Rate rises set to kick-in

01 September 2006
Recently increased mortgage rates will hit homeowners in the pocket book for the first time today (Friday, September 1st), according to financial comparison site Moneysupermarket.com.

Many of the interest rate rises that were introduced by lenders on the back of the Bank of England's move to up the Base Rate earlier this month will take effect at the beginning of September, so borrowers will only now begin to feel the pinch.

Louise Cuming, head of mortgages at Moneysupermarket.com, says that the rates rises will be more detrimental to the finances of some people more than others, however.

"It's not only rises in line with the base rate that borrowers should be aware of," she said. "Lenders can also take advantage of base rate changes to improve profits.

"Consequently, loyal borrowers stuck on SVR rates, or those who have chosen 'discounted' products pegged against the SVR are the ones who pay."

Ms Cumings pointed specifically to lenders like the Co-Operative Bank and Nationwide for raising their SVRs by more than the base rate (0.25 per cent) – 0.3 per cent and 0.35 per cent, respectively.

She encourages borrowers who have suffered from these over-the-top SVR increases to look into remortgaging, or to switch their mortgage product to a different, and cheaper, one provided by the same lender.

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