subject: Mortgage Blog: How To Save Money As Mortgage Rates Begin To Rise [print this page] Over one million mortgage customers in the UK are facing increased mortgage repayments this spring. That's after two of the UK's biggest mortgage lenders announced increases in their 'standard variable' mortgage rates. The Royal Bank of Scotland (RBS) and the Halifax have taken the decision to raise their standard borrowing rate. This is despite the Bank of England Base rate remaining at its record low level of 0.5%.
Consumer groups have accused the partly taxpayer-owned lenders of 'profiteering'. But how will the changes affect you? What should you do to save money? And if you're not with Halifax or RBS, can you also expect your mortgage to rise in the near future?
The changes in full
RBS became the first bank to increase mortgage rates for existing customers in March 2012 when it increased the rate of its Offset Mortgage by 0.25%. The bank also plans to raise the rate on its offset One Account by the same amount on 1st May 2012. It is estimated 200,000 borrowers will be affected. Halifax has also decided to increase its standard variable rate (SVR). This will rise from 3.50% to 3.99% from 1st May 2012, costing 850,000 customers hundreds of pounds per year.
Labour MP John Mann slammed the changes. He says: "They take taxpayer money in the form of a bail-out and then take their money again through their mortgages. It is totally unfair."
How to save money if you're on RBS's or Halifax's SVR
If you are on your lender's SVR - particularly if you are affected by these changes - now could be the time to look for a better deal. There are a considerable number of remortgage products in the market and mortgage brokers expect borrowers to start remortgaging in earnest.
Keith from whathouse.co.uk says: "If you're with Halifax or RBS then these changes will leave you on a very uncompetitive rate. This is particularly true if you have more than 25% equity in your home."
However, if you have little equity, your income has fallen or you have bad credit, Keith warns that you may find it tough to secure a deal with another lender. He adds: "Thousands of borrowers will end up paying hundreds of pounds a year more on their home loan simply because they are unable to switch their mortgages to another provider."
Other lenders expected to follow suit Even if you're not a borrower with RBS or Halifax, these changes could still end up affecting you. Mortgage expert Martyn Bulman told the Daily Mail that: "It is inevitable that more lenders will follow Halifax and RBS's lead and increase their standard variable rates."
So, whoever your current lender is, make sure you shop around for the best deal once your fixed or tracker rate deal comes to an end. If you don't, you could end up losing out.
