The average mortgage standard variable rate (SVR) in the UK has increased again, standing at its highest level since records began in 2007.
According to financial website Moneyfacts.co.uk, the average SVR is currently 8.18%, an astronomical leap from just 4.40% in December 2021. This year is the first time the SVR has breached 7% since October 2008.
Average standard variable rates have been rising gradually since December 2021 following several increases in the Bank of England base rate, which currently sits at 5.25%.
A standard variable rate, or SVR, is the default interest rate that mortgage customers are moved onto after their initial deal ends, sometimes known as the reversion rate. SVRs are usually the highest rates lenders charge, and because they are variable, they can be changed at any time.
Those coming off fixed and other types of mortgage deal onto their lender’s SVR may well find their disposable income taking a hit, as they have to direct more of their outgoings towards making interest payments. The good news is that there are plenty of mortgage deals at much lower rates than SVRs, so remortgaging to one of these can help prevent such a sharp payment shock when your current deal ends.
Fixed-rate deals are finally on the way down, with the average two-year fix falling from 6.7% to 6.47% in October and the average five-year fix falling from 6.19% to 5.97%. A few five-year deals have even dipped below 5% – read more in our article Five-year mortgage fixes dip below 5%.
Rachel Springall, finance expert at Moneyfacts, said: “Across the whole mortgage market, product choice is at its highest level since March 2008 and the average shelf life rose slightly to 16 days, a sign the market is stabilising.”
The question now for homeowners on their lender’s variable rate is whether to fix immediately or to wait for fixed rates to hopefully climb down further – which means having to stick it out on a sky-high SVR until that happens.
Our articles When is the best time to remortgage? and Five good reasons to remortgage right now can help you weigh up whether remortgaging now is right for you. Or you can find out more about your mortgage options in our articles Mortgages for over 50s: what you need to know and Mortgages for over 60s: what you need to know.
Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage. If you’re looking for somewhere to start, you can speak to a Rest Less Mortgages advisor and get high quality advice on residential, retirement interest-only, equity release and buy-to-let mortgages.
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