As we reported a couple of weeks ago that mortgage rates where about to rise, the time has come and rates have increased. Over 1 million people have seen the cost of their mortgage rise!
Yorkshire bank, Halifax, Clydesdale Bank and The Co-Operative (2 of those banks are state owned by the way!) are all raising their standard variable rate (svr) from the beginning of may. Halifax, who is owned by lloyds – backed by taxpayers money, has the most borrowers at around 850,000, has raised its SVR from 3.50% to 3.99% adding hundreds of pounds, even thousands of pounds a year to a mortgage depending on how much you owe. A halifax customer with a £150,000 balance owed on their mortgage would see their payments jump from £750.93 to £790.92, almost £40 a month and a jump of £479.88 a year! So someone with higher balance of say £450,000, which is quite commonplace in this era of rediculous house prices, will see their payments jump from £2252.80 to £2372.78 an increase of £1367.76 a year! This is expected to add a collective £300 million to repayments over the next year!
Natwest, another taxpayer backed bank (its owned by RBS) has increased the rate of its one account, which is not a SVR product, by 0.25%, which looks like affecting 100,00 customer, the new rate for most customers will be 4%.
But the bank base rate remains at 0.5% so why are the banks pushing up the rates? Lenders are blaming the weak economy, the eurozone crisis and the increased cost of funding a mortgage – yet that doesnt tie in with the fact that the bank of england hasn’t increased rates for more than 3 years!
Which? recently conducted a survey and found that Seven in 10 mortgage holders are concerned about an increase in interest rates, while one in seven is already struggling with repayments. “The greatest impact of today’s rises will be felt by ‘mortgage prisoners’ who are unable to move to another provider”, Which said. Nearly 75% of mortgage holders polled said they would be affected if their repayments increased by £50 a month, with four in 10 needing to cut back on regular spending. 20% questioned said they would need to reduce savings and more than 10% would not have enough for essentials. An increase of £100 a month would see 20% of mortgage holders not having enough for daily essentials like food – and more than 10% being unable to pay their mortgage, the Which? survey reveals. So if rates go up any more we are unfortunately going to see a lot of people in a lot of pain. Which also begs the question, how the hell are house prices rising?
Whats your opinion on all of this? please leave a comment below!
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