Opting for SVR 'could cost £43m'

07-Nov-2006

With interest rates expected to rise to five per cent this week, first time buyers opting for standard-variable-rate (SVR) mortgages could find themselves worse off, research suggests.

According to mortgage intermediaries John Charcol, should interest rates rise, first time buyers not considering a fixed-rate mortgage deal could find themselves contributing to a collective bill of around £43 million.

The average monthly mortgage payment would increase by £15 per month should interest rates rise by 0.25 per cent.

"While an interest rate rise is never good news for homeowners, those who are still on their lender's SVR will be hit particularly hard, yet have the greatest opportunity to do something about it," said Ray Boulger, senior technical manager at John Charcol.

"The vast majority of lenders will pass the Bank rate increase on in full and some will … increase their SVR by more," he added.

John Charcol is an independent intermediary firm specialising in the sourcing of mortgages.

First time buyers concerned about how an increase in interest rates might effect how much they would have to pay each month should consult a good broker.

As the market for first time buyers toughens, new companies are offering new services to help first time buyers buy new properties by working with the house-builders.

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