Standard variable rates increased as banks say cost of raising capital is rising.
Two mortgage lenders have announced that they are increasing the interest rates on their mortgages.
Royal Bank of Scotland (RBS)/NatWest has already increased the rate on RBS and NatWest Offset Flexible Mortgages by 0.25% to 4% from 1st March. The RBS One Account mortgage will also increase by 0.25% to 4% on 1st May. This will affect around 200,000 borrowers in total.
Meanwhile, as widely forecast, Halifax has announced that it is increasing its standard variable rate (SVR) from 3.5% to 3.99% from 1st May.
It’s also increasing the rate on its Halifax Variable Rate 2 and Halifax Flexible Variable Mortgage Rate from 3.40% to 3.89% from the same date.
And it has confirmed that the cap for those customers who are part-locked into one of the Halifax Standard Variable Rate, Variable Rate 2 or Flexible Variable Mortgage Rate will increase from 3% above the Bank of England base rate to 3.75% above base rate from 31st March. This affects 40,000 customers who took out mortgages between 2001 and 2007. They should have already received letters from the bank.
Customers affected by the Halifax SVR rise will receive a letter between 11th April and 26th April advising them of their new monthly repayment amount.
But to give a couple of examples: people who have a £100,000 repayment mortgage will pay £24.27 more a month, while those who have an interest-only mortgage will pay £40.81 more.
However, Halifax has said that customers who want to pay off their mortgage or switch to another mortgage can do so without incurring an early repayment charge.
The bank currently offers a two-year fixed-rate mortgage at 3.49% at up to 60% loan-to-value.
On its website, Halifax says: “The change to our lender variable rates is due to the increased cost to us in raising the money we lend our customers.”
The Libor rate, which is the rate at which banks lend to other banks, rose to its highest level since July 2009 in January when it hit 1.09%.
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