Skipton's mortgage rate rise could be the first of many
With householders already struggling to pay the bills, the news that Skipton Building Society has raised its standard variable rate (SVR) will be most unwelcome. Despite the Bank of England's base rate freeze, the lender has raised its SVR from 3.5 per cent to 4.95 and that could land homeowners with an extra £1,500 a year to find.
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Though salaries are unlikely to rise in line with inflation, Skipton's customers will now be looking for an extra £122 each month to meet repayments on a mortgage of £150,000. And financial experts fear that the news could spark similar rises from cash-strapped building societies as they attempt to compete with the big name banks.
Ray Boulger, from broker John Charcol, told the Daily Mail: "There's a pretty good chance that we are going to see more building societies follow. Historically low interest rates have left building societies with thousands of mortgages on low rates which are not making them any money. On top of this, they cannot bring in money from savers because of the fierce competition in this market. The only thing that they can move is their SVR and that is going to hurt their existing customers."
Even so, Skipton chief executive David Cutter's promise of a 3 per cent cap should the market improve, will be scant comfort for those already struggling to pay the bills.
Let us know what you think. Is it fair that credit-crunched homeowners should be faced with rising mortgage payments, or are building societies right to battle the base rate freeze?
