Average SVR mortgage paid in UK tops 5% for first time since 2009

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The average standard variable rate paid by UK mortgage borrowers has topped 5% for the first time in more than 13 years, piling more pressure on households.

The financial data provider Moneyfacts said the typical SVR rose to 5.06% at the start of July and is at the highest level since January 2009, when it stood at 5.14%.

The Bank of England has increased the base rate five times since December, taking it from a historic low of 0.1% to 1.25%.

SVRs are typically paid by borrowers who have come to the end of a fixed or discount-rate deal and are set at the discretion of lenders.

Banking industry figures show that at the end of 2021, just over 1 million borrowers were paying their lender’s SVR and that the average outstanding mortgage for these customers was about £76,000.

Each 0.25 percentage-point increase in rates will add about £16 a month to their repayments.

The current average SVR is up from 4.91% in June and compares with a figure of 4.4% in December 2021, just before the series of interest rate rises.

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Some lenders have passed on every increase so far but others have opted not to do so.

SVRs vary from lender to lender. As of this week, those charging above 6% include Hinckley & Rugby Building Society and Saffron Building Society (both 6.19%), while those charging below 4% include Newcastle Building Society (3.96%).

Eleanor Williams, a mortgage expert at Moneyfacts, said that for eligible borrowers who are about to come to the end of a deal and go on to their bank or building society’s standard rate, “the incentive to lock into a new fixed deal is still clear”.

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Someone switching from the average SVR to the current average two-year fixed rate might be able to achieve a monthly saving of almost £150, based on a mortgage balance of £200,000 over 25 years and comparing potential monthly repayments at a rate of 5.06% versus 3.74%.

“While we remain in a cost of living crisis, with pressure on many household budgets, it’s vital that prospective borrowers explore their options and are not disheartened by recent rate rises,” said Williams.

Other mortgage rates have also increased in recent months as the cost of funding deals has risen.

The average new two-year fixed rate has gone up for a ninth consecutive month, said the data provider. At 3.74%, this is a sharp increase on the December 2021 figure of 2.34% and the highest rate recorded since mid-2013.

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