Santander to hike SVR mortgage rate to 4.74%

Santander customers will receive letters warning of the steep rise to their mortgage repayments set to kick-in over October.

Santander has written to mortgage customers to inform them that its Standard Variable Rate (SVR) is set to rise.

From 3rd October, Santander’s SVR will increase from 4.24% to 4.74%. That’s a rise of 0.5%.

On a £150,000 mortgage the change will cost a customer an extra £43 a month.

Santander predicts this will affect hundreds of thousands of customers but declined to give an exact figure.

A spokesperson for Santander said the lender was forced to take this action because of the increased cost of raising mortgage funds, despite the static Bank of England base rate.

The move comes after a raft of other lenders hiked their SVRs earlier this year. However, many experts says it flies in the face of programmes such as the Government's Funding For Lending scheme, which was designed to provide cheaper borrowing costs by allowing banks to borrow cheaply from the Bank of England.

What is SVR?

The Standard Variable Rate is a type of mortgage rate set by lenders. It is something that you are likely to be dumped onto once an introductory offer has ended, meaning you could be paying more than you need to. The only way you can avoid being reverted onto a less appealing SVR is to switch deals.

How Santander’s SVR compares

So how will Santander's new SVR compare to other lenders?

Halifax, Clydesdale Bank and the Co-op all raised their SVRs earlier this year. But Santander’s increase means it now has one of the most expensive SVRs on the market.

Top mortgage deals

One way to avoid the hikes is to remortgage and switch onto a better deal.

To get a real sense of the best offers on the market you can talk to one of our fee-free mortgage advisers today.

In the meantime here are some best buy mortgage deals that can save you money if you're on an expensive SVR.

Remember to factor in the fee and any other charges to get the true cost of switching to another deal.

At lovemoney.com, you can research all the best deals yourself using our online mortgage service, or speak directly to a whole-of-market, fee-free lovemoney.com broker. Call 0800 804 8045 or email mortgages@lovemoney.com for more help.

Use lovemoney.com's innovative new mortgage tool now to find the best mortgage for you online

At lovemoney.com, you can research all the best deals yourself using our online mortgage service, or speak directly to a whole-of-market, fee-free lovemoney.com broker. Call 0800 804 8045 or email mortgages@lovemoney.com for more help.

This article aims to give information, not advice. Always do your own research and/or seek out advice from an FSA-regulated broker (such as one of our brokers here at lovemoney.com), before acting on anything contained in this article.

Finally, we tend to only give the initial rate of a deal in our articles, but any deal which lasts for a shorter period than your mortgage term may revert to the lender's standard variable rate or a tracker rate when the deal ends. Before you take out a deal, you should always try to find out from your lender what its standard variable rate is and how it will be determined in the future. Make sure you take all this information into account when comparing different deals.

Your home or property may be repossessed if you do not keep up repayments on your mortgage

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