Summary:

There have been one or two nasty shocks regarding mortgage interest rates recently. Read whats been going on.

 

Mortgage – changes ahead?

  (mortgage interest rates)

Author: Dot Piper

  (life insurance)

Borrowers should be aware of some of the changes taking place in the mortgage industry after two building societies recently implemented rises in their SVR (standard variable rate). As the last Bank of England interest rate has remained steady for over 11 months, and especially as the last move was downwards, this has angered and surprised their customers.

The two societies are N&P (Norwich and Peterborough) and the Nottingham. Borrowers with either of these societies whose mortgage is linked to the SVR will now face increased monthly repayments.

N&Ps SVR rose from 6.3% to 6.49% and Nottinghams went up from6.39% to 6.49%. Both societies were defensive regarding the move, as their borrowers are still benefiting from a (marginally) lower SVR than the typical 6.59%! (cheap health insurance)

Many brokers were unimpressed by the move, with the Nottingham being the most criticised due to the fact that in the first months of 2006 it was offering a 3 year discount at 4.3%. This was leading the best buy tables for mortgages for a number of weeks. It is felt that there are people who chose the three-year discount plan in the last month or so and will only just be completing the deal. To have this increase dropped on them, when interest rates have remained steady, is appalling. If they are locked in to the loan for 36 months, they are stuck with it.

In defence, a spokesman from the Nottingham Building Society claimed that, to an average borrower, the rise in payment would be less than £2 per week. They have written to applicants and current borrowers informing them of the situation and believe that they continue to offer members great value. (life insurance quotes)

The majority of N&Ps variable deals will not be affected as they are trackers, linked to base rate.