.5 per cent, but used a clause in the small print of its mortgage conditions to scrap the promise, citing "exceptional circumstances".

In the last year, nine building societies have increased SVRs and more are expected to follow suit in the coming days. Ecology Building Society raised its SVR by a quarter point to 4.9 per cent earlier this month.

Borrowers with a mortgage from Nationwide Building Society benefit from one of the lowest SVRs on the market. A clause in the small print of mortgage contracts issued before April last year means that the rate can be only 2 percentage points higher than the base rate, giving a current pay rate of 2.5 per cent. Around half a million customers are thought to be sitting on the low SVR.

Source: ' Times '

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