Summary:
There have been one or two nasty shocks regarding mortgage interest rates recently. Read what's been going on.
Mortgage – changes ahead?
Author: Dot Piper
Borrowers should be aware of some of the changes taking place in the mortgage industry after two
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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&P's SVR rose from 6.3% to 6.49% and Nottingham's 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%!
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.
The majority of N&P's variable deals will not be affected as they are trackers, linked to base rate.