The Halifax has introduced a new and higher rate of interest that will hit new mortgage customers when their mortgage deal comes to an end.

From the 11th January next year, anyone taking out a mortgage with the UK’s largest mortgage lender will see a different standard variable rate (SVR) when their mortgage deal finishes – the new rate, called the HVR (homeowner variable rate) is 3.99 percent. The Halifax’s present SVR is just 3.5 percent.

The lender is blaming this new higher rate on the cost of the funding available through the retail and wholesale markets, something which CeMAP course students learn about during their study. In the past, mortgage advisors would find that a mortgage owner would only stay on their SVR whilst they and their mortgage advisor had found the best new deal for them to move onto. However, with Bank of England base interest rates staying at a record low of just 0.5 percent for months now, many homeowners have been taking the risk of staying on this variable rate rather than remortgaging.

Although for many borrowers at the moment this means a lower rate than perhaps they enjoyed whilst on their mortgage deal, it also means that if the Bank of England base rate increases, then their mortgage payments will also rise in line with this. Remortgaging could then be an option, but mortgage deals then could be a very different picture to those we see currently.

Other mortgage lenders have also increased their SVR for new customers.

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